01.13.17

IMF says Seychelles Needs to Boost Revenue

Posted in International Organisations, International relations at 6:22 pm by Robert Klien

On January 11, the International Monetary Fund (IMF) indicated that Seychelles will need to take further measures aimed to increase tax revenue over the medium term.

With strong economic activity continuing in Seychelles, the IMF it expects the country’s primary surplus – the surplus before accounting for the cost of interest on debt – is to reach 3% of gross domestic product (GDP) in 2016, despite the expansionary impact of the fiscal initiatives announced in the State of the Nation Address in early 2016. Those measures included personal income tax (PIT) cuts and increases in pensions and the minimum wage.

The IMF confirmed that “the State of the Nation Address initiatives entailed substantial fiscal costs, around 3% of GDP on a full-year basis.” The PIT reforms were designed by the Government of Seychelles to reduce the tax burden on low-income earners and, on a phased basis, make the tax system more progressive.

The IMF noted that the proposed 2017 Budget includes some measures to moderate the impact of the initiatives, including a new property tax on foreigners’ land ownership in Seychelles, and realignments to the presumptive tax rate and to the tax rate on profits made by individual businesses. However, its opinion was that “additional and permanent measures to boost revenue and contain expenditure will be needed to ensure a steady debt reduction over the medium term.”

01.03.17

Switzerland consults on Implementation of AEOI Agreements with Seychelles

Posted in Business and Economy, International relations at 11:43 am by Robert Klien

Switzerland has launched a consultation on the introduction of the automatic exchange of information in tax matters with a series of countries including Seychelles.

The consultation will run until March 15, 2017. The Swiss Federal Department of Finance (FDF) is planning that the AEOI with a number of jurisdictions enters into force on January 1, 2018, with the first exchanges to take place in 2019.

The introduction of the AEOI with the countries confirms Switzerland’s international commitment to implement the AEOI standard. It is expected to enhance the competitiveness and credibility as well as the integrity of Switzerland’s financial center.

Besides Seychelles, the list of countries includes: Andorra, Argentina, Barbados, Bermuda, Brazil, the British Virgin Islands, the Cayman Islands, Chile, the Faroe Islands, Greenland, India, Israel, Mauritius, Mexico, Monaco, New Zealand, San Marino, the Seychelles, South Africa, Turks and Caicos, and Uruguay.

12.31.16

2016 tourism arrivals is success for Seychelles

Posted in Business and Economy, Tourism industry at 9:40 pm by Robert Klien

Reviewing tourism in Seychelles for the year 2016, Alain St Ange, the outgoing Minister for Tourism, Civil Aviation, Ports and Marine said: “We started 2016 on a high and today we know that we will finish the year with a 10% increase over last year. So it is a real success story for Seychelles. A success story because we are going against the trend in many other countries where they are either stagnant or even decreasing. The other major success in 2016 was the arrival of extra flights, airlines or planes serving Seychelles. It is a success because a couple of years ago Seychelles suffered when airlines departed.”

Also, Minister St Ange acknowledged the challenges facing the trade where he also outlined certain measures to be taken to counter these challenges. When there is an increase in tourism arrival numbers, it is necessary to manage the expectations of visitors. So, he said that one of the several projects to be undertaken is the upgrading of hotels so that clients can be informed on the level they are and what type of service is expected of them and of what quality they are before the clients come here. Also, tourists must be able to feel they live in security when in Seychelles.

He noted that 2016 started off after a good, successful 2015 where the country finished the year with a Plus 19 increase in visitor arrivals.

As an industry, tourism remained a key driver of growth in consideration of the sector’s contribution to Seychelles’ GDP, foreign exchange earnings and employment generation.

12.15.16

Seychelles to introduce significant Tax Changes in 2017

Posted in Business and Economy, Seychelles legislation at 10:43 am by Robert Klien

According to the newly released Budget, Seychelles will finalize significant reforms to its main taxes in 2017.

The jurisdiction will complete the introduction of a progressive personal income tax regime from July 1, 2017, rather than January 1, 2017. A SCR 8,555.5 (USD 660) tax-exempt threshold will be introduced, but it will not be available to expatriates. Income tax above that threshold will be subject to progressive rates of 15%, 20%, or 30%.

From July 1, 2017, a new property tax will be introduced on land ownership in Seychelles, to be levied only on foreigners, and purchases of private land by foreigners will also attract a high stamp duty. Further details of the new tax are still under consideration.

Also, it is proposed to change the Business Tax Act. The tax-free threshold for individual businesses, such as sole traders or partners, will remain at SCR 150,000. However to align personal income tax (PIT) and individual business tax rates, the tax rate on profits of between SCR150,000 to SCR1m will be increased from 15 to 20%. Profits above SCR 1 million will continue to be taxed at 33%.

The Government is also proposing that the presumptive tax rate will be realigned. The tax rate on businesses with a turnover of up to SCR 0.5 million is to remain at 1.5%, but a 3% tax will be imposed on businesses with a turnover from SCR 0.5 million. The new cap for the presumptive tax is proposed to rise to SCR 2 million, up from SCR 1 million. Professional taxpayers, such as accountants and engineers, will pay a 5% rate.

Larose also announced that, as from July 1, 2017, the Seychelles Civil Aviation Authority will impose an additional USD 10 passenger service fee. He noted that “the collection will be a direct contribution towards the country’s foreign exchange earnings to maintain the high standard of the Airport.”

12.13.16

Seychelles to introduce Significant Tax Changes in 2017

Posted in Business and Economy, Seychelles government, Seychelles legislation at 9:24 pm by Robert Klien

According to the jurisdiction’s newly released Budget, Seychelles will finalize significant reforms to its main taxes in 2017.

Seychelles will complete the introduction of a progressive personal income tax regime from July 1, 2017, rather than January 1, 2017. A SCR 8,555.5 (which is USD 660) tax-exempt threshold will be introduced, but it will not be available to expatriates. Income tax above that threshold will be subject to progressive rates of either 15%, 20%, or 30%.

From July 1, 2017, a new property tax will be introduced on land ownership in Seychelles, to be levied only on foreigners, and purchases of private land by foreigners will also attract a high stamp duty.

The Government of Seychelles is also planning to change the Business Tax Act. The tax-free threshold for individual businesses, such as sole traders or partners, will remain at SCR 150,000. However to align personal income tax (PIT) and individual business tax rates, the tax rate on profits of between SCR 150,000 to SCR1m will be increased from 15% to 20%. Profits above SCR1m will continue to be taxed at 33%.

In addition, it is proposed that the presumptive tax rate will be realigned. The tax rate on businesses with a turnover of up to SCR 0.5 million is to remain at 1.5%, but a 3% tax will be imposed on businesses with a turnover from SCR 0.5 million. The new cap for the presumptive tax is proposed to rise to SCR 2 million, up from SCR 1 million. Professional taxpayers, such as accountants and engineers, will pay a 5% rate.

Included in a substantial series of measures to help small and medium-sized enterprises (SMEs), the Government will exempt businesses with an annual gross revenue of up to SCR 1 m from paying tax in their first year of operation. Larose said that the medium- to long-term target is “to turn Seychelles into the SME capital of the Indian Ocean.”

Also, an additional cost for foreign visitors disembarking at the Seychelles International Airport was announced. As from July 1, 2017, the Seychelles Civil Aviation Authority will impose an additional USD 10 passenger service fee.

12.10.16

New tax measures announced in budget address

Posted in Business and Economy, Seychelles government, Seychelles legislation at 2:45 pm by Robert Klien

The Seychelles Minister for Finance, Trade and Economic Planning Peter Larose, delivering his budget address before the National Assembly on December 9.

A new tax on property owned by non-Seychellois citizens will be introduced in July 2017, said the Seychelles’ Minister of Finance in his presentation of the budget allocation 2017 to the members of the National Assembly.

Peter Larose is proposing a budget allocation amounting to around $584 million.

The new tax “will include foreigners with a Seychellois passport. Stamp Duty will be charged per square metre,” Larose said.

Also, he announced other new tax measures in his budget address including excise tax on fuel, excise tax on alcohol and tobacco products and progressive tax.

Larose said that for the excise tax on fuel, “An additional 50 cents per litre will be placed on fuel-based products. The Public Utilities Corporation (PUC), the Seychelles Public Transport Corporation (SPC) and Air Seychelles will not pay the additional cost.”

As regards excise tax on alcohol, an increase of 10% will be applicable on all drinks with an alcohol content of less than 16% in 2017. This will apply for both locally produced and imported alcoholic beverages.

In line with this revision, a 10% increase will also be placed on importation and production of tobacco products in 2017.

As for the Progressive Tax, the third and final stage will be implemented as of July 1, 2017, instead of January as was announced previously. This will be the Progressive Tax applicable on emoluments more than $648. A 15% rate will be applicable on earnings between $648 and $758 while a 20% tax will be applicable on earnings between $758 and $6,320. Workers with salaries above $6,320 will have to pay 30% on earnings above that threshold.

Larose also announced an additional cost for the services used by foreign visitors disembarking at the Seychelles International airport – as of July 2017, the Seychelles Civil Aviation Authority (SCAA) will put an additional $10 for services related to incoming foreign passengers.

12.04.16

Seychelles is ‘world’s leading honeymoon destination’

Posted in Tourism industry at 2:39 pm by Robert Klien

The Seychelles is a popular destination for beach weddings and honeymoons, and its popularity of the 115-island archipelago among honeymooners was given a boost this weekend, as the jurisdiction was declared the world’s leading honeymoon destination. This top position was announced at the World Travel Awards grand final ceremony.

The award presentation was held on December 2 in Maldives, in the presence of some 250 hospitality leaders from all over the world.

Seychelles emerged as the world’s best in the honeymoon destination category, ahead of 10 other nominees including neighbouring Mauritius, which has been the leader over the past 4 years.

The Seychelles Tourism Board’s chief executive, Sherin Francis described winning the award as a big achievement. “For me when you mention Seychelles, it’s synonymous to romance, weddings and honeymoon. So the award reiterates the message that is always stressed on during our marketing events, that Seychelles is one of the world’s best honeymoon destinations,” Francistold said.

The World Travel Awards, set up in 1993, recognise the very best travel organisations in the world through a global vote by travel professionals.

11.24.16

Seychelles issues Final Ruling on Expenses Deduction

Posted in Business and Economy at 6:09 pm by Robert Klien

The Seychelles Revenue Commission (SRC) has issued its final Public Ruling 2016-2 aimed to provide clarity as regards the methodology of calculating the additional special business tax deduction allowed for marketing and promotion expenditure.

The SRC confirmed that, in addition to their normal business tax deduction, certain businesses in the Seychelles are allowed a special deduction equal to 5% of their taxable business income or their actual expenditure on marketing and promotion, whichever is the lower.

The special deduction is allowed for the following list:

  • farming entities;
  • agriculture processors and exporters;
  • boat owners;
  • fishery processors;
  • hotels, guest houses and self-catering establishments;
  • cafes and restaurants;
  • domestic air transport service providers;
  • domestic ferry service providers;
  • boat or yacht charter companies;
  • car hire companies;
  • underwater dive and water sports operators;
  • travel agents, tour and/or tourist guides;
  • and gambling/casino operators.

11.06.16

Seychelles’ financial survey reveals more education is needed

Posted in Seychelles offshore jurisdiction at 6:03 pm by Robert Klien

In accordance with the Seychelles’ first financial literacy survey, the majority of people in Seychelles know about financial products and services and have access to them, but do not know about how to use and evaluate these services.

The findings of the baseline survey were presented by Abel Motsomi of FinMark Trust, an independent organisation based in South Africa, which carried out the survey along with the Central Bank of Seychelles (CBS) and the local Financial Services Authority.

The objective of the study which was recommended as part of the Financial Sector Development Implementation Plan was to measure and provide credible benchmarks on financial literacy and capability.

Beggita Vital, the Payment Systems officer at CBS, said 562 interviews were conducted on Mahe, Praslin and La Digue, the three most populated islands in Seychelles.

The study showed that 94% of the participants have transacted with a bank and most knew about financial products and services available and had access to them. However, they were not necessarily knowledgeable about how to evaluate and use these services.

“Another common complaint that we receive at CBS by customers is that they were not aware that as guarantor of a loan, they are responsible to repay the loan in the event of a default by the borrower and this also came out of the study,” Vital said.

Other findings show that 94% of the people interviewed had transacted with a bank, and 87% wanted to improve their financial situation while 46% did not have a plan of what to do.

On the need for financial information, 38% felt they wanted to know more including how to save, invest and budget. While 83% of the people interviewed knew how much they earned or received, only 14% kept track of how much they lend.

The results of the study will be used to develop a national strategy for financial education in Seychelles.

11.02.16

IMF evaluates Seychelles’ 2017 financial outlook as strong

Posted in Business and Economy, International Organisations at 5:56 pm by Robert Klien

According to an International Monetary Fund (IMF) official said, Economic growth for 2016 in Seychelles is projected to reach around 4.5% as a reflection of “vibrant tourist arrivals” and expanding credit to the private sector.

Wendell Samuel led an IMF team that came to conduct the 4th and 5th reviews under the Extended Fund Facility arrangement with Seychelles.

Samuel said that “macroeconomic performance has been robust in 2016” and that inflation has been negative since the beginning of 2016 largely due to the low prices of commodities and stable exchange rates.

Separately, the Bretton Woods institution has predicted the jurisdiction’s primary fiscal surplus to reach 3% of gross domestic product (GDP) this year due to the good economic performance of Seychelles. This is in spite of the impact of the various financial initiatives announced in the State of the Nation Address in February, including income tax cuts and increases in pensions and the minimum wage.

Looking on to 2017, Samuel said the growth outlook remains positive, largely due to foreign direct investment (FDI) in the tourism sector.

However, he cautioned that there might be downside risks to the outlook largely due to the external factors. According to him, “weaker than expected global growth can dampen tourism performance”.

Tourism is one of the 2 main sectors that the Seychelles’ economy relies on for foreign exchange earnings. So far, over 240,000 visitors have visited Seychelles in 2016, which is a 9% increase compared to 2015.

Poverty reduction was another topic discussed during the meetings. In a report made public in late 2015, the Seychelles National Bureau of Statistics said a poverty and equality survey carried out in 2013 placed the poverty line estimate at SCR 3,945 (around USD 300) per adult per month. The proportion of the population below the poverty line was then estimated at 39%. More progress on poverty reduction is needed to ensure that benefits of economic growth are shared by all.

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