The Republic of Seychelles: international companies
The choice of the Seychelles offshore jurisdiction for registering an offshore company provides certain advantages regarding the organization of an international business. Although the offshore companies are exempted from taxation, they are subject to certain limitations. In particular, they are not allowed to carry out commercial and economic activities on the territory of the jurisdiction as well as to perform commercial transactions with the residents of the country.
Local company as an alternative to the offshore one
If you are planning to enter the local market of Seychelles, you need to register a local international company, which differs from the traditional offshore companies in Seychelles. The allowed activities and the structure of the local companies are determined by the “Companies Act”, 2003.
Local company: organizational form and specifics
In fact, a local international company is the legal entity that is designed to carry out business activities on the local market. Such companies are not subject to the preferential terms of taxation. However, the main advantageous distinctive feature of this type of companies is the availability of the Seychelles tax resident status that allows taking the advantages of the bilateral international double taxation agreements.
The international double taxation agreements allows optimizing a taxable base on the international level. Moreover, the residency status eliminates the risk of being blacklisted by the other states and their fiscal authorities.
It should be noted that the local company has more complex structure. This type of international companies is ideal for businesses that require specific management. According to the data based on the current practice, the companies that possess the residency status are used when carrying out the following types of activities:
- Establishing international holding entities;
- Carrying out investment activities;
- Owning intellectual property;
- Developing franchise business schemes;
- Services for the selection of highly skilled personnel.
The main features of the legal organizational form of the local companies include:
- Prohibition of issuing bearer securities;
- Possibility of using the nominee services including the involvement of the nominee shareholders and directors;
- Minimal number of executives is two. There is no requirements to the residency status of the directors;
- Legal entities may not act as the company managers;
- Involvement of the Authorized Secretary possessing a tax residency status is obligatory;
- Foreign citizens are allowed to participate in the shareholders’ capital;
- Resident companies are required to submit annual financial reporting and maintain accounting records;
- Guarantee of the complete confidentiality of the information about the shareholders and executives.
Taxation of the local companies
All the local companies, irrespective of the geographic origin of their revenues and profits, are subject to the 1,5% tax rate. However, incomes from royalties, dividends and revenues from the tax on immovable property acquisition are exempted from taxation.
As of today, the Republic of Seychelles has signed a number of bilateral international agreements that are aimed at avoiding double taxation. This allows optimizing taxes in the home country without violating the domestic fiscal legislation.