Taxation in Seychelles
Seychelles is considered to be a favourable international jurisdiction for registering tax free offshore companies. This option is available to the international companies that do not carry out any commercial or business activities on the territory of Seychelles. Thus, a zero tax rate is also applied to the schemes that provide for the receiving profits and incomes from the sources, which are located outside the jurisdiction of Seychelles.
Knowledge of current tax legislation is the necessary requirement for those international companies that plan carrying on business on the local market. It should be also noted that the Seychelles tax legislation has its own peculiarities and differs from the traditional taxation schemes. In this article we will provide a brief overview of the Seychelles state tax system.
Seychelles Tax System
First of all, it should be noted that the Seychelles Revenue Commission, which is subordinated to the Ministry of Finance of the Republic of Seychelles, is the main state fiscal authority of the country. This government body collects taxes that are paid to the state budget.
The Seychelles tax legislation provides for the following types of taxes:
- Corporate taxes on business activities;
- Tax on the earned income;
- Taxes on goods and services;
- Customs duties on imported goods.
Corporate tax on business activities
The norms of the Seychelles corporate law provide for the obligatory registration of all the businesses that operate on the territory of the country by the Specialized Commission. The period of registration is 14 calendar days from the beginning of carrying out economic and commercial activities of a company or an entrepreneur.
The declaration of the earned incomes or incurred losses is filed to the Commission every year. It is worth noting that the filed tax returns are carefully checked with the respective government body. the company’s income analysis is usually performed by means of checking its bank accounts. The government inspection may include gathering all the necessary information and is based on the standard measures for an average business.
The current tax law provides for the several schemes of charging taxes from businesses, in particular:
- Monthly conditional tax – the tax is paid monthly as a down payment. Such a taxation scheme allows reducing a tax burden and eliminates the necessity of paying the significant corporate taxes at the end of the financial year;
- Conditional withholding tax is charged when the income is earned. Such a scheme of taxation is mostly used at the initial stages of opening companies and enterprises;
- Annual tax on business — the tax is collected at the end of the financial year after filing a tax return. The tax rate depends on the measurement of the performance of business activities and the earned incomes.
The annual tax on the business activities is calculated based on a certain threshold of the earned income, which is established by the state. For instance, the corporate income, which is lower than 250 thousand Seychelles rupees, is not taxed at all. All the subsequent profits of the company are taxed at the rate of 40%.
Tax on the earned income
Only the certain types of payments are taxed in Seychelles. Payments, which are made to the non-residents, should be singled out among the main taxable items. The tax rate is calculated based on the following scheme:
- Dividend payments – 15% tax rate;
- Royalty payments – 15% tax rate;
- Financial interest payments – 10% tax rate.
Taxes on goods and services
The rate and the procedure of taxing goods and services are determined based on the business turnover, in accordance with the applicable “Goods and services tax act”.
This law applies to the following types of commercial and economic activities of the companies:
- Importing goods into the territory of the country;
- Production of the certain types of goods on the local market (alcoholic beverages, cigarettes, frozen products, etc.);
- Activities related to the provision of the professional services (accountants, lawyers, doctors, engineers, etc.);
- Tourism related activities (hotels, catering facilities, car rental, sport and entertainment venues, etc.);
- Consumption of water, electricity and telephone services;
- Traveling beyond the Seychelles.
Customs duties on imported goods
The rate and the procedure of collecting customs duties on imported goods is determined by the rules of the “Import Duties Act”. It should be noted that the different tax rates are applied to the different types of goods and equipment imported into the territory of the Republic of Seychelles.
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