Taxation is one of the important aspects verified by foreign investors when seeking for a location to set up a business in. From this point of view, the Seychelles offers many advantages, among which the offshore company, also referred to as the IBC (international business company).
The business tax, or the corporate tax, is levied on the company’s income. This is the assessable income once any deductions (if available) have been made.
The Seychelles taxation system applies based on tax residency, meaning that an individual or company must have a place to live, respectively a registered address or management place here. Our Seychelles company formation consultants can offer full information on how taxes apply in this country.
The main taxes in Seychelles
Just like other countries, Seychelles has direct and indirect taxes levied on individuals and companies. However, Seychelles is also known for the tax advantages it offers especially to foreign investors setting up offshore companies here.
Here are the main taxes levied in Seychelles:
- the income tax which is applied to natural persons in Seychelles;
- the corporate tax which is levied on onshore companies in Seychelles;
- the trades tax which is applied on goods imported in Seychelles;
- the value added tax which is the most important indirect levy in this country;
- the immovable property tax which is applied on real estate.
There also other taxes that need to be considered in Seychelles. Among them, the excise and the presumptive tax, and the corporate and social responsibility tax (CSR) and the tourism marketing tax (TMT).
If you have any questions about taxation in Seychelles, our specialists can help you.
Determining tax liability in Seychelles
Even if Seychelles is known as an offshore destination which is known for the tax exemptions available in many cases, taxation here occurs the same way as in onshore jurisdictions where specific regulations apply when applying various levies. One of these regulations refers to establishing tax liability before any levy is actually imposed.
Natural persons and companies deemed as residents of Seychelles will be taxed on their worldwide income here. In the case of individuals, tax residency arises when a person lives in Seychelles for more than 180 days in a calendar year. Companies must be registered as onshore companies to pay the corporate tax in the insular state, however, different rules apply to offshore companies registered here.
With respect to individuals, it should be noted that foreign citizens will not be taxed on dividend, interest and royalties income earned in Seychelles. In many cases, this is related to Seychelles’ double tax treaties.
Natural persons operating as sole traders or self-employed in Seychelles will be imposed the business tax on the net income. The same tax rules apply to members in partnerships registered here. Income obtained abroad is not taxed in Seychelles. In case of income obtained in Seychelles for which the withholding tax was imposed at source will not be subject to additional taxes either.
Our company registration agents in Seychelles can offer more information on tax residency in the insular state.
Our lawyers in Seychelles can also provide various information on the requirements you must meet as a foreign investor.
Tax rates for companies in Seychelles
At first, the tax rates imposed by the authorities in the Seychelles may seem high; however, it is useful to know that the local taxation system provides for many advantages.
The taxation system in Seychelles is made of up of the following main taxes:
- – the corporate tax: which is applied at various rates ranging between 0% and 33%;
- – the personal income tax: this has a standard rate of 16% and it applies to employees and other individuals;
- – the value added tax: this is applies using the principles for the VAT in other jurisdictions worldwide and it has a standard rate of 15%;
- – others: some other taxes that can include the withholding tax on dividends, interest or royalties.
The owners of a partnership or a sole trader are subject to business tax if their taxable income is above the value of 150,000 SR for a tax year. Company owners are subject to tax on any net profit that they derive from this jurisdiction. However, an important diction is made in terms of taxation between the International Business Company and other types of companies. This is detailed below under tax advantages by our team who specialize in company formation in Seychelles.
The Seychelles has also signed various double tax treaties through which the corporate tax rate can be reduced. Our company registration agents in Seychelles can offer more information on the taxes applied to individuals and companies operating here.
The corporate social responsibility tax in Seychelles
The corporate social responsibility tax or CSR tax has been introduced in Seychelles’ taxation system in 2013. It is levied at a rate of 0.5% on monthly turnover by companies not registered for VAT that meet certain conditions. On VAT-registered companies, the CSR is applied at the same rate but on the turnover charged as VAT on the invoiced issued during a month.
In order to pay the CSR a company must meet the following two conditions:
- – it must have a turnover of 1 million SCR;
- – it must not be included in the Second Schedule of the Business Tax Act of 2009.
The CSR was introduced with the purpose of making companies comply with ethical standards and promoting responsibility among businesses that can make a positive difference among the communities and markets they operate in.
Our local advisors can offer more information on the CSR tax in Seychelles.
Tax advantages in Seychelles
We mentioned earlier that the Seychelles taxation system provides for several advantages for companies. One of the best examples is the IBC form which benefits from a 0% corporate tax and exemptions from the withholding tax on dividends. Also, the repatriation of profits derived from an offshore company in Seychelles is free of tax for foreign investors.
Other particularities related to the taxation of qualifying companies in Seychelles imply:
- – a 1.5% tax rate applied to special license companies;
- – a business tax applied to companies at a rate of 25% for the first 1,000,000 SCR and 33% on any amount above it;
- – capital gains are not taxed;
- – there is no stamp duty;
- – a reduced VAT rate of 0%.
Tax requirements in Seychelles
Business owners in Seychelles need to pay attention to the following issues regarding taxation:
- • the tax year: in most cases, the tax year is the same as the calendar year, from January 1 to December 31.
- • the payment method: companies may be subject to one of two manners in which the business tax is remitted, as described below by our agents specialized in company formation in Seychelles.
- • the annual tax return: the mandatory annual payment that is made on the same day when the business tax return is lodged.
- • concessions: in some industries, investors may benefit from concessions, such as those for farmers, fisheries, or in tourism (for the construction or renovation of a hotel).
An important regulation is that any business, be it a sole trader, a partnership or a corporation, needs to be registered with the Seychelles Revenue Commission after it is incorporated, in order to be considered a registered taxpayer. All taxpayers are subject to a simplified self-assessed tax system, in which they make their own assessment of the taxes due to their business and report the taxable income for the tax year, also mentioning the exemptions, deductions and liabilities payable for the losses incurred during the said year. As mentioned before, the tax year is generally the calendar year, however, companies are allowed to select and implement a different period as per the Business Act, Section 58.
The two ways in which companies may pay their tax include the pay as you go installment as well as the pay as you go withholding. The installment is a fixed monthly one and it has the advantage that it is less burdensome (investors do not pay one large amount at the end of the tax year). The pay as you go withholding is mostly applicable in selected business fields, such as construction, when the tax is deducted from the gross payments made to a public body or business or made to a specific business by Government. Some of the specified businesses include building and labor contractors, carpenters, mechanics, welders, and others. The rate is 5%. One of our agents can not only help investors set up a company in Seychelles in these business fields but can also provide more details on this particular method of taxation.
We can assist in VAT registration in Seychelles.
Personal taxation in Seychelles
Some entrepreneurs may also be interested in the Seychelles tax system for individuals, not only for those interested in company formation in Seychelles. Natural persons are only liable to tax on the income they derive from this jurisdiction, irrespective of their residence (whether or not they are a Seychelles resident). As mentioned above, the personal income tax rate is 15%. Foreign nationals who are employed here are under no obligation to file a tax return.
Investors in Seychelles can also be interested in the manner in which their investment income is taxed. Those who are tax residents are not subject to taxation on the income they derive from investments outside of the jurisdiction. Investment income derived from Seychelles is subject to income tax. When an individual receives rental income, it is taxable at a 15% rate.
A 15% withholding tax applies to dividends when the recipient is a non-resident. There is no withholding tax on royalties and capital gains. There are no exchange control regulations.
Seychelles is a recipient of foreign direct investments in various business fields. The following statistics highlight both the evolution of the investment and of the trade:
- – foreign direct investment increased in Seychelles in the second quarter of 2018 by 3.70 million USD.
- – the average foreign direct investment value in the country was 44.03 million USD from 2007 until 2018.
- – in 2016, the value of trade for domestic exports was 6,132.2 million SR, with the top destinations countries being France and the United Kingdom.
The trades and excise taxes in Seychelles
Among the most important custom duties that need to be paid in Seychelles are the trades and excise taxes. The first one is imposed on the goods imported into Seychelles and is calculated according to the regulations of the Trades Tax Law. It is based on the Cost, Insurance and Freight (CIF) value of the goods.
The excise tax, on the other hand, is imposed on several goods imported or manufactured in Seychelles. These are cigarettes and tobacco, motor vehicles, alcohol and petroleum-based products. The excise tax is levied in accordance with the provisions of the Excise Tax Law of 2009.
In order to pay the excise tax, a Seychelles company must register with the Customs Authority.
The immovable property tax in Seychelles
The immovable property tax is the newest levy imposed in Seychelles. Enabled in 2019 and effective in 2020, this levy is applied to foreign citizens owning real estate in Seychelles for residential purposes. The rate of this tax is set at 0.25% of the market value of the respective property and it must be paid by December 31st of every year. In order to pay it, a person must register with the General and Valuation of the Immovable Property Registry.
What is the tax year in Seychelles?
According to the Business Tax Act 2009, the tax year in Seychelles is the one year period (1st of January – 31st of December) necessary for taxpayers to comply with the rules in this sense and pay the imposed fees for companies and businesses in Seychelles.
What is the business tax in Seychelles?
The business tax is imposed on insurances, natural resources of the tax year, interests, royalties, and dividends registered by a non-resident company in Seychelles. There are also tax exemptions in this matter, depending on a particular registered revenue in a firm with permanent establishments in Seychelles.
What are the allowable deductions in Seychelles?
According to the Business Tax Act 2009, in Seychelles, the allowable deductions for companies are the costs of trading stocks within a year. These are:
- • the losses to the amount acquired during one tax year in deriving taxable business income;
- • the net loss on disposal of a business asset referred to the classification of the business assets different from other trading shares during one taxable year;
- • the fee of the trading stocks registered during one year for the objectives of gaining taxable business revenues;
- • the authorized amount as stipulated by the provisions of the law.
We invite you to talk to our Seychellescompany incorporation agents for extra information about the taxable incomes of companies in Seychelles. Also, our team can support foreign investors set up companies in Seychelles.
Business tax returns in Seychelles
Partnerships and trusts in Seychelles are subject to business tax returns if they have registered losses for one taxable year. One should know that the business tax allocated to a company on the market is payable by the date the business tax return in that year is drafted. According to the law, a company is also requiered to obtain a VAT number and file VAT returns in Seychelles.
The same Business Tax Act 2009 provides information about the double taxation agreements signed by Seychelles with numerous countries worldwide that help companies avoid the double payment of taxes.
Foreign investors who want to open companies in Seychelles are invited to contact our local company formation advisors for assistance with the registration process. You can also rely on us for more information on taxation in Seychelles.
You are invited to contact our specialists in Seychelles offshore company formation if you want to know more about the tax laws imposed to businesses.
Our consultants can present all the tax benefits your company can obtain, as well as the tax benefits you can have as a natural person living in this jurisdiction, which is known for the many tax exemptions it provides.
Our team can also provide information on the tax benefits of a Seychelles IBC, one of the main types of companies foreign investors choose to register here.
The IBC benefits from a 0% tax on dividends, interest, royalties, and other sources of income from outside Seychelles. Income derived from this country is charged with an income tax of 30%, but it can also benefit from the provisions of double tax treaties.