The Seychelles is a group of 115 islands located in the Indian Ocean to the north of Madagascar. The Seychelles economy is primarily based on tourism and fishing. The rapidly growing financial sector, linked to the establishment of the Seychelles International Business Authority and the introduction of progressive laws facilitating the establishment of offshore structures and encouraging inward investment, is now a significant element of the economy. An ever-increasing number of international banks and insurance companies have established either branches or subsidiaries whom, together with local management, accounting and legal firms provide clients with support.
Geography, Population, Language and Culture
The Seychelles are famous for their beauty. The 115 islands in the Indian Ocean, near the equator and northeast of the island of Madagascar. The main island, Mahé, has an international airport and well developed harbor in the city of Victoria. The majority of the inhabitants live on Mahé. The Seychelles have not indigenous population. There are different ethnic groups such as French, African and Indian, speaking Creole, but also English and French, especially in business. The main business areas are the tourism and the offshore industry, mainly the incorporation of Seychelles offshore companies also called Seychelles IBC.
Seychelles Economy
The Seychelles Specialties
The Seychelles have a taxation based on the territory. Therefore, only the locally-sourced incomes are taxed. There is a complete legislation for International Business Companies (Seychelles offshore company or Seychelles offshore company) based on the common law, Offshore Banks, Insurance Companies, Mutual Funds, Trusts, as well as the International Trade Zone, all of these being basically free of taxes. Later on, the government legislated for other types of companies such as Special License Companies, Protected Cell Companies and Limited Partnerships.
The offshore company formation is pretty easy, and privacy is assured. The Seychelles have signed tax treaties with a number of different countries, such as China. Banking and shipping are the two main “offshore business” in Seychelles. The Seychelles started to create an IOFC not so long ago, but by 2008, more than 50,000 companies had already been registered which granted the Seychelles with the highest growth rate in terms of new incorporation of offshore companies. The Trade Zone has been the most efficient aspect of the offshore initiative.
The service sector represents 70% of the Seychelles's economy, which is mainly based on tourism. The International Trade Zone is successful, and the Seychelles are evolving into a trading center with the rest of the Indian Ocean area.
Business Environment
The Seychelles are politically stable, offer good corporate laws, they have well-developed air and sea transport links and modern telecommunications means. The Government has been consistently business-friendly during a long time, and has been very active in the development of the offshore business. Due to the size of the country, professional services do not offer the same breadth as the one you will find in a larger jurisdiction. However you will find adequate banking and legal facilities.
Seychelles International Trade Zone (SITZ)
The Seychelles International Trade Zone is ruled by the International Trade Zone Act 1995 and the International Trade Zone Regulations 1995. The existing International Trade Zone (SITZ) on Mahé (the capital of Seychelles) is established under the Act. Activities within the Zone are governed by the Seychelles. The concessions available to licence holders in SITZ include different types of exemption such as exemption from customs duties on capital equipment to be used in SITZ or exemption from social securities contributions. Companies established in the Free Zone are free of taxes
Seychelles Types of Company
Most of the companies incorporated in the Seychelles for offshore purposes are formed under the International Business Companies Act 1994. However this law did not replace the existing Companies Law 1972, which is based on English law. The Companies Law 1972 is used by other types of company, and also for offshore businesses which cannot use the Seychelles IBC form, such as insurance companies, banks, and mutual funds.
The Companies Act 1972 allows the companies to be incorporated as private companies limited by shares, by guarantee, or hybrid; or they can be unlimited, which is less frequent. There can also be Public companies formed under the Act. No matter what type of company it is, Memorandum and Articles of Association must be filed at the Companies Registry and the registration fees must be paid.
It is also possible for foreign companies to re-establish themselves in the Seychelles. This process is called a continuation.
Seychelles International Business Company
The most common vehicle for offshore operations in the Seychelles is the International Business Company also called the Seychelles offshore company. Most of the time, it will take the form of a private company limited by shares and will be legislated by the International Business Companies Act 1994. The main characteristics of the Seychelles offshore company are the followings:
• The company can be formed with only one director and one shareholder.
• It is not mandatory for the shareholders, directors and officers to be resident in the Seychelles and there is no restriction with regards to their nationality;
• There is no minimum capital requirement; shares may be either registered or bearer and may be issued in any currency;
• There is no accounting requirements;
• Shareholders and directors meetings need not be held in the Seychelles and can be held by telephone;
• The only documents to be held on the public record are the Memorandum and Articles of Association.
Seychelles IBC status is subject to certain conditions:
• It is not possible to have any business activity or to transact any kind of business with residents of the Seychelles;
• A Seychelles IBC cannot have ownership interest in real property in the Seychelles; the only way that a property may be leased is for office use;
• An appropriate license is required in order to be carry on Banking or trust business, insurance or re-insurance business;
Seychelles IBC’s are allowed to have activities within the Seychelles without compromising the offshore status under the Act;
• A Seychelles offshore company can have professional contacts with lawyers and accountants;
• A Seychelles offshore company can prepare and maintain books and records;
• A Seychelles offshore company has the right to own shares in other Seychelles companies, whether under the Act or the Companies Act 1972;
• A Seychelles offshore company has the right to own a vessel registered in Seychelles.
In order to be able to incorporate a Seychelles offshore company, it is mandatory to use a registered agent in the Seychelles. The incorporation fees of an IBC will depend on the company's authorized share capital. Normally, the incorporation of a Seychelles IBC takes no more than one day; however, for banks, trust companies and insurers the process takes longer than that.
The governmental fees for the incorporation of a Seychelles offshore company are $100 as long as the capital would not exceed $100,000 and $1,000 for capital over $100,000. However, since October 2007 the law changed and the Seychelles government chose not to increase any longer the licensing fees for share capital above $100,000. The Seychelles company annual renewal fees are also set at $100. These fee levels are guaranteed for the life of the company even if the fees were to change for new Seychelles IBC’s.
Seychelles Special License Company
Special License Companies (CSL) are legislated by the Companies (Special License) Act, 2003 (the Act). Unlike the IBC, a CSL is free to carry on a business activity inside and outside of Seychelles. The CSL entity is a Seychelles domestic company, which is has a special license under the Act. A CSL has significant legal tax advantages including access to the Seychelles Double Tax Agreements.
Seychelles Limited Partnership
Limited Partnerships (LP) are legislated bye the Limited Partnership Act, 2003 (the Act). An LP has significant legal tax advantages including the facility of receiving incomes from outside of the Seychelles and distributes such income to foreign partners without being liable of any tax in Seychelles. A Seychelles LP is especially useful for international joint venture actions.
Seychelles Offshore Industry
It is in 1994 that the Seychelles really started to develop the offshore business. The government created different legislative initiatives in order to show the Seychelles as a modern and international offshore centre. The majority of the legislation was based on the one existing in the “older” jurisdictions such as Bahamas and the British Virgin Islands.
The legislation that was enacted in 1994 covers the registration of Seychelles offshore companies, offshore trusts and the licensing of international trade zone companies. Later on, other legislations were introduced with regards to the licensing of offshore banks and insurance companies. It is in 2003 that the government legislated for the types of company such as CSL and LP’s.
In order to deal with all matters related to the offshore business, the Seychelles International Business Authority (SIBA) was created in 1994. The SIBA is in charge of the administration of the offshore sector, the offshore company incorporation and the supervision of the SITZ.
In the beginning of 2005, we could count more than 17’000 Seychelles IBC’s. In 2008 there were more than 50’000 Seychelles companies which made the Seychelles one of the fastest growing centre in terms of offshore business.
Banking
It is the Financial Institutions Act 1984 as amended in 1995 that legislated the banking industry in Seychelles. The Offshore Banking Department of the Central Bank is in charge of issuing the Licenses which will only be issued to companies incorporated under the Companies Act 1972 or foreign companies registered under the Companies Act. There are different types of Licenses such as the ones for domestic banking, offshore banking, or both.
In order to apply for a license, there are much information which needs to be provided to the Central Bank together with copies of the last three balance sheets and a business plan. There are different prudential requirements and the Bank will need to have monthly balance sheet submissions.
The price of a license is USD15,000, payable to the Central Bank. Today, there are six licensed commercial banks in the Seychelles, together with a credit union and two money changers. Of the commercial banks, two are state owned, two are branches of foreign banks and two are locally incorporated subsidiaries. All the banks have a license which allows them to conduct domestic banking but only two of them have the license to have offshore banking activities.
The banking industry is very important in Seychelles and represents an important part of the offshore business together with the incorporation of Seychelles offshore companies. There are other types of offshore businesses such as the offshore insurances companies, legislated by the Insurance Act 1994 which is modeled on the Insurance Act of Singapore 1995.
Another element of the offshore business in Seychelles is the Investment Fund Management. Indeed, legislation was put in place for this matter in 1997. The regulations from this Act offered a modern system in order to attract worldwide international mutual funds promoters.
The last but not the least sector of the offshore business in Seychelles is the Ship Management and Maritime Operations. In Seychelles, this industry is governed by the Merchant Shipping Act 1992. One has the possibility to register ships and yachts under the terms of this Act
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The ownership of a Seychelles registered vessel or ship management operation is closely linked to a Seychelles IBC which remains the most efficient vehicle for this type of operation. Indeed, such a Seychelles company will not be liable for tax on profits and dividends. The vessels registered in Seychelles can be sold or transferred free of tax, and so can the Seychelles offshore company.
Seychelles Double Tax Agreements
Based on the Seychelles International Business Authority, the Seychelles have Double Tax Agreements in force with the following countries: China, Oman, South Africa, Indonesia, Malaysia, Botswana, Thailand, Mauritius, Vietnam, Cyprus, Barbados and the United Arab Emirates.
Double Tax Agreements with the following countries have been signed, but as of 2008 were not ratified: Belgium, Qatar and Zimbabwe.
There are many countries which are in discussions on tax treaties with Seychelles such as Tunisia, Malta, India and the Czech Republic. Other countries Russia and Egypt have concluded the negotiations.
These treaties are important for the development of the national economy. Indeed, the government is actively trying to expand its network in terms of tax treaty.
