Among multiple choices of the most widely-chosen tax havens, Seychelles is a preferred destination for wealthy individuals and corporations. In this blog, we will walk you through interesting facts about Seychelles tax haven. And in addition, why offshore company formation is popular here.
How should you visualize a “Seychelles tax haven”?
In general, this part covers a picture of Seychelles’ tax haven in terms of its geographical location, economy, political structure, legal system, and Seychelles’ offshore sector development.
A modern archipelago’s “golden” site
The Republic of Seychelles, typically known as Seychelles in short, is a country located in the Indian Ocean, lying about 1.500 kilometers east of mainland East Africa.
Seychelles is a well-known archipelago that is made up of 115 small islands. Seychelles’ main and largest island – the Mahé is widely reputed as the home to the capital city Victoria, the international airport as well as a large number of commercial centers of the country.
Seychelles has a population of more than 98.000 people, and interestingly almost 90% of the country’s people live on the Mahé island.
There are 3 official languages used in Seychelles, including English, Seychellois Creole (a kind of French-based creole language), and French. It is also good to know that residents living in Seychelles do not have to witness hurricanes and other disasters as much as other offshore jurisdictions like Caribbean countries.
Not only is Seychelles a picturesque tourism attraction, but it is also well-placed as a golden position for manufacturing and trading between Africa, Europe, and Asia. The gross domestic product (GDP) per capita of Seychelles is among the highest in Africa ($16,575, nominal, 2018 est.).
The World Bank has also classified Seychelles (the only country in Africa) as a High Income Economy since 2015, proving the potential and the robustly growing economy of the Seychelles tax haven.
Open market economy and political stability
- Open market economy
Seychelles tax haven represents strong stability in both economy and politics.
Agriculture and tourism have both largely shaped Seychelles economy in the beginning. However, it was not until the emergence of the offshore service industry did the jurisdiction underwent drastic changes. How the offshore sector has been booming in Seychelles will be later discussed.
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Another key fact about the Seychellois economy is its start as a single-party socialist country throughout the 1970s and 1980s. Afterward, the modification of dropping the centralized planning and using an open market economy instead has contributed significantly to the growth of the country, along with the increase in private investments in particular.
As a result, the strong economic performance has steered the Seychelles infrastructure, facility, and many other aspects like healthcare or education towards great improvements as well.
- Stable political structure
Like its economy, the politics of Seychelles tax haven was considerably influenced by the single-party socialism, which was brought about after the 1976 independence from the UK and remained active until 1993.
Currently, the Seychelles government has highlighted a framework of the multi-party political system with the nation’s president being the head of both state and government. The government holds the right to exercise executive power, meanwhile, the legislative power is vested in both the government and the National Assembly.
Seychelles has joined reputable organizations such as the Commonwealth, the United Nations, the African Union, and many others. Embassies of Seychelles are also spreading throughout the world such as in Paris, New York, Brussels, New Delhi, Beijing, London, etc.
A prime example of the mixed legislative system
Regarding its legislation, Seychelles represents a uniquely mixed-jurisdiction system of law. Why a mixture?
The justice system of the Republic of Seychelles has been a combination of English Common Law and the French Napoleonic Code. This is due to the result of historical roots from both French and English territory.
It is noted that The National Assembly, which is the branch of the Seychelles legislative system, holds the power for forming as well as amending all laws, excluding some specific chapters as per in the Constitution. The constitution also highlights an independent judiciary.
In respect of the offshore sector, Seychelles tax haven has also gone through many changes before determining both modern and strict legislation for this contributing sector in the islands.
Companies under Seychelles offshore-related laws are provided with a range of merits like wealth protection, tax optimization, confidentiality guarantee for both individuals and corporations. Further details on how a Seychelles offshore company can benefit startups and entrepreneurs will be discussed later.
Along with Companies Ordinance, Electronic Transactions Act, Financial Services Authority Act, etc., there is two Seychelles’ legislation (with its latest update) that can significantly influence the operation of international companies including:
- Business Tax (Amendment) Act, 2018
- International Business Company (Amendment) Act, 2018
The booming offshore sector in Seychelles tax haven
Like the aforementioned, the offshore sector is a big contributing factor to Seychelle’s economic growth.
In fact, the introduction of offshore service was in 1994 after the offshore legislation – i.e., the legislation regulating the incorporation of Seychelles International Business Companies (IBCs) – had been set out and gone into effect, then offshore service industry has been well recognized as one of the key income-generating sectors for the Seychelles country.
Seychelles tax haven mostly has focused on offshore activities such as the incorporation of Seychelles IBCs, offshore trust, offshore insurance, investment fund management, offshore banking services, and many other offshore-related services.
The Seychelles International Business Authority (also known as SIBA) was also established by the Seychelles government to encourage the prospect of the offshore service industry. This authority is to ensure a smooth process for offshore company incorporations as well as to give further assistance to other offshore services like a foreign investment to be done in an appropriate manner.
For years, Seychelles tax haven has made efforts to introduce new legislation, review, and make necessary amendments for the sector improvements in the jurisdiction. Offshore investment in the Seychelles jurisdiction is also a widely chosen option thanks to its great benefits to investors and entrepreneurs.
The EU recently announced the next batch of exiting offshore jurisdictions from its “non-cooperative” list which included Seychelles, Anguilla, and the Dominica Republic.
The scale of delisting, however, is not absolute as they’re now simply allocated to Annex II which is typically a division reserved for jurisdictions that while not entirely compliant with international regulations, are on a best-effort basis of doing so.
Subsequent to this, the Republic of Seychelles also requested an additional supplementary review from the Peer Review Group (PRG) to provide judgment on whether or not the jurisdiction would be eligible for a Largely Compliant Status.
If approved then Seychelles would effectively have its name removed from the EU’s list of non-cooperative jurisdictions for good.
Tip
Interested in starting your business in Seychelles? Take a look at our Seychelles IBCs formation guideline
Investing in Seychelles tax haven through the incorporation of an offshore company
Seychelles is considered a wise choice when it comes to offshore investments. As a “tax haven”, Seychelles offers your business a wide range of benefits. What are the highlights?
Seychelles imposes no tax in place for corporations that do not conduct their business activities within the Seychelles territory. In other words, an offshore company in Seychelles pays no taxes on income generated abroad. There are also no capital gains tax, dividends, interest, inheritance, or property tax.
- Seychelles as a tax-free entity for offshore companies is well guaranteed by legislation.
- Seychelles offshore companies are significantly attached to their privacy and confidentiality guarantee. The jurisdiction implements strong protections against disclosure of information relating to the identities of the company’s beneficial owners, directors, and shareholders.
- Offshore banking in Seychelles has been growing fast. By its extensive and sophisticated offshore banking network, opening an offshore bank account is a good idea for corporations and individuals.
- Seychelles IBC is the most common type of business entity in Seychelles tax haven.
- An annual license fee is a must to any companies registered in Seychelles tax haven, including offshore companies.
- There can be some restricted activities that require an offshore company (international business company for example) to obtain the Seychelles authority’s permission before operations such as banking, insurance, securities business, gambling business, etc.
You are advised to conduct a careful examination of the offshore-related laws of Seychelles to make sure your company incorporation runs smoothly. You also should engage professional offshore service providers to save time and resources for Seychelles offshore company formation.
