Seychelles has updated the Business Tax (Amendment) Act (“BTAA”) to further fulfill the requirements of European Union (“EU”). Some of the Economic Substance obligation of an International Business Company (“IBC”) in Seychelles had changed.
Tax Exemption
Foreign source income previously was not taxable in Seychelles and only income sourced in Seychelles was taxable in Seychelles.
After the updated of BTAA, tax will be exempted only fulfilled the following situation:
Profit generated by a Seychelles company with oversea permanent establishment are NOT taxable in Seychelles. If a Seychelles company does not have an oversea permanent establishment, the profit generate from oversea activities are still taxable in Seychelles.
Foreign-sourced passive income (e.g. dividend) is tax exempt in Seychelles, provided the company has adequate economic substance in the Seychelles.
Foreign-sourced passive income from Intellectual Property is taxable in Seychelles, except the qualifying income from patents or equivalent.
Is my Seychelles company fall within the scope and need to establish substance in Seychelles?
If your Seychelles company fulfill the below two requirements, your company fall within the scope and need to establish substance in Seychelles.
The Seychelles company is a member of a multinational group; AND
The Seychelles company have passive foreign-sourced income throughout the financial year.
Multinational group defined as:
a. Any group that includes two or more enterprise, which are tax resident in different jurisdictions; or includes an enterprise that is tax resident in one jurisdiction and is subject to tax with respect to the business carried out through a permanent establishment in another jurisdiction; AND
b. The ultimate parent company requires to prepare consolidation account.
If your Seychelles company does not fulfill the above two requirements or only have active foreign-sourced income, it will be out of scope and do not need to establish substance in Seychelles.
Obligation for in scope Seychelles company
If your company is fall in scope, it is required to establish adequate Economic Substance in the Seychelles. The Economic Substance includes:
To complete all of its local statutory filings; and
To have adequate human resources and premises in the Seychelles for holding and managing its assets. An IBC having a Seychelles registered agent and registered office, it likely be treated as satisfied; and
In respect of any assets it acquires, holds, or disposes of, to take necessary strategic decisions and manage and bear principal risks in Seychelles; and
Incur adequate expenditure relating to the acquisition, holding or disposal.
Pure equity holding companies or pure real estate holding companies are subjected to lighter requirements, only 1 & 2 listed above is required.
Intellectual property holding company is subjected to additional requirements.
If you are requiring further information or would like to discuss about the new legislation and business solution, please get in touch with your contact persons in Kaizen.
