Located on the northeast of Madagascar in the western Indian Ocean, consisting of 115 islands, Seychelles is certainly one of the most beautiful tropical island destinations in the world. The country is officially known as the Republic of Seychelles. Mainly, the country’s economy is based on tourism, hospitality industry, a booming offshore financial services industry and fishing. The tourism sector employs about 26% of the workforce and contributes directly and indirectly to more than 55% of the country’s GDP. Further, Seychelles has the highest Gross Domestic Product (GDP) per capita in Africa. Seychelles Investment Board (SIB) plays a vital role in promoting and facilitating local and foreign investments.
Since independence, the country’s economy has been steadily growing, making it one of the major financial hub in Africa. Due to following advantages, Seychelles has now become one of the most popular places for offshore incorporation.
Establishing a business entity in the Seychelles is one of the easiest process. International Business Companies (IBCs) is the most common type of company in the country for non residents and the process for incorporation is quite simple. There is no upfront capital required and no par stock value is accepted, thus a little financial commitment needed.
Privacy and confidentiality
Especially when it comes to personal information, the issue of privacy has been an increasingly hot button in Seychelles. If a person wants to open his business in Seychelles, his privacy is guaranteed by the local laws. Aside from the identity and personal information of the initial company director, the identity of shareholders, other directors, and beneficial owners are not kept on public records.
As Seychelles is called as a tax heaven country, one of the biggest benefits of incorporation of a company in Seychelles its taxation regime. The country has a territorial tax system, which means any income earned outside the country is not subject to taxation. Further, zero taxation also applies to capital gains, interest, and stamp duties on business transactions.
Flexible entity structure
Basically, designed to accommodate a wide variety of business structures, the country is very flexible when it comes to structuring your business. For IBCs, only one director and one shareholder is needed, and they can be the same person. However, there is no limitation on nationality and no requirement for a local director either.
Modern banking facilities
The country is offering some of the most modern banking facilities in the world. A person has access to premium services when it comes to business banking and any other financial services. Further, there is a wide range of bank account options available as per business needs. Internet banking is a standard choice and is known for being highly secure.
Political and economic stability
The future success of any business is directly tied to the economic situation of the country in which the business is incorporated. Further, the economic growth has been steadily increasing in Seychelles. Additionally, the government has been focusing on debt reduction to ensure stability.
Simple Tax Regime
Individual income tax
Personal income tax is a tax collected from individuals and is imposed on different sources of income, such as labor, pensions, interest and dividends. Further, the revenue from personal income tax is an important source of income for the government of Seychelles. The standard rate of individual income tax is 15% and it applies to employees and other individuals.
Under the new taxation system, a resident individual is liable to tax on the basis of monthly income as follows:
- income up to SCR 8,555.50 is liable to tax at a rate of 0%;
- income from SCR 8,555.51 to 10,000 is liable to tax at a rate of 15% of the excess of SCR 8,555.50;
- income from SCR 10,000.01 to 83,000 is liable to tax at SRC 216.68 plus 20% of the amount in excess of SRC 10,000; and
- income over SCR 83,000 is liable to tax at SRC 14,883.28 plus 30% of the amount in excess of SRC 83,333.
For non resident individuals, the rates are:
- income up to SCR 10,000 is liable to tax at a rate of 15%;
- income from SCR 10,001 to 83,000 is liable to tax at SRC 1,500 plus 20% of the amount in excess of SCR 10,000; and
- income over SCR 83,000 is liable to tax at SRC 16,166.61 plus 30% of the amount in excess of SCR 83,333.
In Seychelles, the corporate income tax is a tax collected from companies, whereas the amount of corporate tax is based on the net income obtained by companies while exercising their business activity, generally during one business year. However, the revenue from the corporate tax is an important source of income for the government of Seychelles. Usually, the corporate taxes are levied at various rates ranging between 0% and 33%.
Value added tax
Value added taxes are applied using the principles for the VAT in other jurisdictions worldwide. It has a standard rate of 15%.
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.
In Seychelles, the owners of a partnership or sole traders are liable to pay business taxes, if their taxable income is above the value of 150,000 SCR for a tax year. Further, they are liable to pay tax on any net profit they derive from this jurisdiction.
Foreign investors who wants to establish a company in Seychelles can choose from two main types of business entities:
- Offshore company (International Business Companies) and
- Onshore company
Special License Company (SLC)
This type of legal business entity is called as Special International Business Company (IBC). Special IBC holds a higher status than a standard IBC as it can take advantage of numerous double taxation agreements. It can be formed by the presence of only two business directors.
In Seychelles, this type of business structure is highly in demand, which is often opted by business individuals who want to incorporate their business entity to safeguard their assets and wealth from business rivals and proceedings.
Further, while incorporating an anonymous company in Seychelles, most of the business owners go for nominee director services to add extra protection.
In Seychelles, any foreign investor can easily incorporate a holding company. This type of company is a legal business entity that controls the shares of other companies.
In Seychelles, trust is a tax saving tool which is highly opted by foreign investors while incorporating an offshore company. This legal entity unit acts as a fiduciary or an agent on behalf of an individual or a corporate entity. The core tasks involved is administering the management and transferring the business assets to the company beneficiaries.
Investment/ Hedge Fund Company
This type of company is usually preferred by business investors who are interested in financial investments. It is maintained under the Mutual and Hedge Funds Act 2007. International Business Companies (IBCs) is the most common type of company in the country for non residents and the process for incorporation is quite simple. There is no upfront capital required and no par stock value is accepted, thus a little financial commitment needed.