Seychelles amends its legislations with respect to BEPS Standards

Following the review of all relevant preferential tax regimes, amendments were made to the following legislations in order to bring them in line with BEPS (Base Erosion and Profit Shifting):

1. The International Business Companies Act has been amended to allow IBCs to carry on business in Seychelles. This is in line with the amendments made in the Business Tax Act to move Seychelles tax system to a territorial system. The tax exemption clause under the IBC Act has been removed. Only IBCs deriving “Assessable Income” in Seychelles will be required to submit Annual Returns and Audited Accounts (in line with the Companies Ordinance 1972) to the FSA.

2. Similarly, in light with concurrent amendments in the Business Tax Act to move Seychelles tax system to a territorial system, the Companies (Special Licences) Act has been amended to remove the 1.5% business tax concession and withholding tax exemptions. CSLs incorporated on or before the 16th October 2017 may still be able to enjoy these tax concessions and exemption until the 30th June 2021 (other limitations apply).

3. The Insurance Act has been amended to remove tax exemption provision applicable to non-domestic insurers. Non-domestic insurers licensed on or before the 16th October 2017 may still be able to enjoy these tax concessions and exemption until the 30th June 2021 (other limitations apply). Moreover, the Second Schedule of the Business Tax Act was amended earlier this year to remove the tax exemption applicable to reinsurance business.

4. The licensable Export Services activities under the International Trade Zone Act has been amended to remove the activities falling within the scope of the OECD work on BEPS. Under the revised export services regime, the holder of an Export Services License will not be allowed to provide any services other than repair and reconditioning of goods, warehousing and rental of storage space or logistic services provided that these activities relate to goods physically handled in the zone, in Seychelles. Export Services operators licensed on or before the 16th October 2017 may still be able to enjoy all concessions and exemptions accorded under the International Trade Zone Act until the 30th June 2021 (other limitations apply).

5. The Securities Act and Mutual Fund & Hedge Fund Act have been amended to require licensees to meet the minimum substance requirements in order to benefit from the concessionary tax rate afforded under these legislations. The Regulations provides that the substantial activity requirements shall be met if the licensee (including fund administrator) undertakes its core income generating activities in Seychelles by employing, a reasonably adequate number of suitably qualified persons to carry out the core activities. The licensees are also expected to incur an adequate amount of operating expenditures for such activities.

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