Seychelles CSL - Special Licence Company
Overview of a Seychelles Special Licence Company (CSL)
The Seychelles CSL is a Seychelles domestic company, incorporated under the Companies Act 1972, which is granted a special licence under the Companies (Special Licence) Act 2003 (“the CSL Act”).
Unlike the Seychelles IBC (which is a tax exempt entity and non-resident for Seychelles tax purposes), the CSL is a tax resident of the Seychelles and may carry on “permitted” business inside as well as outside of Seychelles. However, the permitted business requirements are such that CSL status is only granted where the Company is to hold investments, or provide services to clients, outside of Seychelles.
The CSL has substantial appeal (particularly to international groups), as a tax-efficient vehicle for permitted uses under the CSL Act including, in particular, use as an intermediary holding company, to hold and license out intellectual property or as a services company (e.g. management, consultancy, etc).
Tax Advantages of a Seychelles CSL
- A CSL is liable for Seychelles business tax at the rate of 1.5% on its world-wide taxable income (which, when a CSL is accessing a Seychelles Double Taxation Avoidance Agreement, may be fully avoided when tax credits apply – for example, if not less than 1.5% foreign withholding tax has been paid in respect of income received by a CSL). “Taxable income” means assessable (gross) income less allowable deductions.
- A CSL is exempt from Seychelles withholding taxes on dividends, interest and royalties
- A CSL is exempt from stamp duty on property transfers, share transfers and other business transactions
- The fiscal exemptions granted to a CSL under the CSL Act shall be guaranteed for ten years from the date of incorporation of a CSL and shall continue in force thereafter unless otherwise provided for by written law (the statutory guarantee period is anticipated to be extended to 20 years)
- The CSL (unlike the IBC) has access to Seychelles' steadily expanding network of double taxation avoidance agreements (“DTAs”) – including China, Thailand, Indonesia, Malaysia, Cyprus, South Africa, Botswana, Mauritius, Oman, etc. Details of any specific Seychelles DTA are available upon request. Seychelles DTAs with China and Indonesia are particularly attractive in terms of available tax relief.
Components of a Seychelles CSL
- Minimum number of directors: 2
- Corporate directors permissible: yes
- Local director requirement: no (However, having all or a majority of Seychelles resident directors, is essential where a CSL intends to access a Seychelles Double Taxation Avoidance Agreement)
- Publicly accessible records of directors: yes
- Location of directors meetings: anywhere
- Minimum number of shareholders: 2
- Corporate shareholders permissible: yes
- Local shareholder requirement: no
- Location of shareholders meetings: anywhere
- Details of shareholders are required to be filed with the Seychelles Government Registry, however such information is not publicly accessible
Beneficial owners (clients)
- Details of beneficial owners are required to be filed with the Seychelles Government Registry, however such information is not publicly accessible
- Shares may be held by a nominee on behalf of beneficial owner client (provided the beneficial owner’s details are also disclosed)
- Seychelles resident Licensed Company Secretary required
- Standard currency: USD (but any other convertible currency is permitted)
- Registered shares (Bearer shares not permitted)
- At least 10% of the authorized share capital must be issued and paid up. Therefore and unless a client requires a higher share capital, “standard” authorized capital is $100 comprising 100 shares of $1 each; of which not less than 10 shares being issued and paid up on subscription
Accounts and Returns
- Audit requirement: yes
- Requirement to file annual audited accounts: yes
- Requirement to file annual company return: yes
- The filed Accounts and company return are not publicly accessible
- Confidentiality: use of nominees is permitted, and whereas shareholder and beneficial ownership name and address are required to be disclosed to the Seychelles Government Registry, such information is subject to strict confidentiality obligations on the Registrar and will not be accessible pursuant to any public search of the Registry
- A CSL is required to have a registered office and a licensed Company Secretary in Seychelles
- A Company Seal is optional
- A CSL is required to hold an Annual General Meeting
- Trading restrictions: A CSL may carry on permitted business inside as well as outside of Seychelles, as authorized by its “special licence” and the objects clause of its Memorandum and Articles of Association. Certain activities may not be carried out by a CSL without the appropriate additional licence – such as mutual fund activity
- A Seychelles CSL has the same powers as a natural person, including the right to sue and be sued. It is a separate legal entity with limited liability and has perpetual existence
- Provision for "redomiciliation": a foreign company or Seychelles IBC may be continued as a CSL - and a CSL may redomicile to another jurisdiction
- A CSL’s name must end in the suffix, “LIMITED”, to denote limited liability
- A CSL is a Seychelles resident for taxation purposes
- Any charge, mortgage or other security interest created by a CSL over its assets is required to be registered pursuant to the provisions of the Companies Act 1972 (sections 92 and 93)
- A CSL is required under the Companies Act 1972 to maintain various registers at its registered office, including a Register of Members and a Register of Directors and Secretaries
Key Corporate Features [Chart] of a Seychelles CSL
|Political Stability||Very Good|
|Legal System||Common Law/Civil Law Hybrid|
|Disclosure of Beneficial Owner to Registrar||Yes|
|Disclosure of Beneficial Owner toRegistered Agent||Yes|
|Migration of Domicile Permitted||Yes (Incoming and Outgoing)|
|Non-English Language Names Allowed||Yes|
|Operational Objects||Specific to intended business|
|Tax on Worldwide Profits||1.5%|
|Access to Double Taxation Avoidance Treaties||Yes|
|Bearer Shares Allowed||No|
|Corporate Directors Allowed||No|
|Company Secretary Required||Yes|
|Standard Authorized Share Capital||USD 1,000 (up to USD 100,000)|
|Minimum Paid Up Capital||10% of authorized share capital|
|Government Registry of Directors||Yes, not public|
|Government Registry of Shareholders||Yes, not public|
|Annual Filing of Returns||Yes|
|Meeting Location||Anywhere, proxy also allowed|
|Incorporation Time||2-4 weeks depending on the time it takes for the client to return the application and supporting docs|
Using a CSL as a Vehicle for Doing Business in China
China tax changesChina's recently enacted Enterprise Income Tax ("EIT") Law (effective from 1 January 2008) introduced a new uniform income tax regime which applies to both foreign and domestic enterprises. Under the EIT Law, foreign investors are now exposed to higher Chinese taxes than in the past. China is also becoming increasingly serious about tax collection (Chinese tax collection was up by approximately 30% for year ended 2007).
Under the EIT Law Chinese companies are generally subject to 20% Chinese tax on payments to non-residents. It is anticipated that many foreign owned businesses will enjoy a concessionary 10% withholding tax rate, but which may be further reduced using a Double Taxation Avoidance Agreement ("DTA").
Seychelles / China DTAUse of a Seychelles CSL, in conjunction with the Seychelles / China DTA, provides significant scope to reduce Chinese tax exposure. The Seychelles / China DTA caps Chinese withholding tax on dividends at 5% and 10% on interest and royalties, provided that the CSL has its effective management in Seychelles (and the CSL is not tax resident in China). In contrast, while the Hong Kong / China DTA also caps Chinese withholding tax at 5% if the Hong Kong company owns 25% or more of the shares in a Chinese company, the Hong Kong / China DTA only caps Chinese withholding tax at 10% if the Hong Kong company owns less than 25% of a Chinese company. The Seychelles / China DTA therefore has a distinct advantage over the Hong Kong / China DTA in such cases, which will be relevant to Chinese investment mutual funds and other non-controlling foreign investors.
Another significant benefit under the Seychelles / China DTA is avoidance of Chinese tax on capital gains made by a CSL selling shares held by it in a Chinese company if the CSL holds less than 25% of the issued shares in the Chinese company and the assets of the Chinese company do not principally consist of immovable property (real estate). Once again, this will be of interest to China oriented mutual funds and other non-controlling investors. China has already indicated plans to enforce taxing of capital gains on Chinese share disposals.
A further attractive benefit under the Seychelles / China DTA is that no tax is payable in Seychelles (on Chinese-sourced income of the CSL) if Chinese withholding tax of at least 1.5% is paid on payments made by a Chinese company to a CSL. That is, under the Seychelles / China DTA withholding tax paid in China can be credited and set-off against the 1.5% Seychelles business tax payable by the CSL to fully discharge all business tax liability in Seychelles.
Seychelles CSL Registration and Maintenance Fees
Our complete cost to form a CSL is US$5,500 which includes everything needed with the exception of the following:
- Provision of a Resident Natural Person Director (add USD 300 each if non-resident and USD 700 if Seychelles resident needed for tax residency purposes) - minimum of 2 directors required
- Provision of a Nominee Corporate Shareholder (add USD 250 each) - minimum of 2 required
Annual Maintenance Fees
Annual fees start at US$ 2,000 in addition to any nominee director or shareholder fees that may apply.