Is Seychelles a Tax Haven? Offshore Jurisdiction Review

Last updated on 06 October 2024. Written by Offshore Protection.

The independent democratic republic of Seychelles is a tax haven with a stable political system that offers one of the most attractive complete offshore formation packages, created and supported by one of the most auspicious legal and regulatory authorities in the offshore global arena.

Seychelles diligently encourages local and foreign investment; thus it offers:

Low government fees
Tax-resident low-tax and non-resident tax free structures
A growing matrix of tax treaties used for investment into other countries
An international trade zone

Seychelles offshore companies and financial services is governed and regulated by the Seychelles Financial Services Authority. Located approximately 1000 miles east of Africa, Seychelles is not in the cyclone belt, giving it an advantage over other natural disaster-prone jurisdictions, such as Mauritius and all of the Caribbean territories.

Seychelles keeps on flourishing as a global offshore financial center. With its efficacy and command of the offshore industry, its broad range of offshore banking products and services, and its devotion to persistent innovation, Seychelles is poised to be the premier choice in the offshore world.

If you are looking for a tax haven with a solid secrecy policy, attractive offshore business laws, Seychelles may be the perfect choice for your next offshore company formation.

For more information on Seychelles Structures:

Characteristics of a Tax Haven

A tax haven is a jurisdiction that offers favorable tax policies to foreign individuals and businesses. These locations typically provide low or zero tax rates on certain types of income, financial transactions, or corporate profits.

Key characteristics of tax havens include:

Little to no taxation on foreign income
Strong banking secrecy laws
Lack of financial transparency
Minimal reporting requirements
Ease of incorporation for foreign entities

Tax havens often attract wealth and business activities from high-tax countries. They may offer offshore financial services and allow the formation of shell companies or trusts to shield assets.

Critics argue that tax havens facilitate tax evasion and money laundering. Proponents claim they promote economic growth and financial privacy.

Many small island nations and territories serve as tax havens. Examples include the Cayman Islands, Bermuda, and the British Virgin Islands.

International organizations like the OECD have pushed for greater transparency and information sharing to combat harmful tax practices. Some jurisdictions have made reforms in response to global pressure.

Seychelles Overview

Seychelles, an archipelago in the Indian Ocean, gained independence from the United Kingdom in 1976. The nation operates as a democratic republic, maintaining its status as a member of the UK Commonwealth while exercising full self-governance.

The country has positioned itself as an attractive offshore jurisdiction for international investors and businesses. Its legal framework supports the establishment of offshore companies, offering various advantages to those seeking tax optimization strategies.

Seychelles has worked to enhance its reputation in the global financial community. In recent years, the nation has made efforts to address concerns raised by international bodies regarding tax transparency and information exchange.

These efforts have yielded positive results. In 2024, the European Union removed Seychelles from its list of non-cooperative jurisdictions for tax purposes. This decision followed improvements in the country's regulatory framework and compliance with international standards.

The jurisdiction's evolving status reflects its commitment to balancing attractive financial policies with adherence to global regulatory expectations. Seychelles continues to adapt its legal and financial systems to maintain its appeal as an offshore center while striving for international recognition as a compliant jurisdiction.

Benefits of Seychelles

As a rapidly-rising offshore tax haven, Seychelles boasts the following advantages for international investors and business people to set up offshore companies:

A 100% self-governed democratic republic
- it gained its independence from the United Kingdom in 1976
- remains an independent member of the UK Commonwealth, but is under no authority of the British Crown
- it is also under no jurisdiction of the European Union
Full member of the United Nations
Well-respected and established offshore jurisdiction
Favorable corporate laws offering an array of sophisticated, modern & flexible offshore products
Solid banking secrecy, considered one of the best jurisdictions for protecting the privacy of its foreign investors
Free from undesirable measures and exchange agreements
Holds 46 tax treaties, all compliant to OECD standards
Expanding Double Taxation Avoidance Treaty Network
Names of company directors and shareholders are not placed in the public registry
Offers lenient policy on reporting interest incomes to overseas tax authorities
Issues an innovative 'Special Licence' company that can be used to take full advantage of Seychelles’ growing network of double taxation agreements
No exchange controls
Fiscal Incentives
A skilled, professional and bilingual population
Modern communication network
Excellent sea and air links with Europe, USA, Asia and Africa
Convenient time zone coincides with major financial centers from East Asia to Western Europe (+ 4 GMT)
Reliable telecommunications infrastructure geared toward business and is continually enhanced
Residence permit and work permit are available for foreign investors
British styled educational system, private schools and peaceful living environment for families

Features & Regulations

Hybrid between Civil Law and Common Law
Affordable fees for government licensing
Tax-free International Business Companies (IBC)
Special License Companies (CSL) – resident companies with 1.5% tax
Modern, up-to-date body of laws that allows for and regulates offshore banking, offshore companies, protected cell companies, limited partnerships, mutual funds, and hedge funds
Rapidly-expanding network of Double Taxation Avoidance treaties with Bahrain, Barbados, Botswana, China, Cyprus, Indonesia, Malaysia, Mauritius, Monaco, Oman, Qatar, South Africa, Thailand, U.A.E, Vietnam and Zambia
Incorporate (form an time IBC) in only 24 hours
Government committed to positioning Seychelles as a top international offshore financial center

Things to Consider

Restrictions on bearer share issuance which requires local registered agent to 'immobilize' them. (We recommend the setting up of a Panama foundation as sole shareholder or, if unrestricted bearer shares are a must, a Panama company).
Limited number of local banking options; accounts are not as easy to open as in prior years (but still possible despite additional paperwork requirements).
Network of Double Taxation Agreements, with OECD approved language that include Mutual Legal Assistance agreement language, which weaken Seychelles as the best asset protection haven.

Seychelles as an Offshore Financial Center

Seychelles has emerged as a prominent offshore financial center, offering attractive benefits for international investors and businesses. The jurisdiction provides a range of financial services, robust offshore banking options, and a favorable tax system.

Financial Services and Benefits

Seychelles offers a diverse array of financial services tailored to international clients. These include:

Company formation and management
Trust and foundation services
Investment fund administration
Asset protection strategies

The jurisdiction's legal framework supports confidentiality and asset protection. Seychelles International Business Companies (IBCs) benefit from minimal reporting requirements and flexible corporate structures.

Foreign investors appreciate the ease of doing business in Seychelles. The registration process is streamlined, allowing for quick company setup. Additionally, there are no restrictions on foreign ownership or currency controls.

Offshore Banking in Seychelles

Seychelles' offshore banking sector caters to international clients seeking privacy and financial flexibility. Key features include:

Multi-currency accounts
Online banking services
International wire transfers
Wealth management solutions

Banks in Seychelles adhere to international standards for anti-money laundering (AML) and know-your-customer (KYC) procedures. This ensures compliance while maintaining client confidentiality.

The Seychelles Financial Services Authority (FSA) regulates the banking sector, providing oversight and stability. Offshore banks often offer competitive interest rates and personalized services to attract international clientele.

Seychelles' Tax System

Seychelles employs a territorial tax system that is highly attractive to offshore businesses. Key aspects include:

Zero corporate tax for offshore companies
No capital gains tax
No withholding tax on dividends, interest, or royalties
Foreign-source income exemption (FSIE) for qualifying entities

The FSIE regime allows eligible companies to benefit from tax exemptions on foreign-sourced income. This makes Seychelles particularly appealing for international holding companies and investment vehicles.

Seychelles has signed numerous double taxation agreements, enhancing its appeal as a tax-efficient jurisdiction for cross-border transactions. The government remains committed to maintaining a competitive tax environment while adhering to international transparency standards.

Corporate Tax Policies

Seychelles employs a territorial tax system for offshore companies. International Business Companies (IBCs) registered in Seychelles enjoy significant tax advantages.

IBCs that do not derive income within Seychelles are exempt from corporate tax. This zero-tax policy is guaranteed by legislation, making Seychelles an attractive destination for foreign investors.

For companies operating domestically, Seychelles uses a progressive tax structure:

15% tax rate on profits below SCR 1 million
25% tax rate on profits exceeding SCR 1 million

This tiered system aims to balance revenue generation with business-friendly policies.

Seychelles has implemented tax reforms to align with international standards. The Business Tax (Amendment) Act 2018, effective January 1, 2019, introduced changes to enhance transparency and combat tax evasion.

Despite these reforms, Seychelles maintains its competitive edge in attracting foreign investment. The country's tax policies continue to offer benefits for offshore companies while addressing global concerns about tax havens.

Offshore Companies

Seychelles has become a popular destination for establishing offshore companies. These entities, known as International Business Companies (IBCs), offer significant advantages to foreign investors and entrepreneurs.

IBCs in Seychelles enjoy a favorable tax environment. They are exempt from taxation on income generated outside the country, making Seychelles an attractive tax haven for international business activities.

The process of setting up an offshore company in Seychelles is straightforward. Requirements are minimal, typically needing only one director and shareholder. This individual can be the same person or a legal entity.

Seychelles' offshore sector benefits from robust confidentiality laws. These regulations protect the privacy of company owners and their financial affairs, a key consideration for many international businesses.

The country's stable political environment and membership in the UK Commonwealth contribute to its appeal as an offshore jurisdiction. This stability provides reassurance to investors looking for a secure location to base their international operations.

Seychelles' offshore companies can engage in a wide range of activities, including international trade, investment holding, and asset protection. This flexibility allows businesses to tailor their operations to specific needs and strategies.

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In-Depth Information

Location

Seychelles is an archipelago consisting of 115 of the most picturesque islands in the world, located about a thousand miles off the eastern side of Africa (just to the south of the equator).

Lying in the coastal area of the Indian Ocean, along the African continent, Seychelles is favorably positioned between the prime manufacturing and trade channels of Africa, Asia and Europe. This allows it to provide an exceptional platform for foreign investment into these important global areas of commerce.

Furthermore, Seychelles does not experience hurricanes like many other offshore jurisdictions, such as Mauritius and all of the Caribbean nations.

Political Structure

Seychelles is comprised of a multi-party political system, having an executive President as head of state and government. The Cabinet of 13 ministers, which also includes the Vice-President, is under the control of the President.

Legislative authority is vested in a National Assembly. This lawmaking body contains 32 members, 26 of whom are chosen straight in constituencies, with the balance on a comparative basis, as per the results of the National Assembly elections.

Seychelles holds memberships in the United Nations, the Commonwealth, the African Union, and La Francophonie. There are embassies of Seychelles in Paris, Brussels, New York, New Delhi, Pretoria, Beijing, and London, as well as many honorary consulates throughout the world.

Economy and Infrastructure

During the era of 1970’s and 80’s, Seychelles was a single-party socialist country. Designed to alleviate the economy and lessen its vulnerability to external shocks, commercial activity was centralized in the hands of around 30 parastatal organizations (corporations having a majority of their shares held by the Government).

The country has evolved away from centralized planning to an open market economy, with increasing private investments. As part of the effort to strengthen this capitalist system, the country's infrastructure, including health and education, has been revamped to create a strong foundation for future economic growth. Since 2006, the government has continued to privatize government-held assets, ranging from production activities to monetary services.

In 1997, Seychelles became part of the Common Market for Eastern and Southern Africa (COMESA). In support of COMESA's strategic goals, Seychelles focuses on increasing national production to compete globally, addressing supply-side limitations related to infrastructure, as well as maintaining peace and security, among others. Combined, the COMESA member countries have a population of more than 389 million, producing annual import and annual export totals of approximately one US billion, respectively.

In May of 2009, Seychelles joined the COMESA Free Trade Area (FTA). Seychelles is well-positioned to benefit from several key initiatives, such as:

COMESA Customs Union
COMESA Common Investment Area
Common Market

Since gaining independence in 1976, per capita output in Seychelles has grown about seven-fold, compared to the old near-subsistence level. Primarily, this increase was spawned by the tourism industry, which employs about 30% of the labour force (agriculture today only employs around 3% of the Seychellois labour force).

Starting in 2008, shortly after the world economic crisis, the government of Seychelles made the control of the budget deficit a priority, especially by curbing social welfare costs and expanding the privatization of national enterprises.

The Seychelles administration has an extensive hand in economic life. The government owns public companies involved in the distribution of petroleum-based products, banking, importation of essential products, telecommunications and many more. Since 2010, the Index of Economic Freedom has been increasing each year (a measure of the degree of limited government, rule of law, regulatory efficiency, market openness as well as other factors).

In recent years, Seychelles has promoted foreign investment to modernize hotels and other services. Most recently, government established the Seychelles International Business Authority (SIBA) to encourage the growth of the offshore financial sector (through offshore company formation and foreign investment) and passed several new regulations (such as the International Corporate Service Providers Act, the International Business Companies Act, the Securities Act, the Mutual Funds and Hedge Fund Act, amongst others).

Population, Language and Culture

Seychelles people belong to diverse ethnic groups such as Asian, African and European. The combinations of these groups are called Creole. Seychelles people speak different languages because of their diverse religious backgrounds. The state has three authorized languages: English, Creole, and French.

Seychelles culture is a colorful tapestry, a combination of Africa, Asian and European influences. Most of the people in Seychelles belong to diverse religions and thus have different lifestyles and customs. Both their music and dance are a combination of European, African and Asian styles using drums, percussion such as zez and the bom.

Seychelles population is 87,785, as per 2012 census. Its population makes it the second smallest state of Africa. There are virtually no native population on the islands as all have migrated here mostly from France, China, India and the African sub-continent.

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Exchange Control

The Seychellois rupee (SR) is the national currency of Seychelles. In 2008, the SR was allowed to float freely, rather than be tied to a set of international currencies, in the hopes of attracting an increasing number of foreign investments to the Seychelles economy.

In 2001, the latest foreign exchange laws were announced by the Seychellois government. The Foreign Earnings Regulation Act and the Exchange Control Act were amended to reject unlawful foreign exchange activities and to make sure that all foreign exchange activities and transactions were certified and, to a certain extent, supervised by the Central Bank of Seychelles.

The major purpose of the Foreign Earnings Regulation Division is to make sure that all foreign exchange coming into country legally goes through the banking system and allotment of the foreign exchange is moderately distributed by the commercial banks as per the directives issued to these banks.

Visitors in Seychelles make payments in foreign currencies for hiring of boats, cars, lodging, travel agents, tour operator services, inter island services, visiting state parks and nature reserves. In most places, credit cards can also be used. It is not mandatory for tourists to switch currency when entering the state. In fact, they can exchange only little amounts for their secondary expenses outside tourist places and hotels.

Type of Law

Seychelles has a mixed-jurisdiction system of law that makes it quite unique. The civil law is directed by a Civil Code, which was derived from the French Napoleonic Code. There is no British common law aspects in Seychellois civil law.

In criminal law, however, there are significant similarities to British criminal law. Procedural law is mainly British-based. British courtroom procedures also share great likeness to those of Seychelles procedural law.

Laws are passed primarily through legislation. The Seychelles legislative division is headed up by the National Assembly. It holds the power to develop, alter and revoke all laws except for some sections of the Constitution of the Republic of Seychelles. This Constitution is the ultimate law of the state; therefore, particular chapters, such as ones that address individuals’ constitutional rights, can be revised only through a referendum.

The Seychellois Civil Code lays out the principles and laws relevant to handling civil disputes. Matters not explicitly addressed through legislation may be explained or proposed through case law developments, but to date no branches of the law have been formed purely using case law, as in the British common law system.

Principal Corporate Legislation

The International Business Companies Act 1994 governs the operations of offshore companies. Seychelles has continually improved this original document to serve the needs of offshore corporate investors, through more than ten amendments in the past 20 years.

Seychelles recently passed three new very important pieces of legislation: the Mutual Fund Act 2008, Securities Act 2007 and Insurance Act 2008. All build upon excellent existing products and reflect 'best practices' born from the benefit of insight into other similar products in competing jurisdictions and leading international experts who assisted in crafting the legislation.