Seychelles Direct Taxes

A. Income Tax: Scheme of the Act

The Business Tax Act 2009 came into operation on 1st January 2010 to consolidate, simplify and revise the taxation of business income. It replaces the Business Tax Act 1987.

Since the introduction of the Business Tax Act, only businesses, whether conducted in the form of a body corporate, partnership or sole proprietorship, are liable to tax in Seychelles. In other words, Anyone whose income is derived by way of trade, profession etc. are liable to Business Tax as a self employed person.

All salary and wage earners who were previously also being taxed under the Income Tax Assessment Decree have since been removed from the list of taxpayers. Salary and Wage earners and every person in employment now pay a non refundable Social Security Contribution of 5% flat of their emolument. This contribution is not administered by the Taxation Division but by the Social Security Fund.

The Business Tax Act 1987 (As Amended) provides for a number of business expenses to be allowed against the assessable income of the business to arrive at the taxable income.

In other words, the Taxable Income of a business is derived by deducting from the Assessable Income, all expenditures that are for the purposes of the Act allowable as deductions, viz

Assessable Income

Less: Allowable Deductions

= Taxable Income

B. Income Tax on Resident Corporations (National Government)

1. Name of Tax and Levied in Terms of Which (Name, Number and Year)

Business Tax Act, 2009, Act 28 of 2009, hereinafter referred to as 'the Act'

2. Department Responsible for Administration

The Seychelles Revenue Commission (hereinafter referred to as SRC) headed by the Revenue Commissioner, (hereinafter referred to as the Commissioner).

3. Definition and Classification

The business tax is payable by all taxpayers who conduct a business, whether through a sole proprietorship, partnership or an entity.

The Act contains a number of definitions, most of which are to avoid doubt. For example:

? "Business" includes a commercial or profit making venture, a profession, trade, vocation, or calling exercised by, or any leasing of property or premises or any venture in the nature of trade carried on by, a person but does not include an occupation as an employee;

“Entity” means –

(a) a body or association of persons corporate or unincorporate whether incorporated, created, or formed under the law of Seychelles or elsewhere, including a limited partnership and unit trust; or

(b) a foreign association of persons that the Revenue Commissioner has declared to be an entity for the purposes of this Act,

but does not include an individual, partnership, or trust;

“Partnership” means two or more persons carrying on business jointly for common profit, but does not include a limited partnership;

“Person” includes -

(a) an individual, partnership, entity or trust; or

Government body;

The business tax is payable by all taxpayers who conduct a business, whether through a sole proprietorship, partnership or body corporate.

The Act contains a number of definitions, most of which are to avoid doubt. For example:

Business is defined as:

• any profession, trade employment, vocation or calling, exercised by, or any leasing of property or premises or any venture in the nature of trade carried on by, a person but does not include an occupation as an employee
• employee means a person who is in employment of another person and is liable to pay contribution in respect of the emolument received by him in respect of that employment under the Social Security Act whether or not he or the emolument is exempted under the Act (the definition is used to indicate which taxpayers are not subject to the business tax)
• company includes all bodies whether it is incorporated or not, but does not include a partnership
• partnership means an association of persons carrying on business as partners or in receipt of assessable income jointly but does not include a company
• person includes a company, partnership or any owner of a business

4. Basis of Taxation

4.1 Source-based or residence based

The Seychelles tax system is source-based, i.e. income assessable in Seychelles is only that income that has been derived, or deemed to have been derived, from a source in Seychelles by a business, whether directly or indirectly, that is not exempt income

4.2 If source, define:

4.2.1 Actual source

The term “source” includes:-the place where the relevant contract is made;-the place where the services which give rise to the income are performed; and-the place where the amount is payable.

4.2.2 Deemed source

Income is deemed to be derived by a business form a source in the Seychelles if derived in respect of:

• a contract made in Seychelles for the sale of goods
• anything done by a person in Seychelles, irrespective of where payment is made
• anything done by a resident of Seychelles as owner or charterer of any ship or aircraft,
• irrespective of where the ship or aircraft is operated;
• any activity of a branch of a financial institution in Seychelles

4.3 If residence, define:

4.3.1 Define resident

There could be instances where a taxpayer is not resident of Seychelles but the source of the income is from Seychelles. In such instances the taxpayer would be liable to tax here in Seychelles, irrespective of his residency status. It is therefore fair to say that for business tax purposes, it is the source basis of the income governs and not residency.

A Seychelles resident entity, having a permanent establishment in Seychelles, deriving income from an activity wholly carried on outside Seychelles, is not liable to tax on such income in Seychelles. For example, a Seycheles resident living in Seychelles but deriving passive rental income from a property in UK is not taxed in Seychelles on such property income.

For the purposes of the Act, resident is defined as:

• A person whose domicile is in Seychelles unless the Commissioner is satisfied that his permanent place of abode is outside Seychelles;
• A person who has continuously been living in Seychelles for one-half (183 days) of the tax year; or
• The Permanent Establishment of the resident is in Seychelles.

4.3.2 Exclusions from the definition of resident:

• A business is not considered to be a resident where the entire capital is held by persons who are not residents of Seychelles.
• Also activities falling outside the definition of "permanent establishment" (see below)

4.3.3 Ceasing of residency provided for in the Act

Permanent Establishment does not include:

• a place where the person is engaged in business dealings through a bona fide commission agent or broker who, in relation to those dealings, acts in the ordinary course of his business as a commission agent or broker and does not receive remuneration otherwise than at a rate customary in relation to dealings of that kind, not being a place where the person otherwise carries on business;
• a place where the person is carrying on business through an agent who does not have, or does not habitually exercise, a general authority to negotiate and conclude contracts on behalf of the person; or
• whose authority extends to filling orders on behalf of the person from a stock of goods or merchandise situated in the country where the place is located, but who does not regularly exercise that authority, not being a place where the person otherwise carries on business; or
• a place of business maintained by the person solely for the purpose of purchasing goods or merchandise.

5. Time Tax is Levied

For businesses using accruals basis of reporting, income is accounted for when the right to receive it comes into being, that is, when all the events which determine the right have occurred. It is not the actual receipt but the right to receive that governs.

Whereas for business using cash basis, tax is levied at the time when the income is actually received. However, for provisional tax purposes, income is deemed to be received even if it is not actually physically received.

6. Included in Tax Base

Income derived or deemed to be derived from a source in Seychelles.

7. Year of Assessment

A business tax year is a period of twelve months beginning on the 1st January in any year and ending on the 31st December in that year, except where leave is granted by the Commissioner to adopt a different year end to coincide with a parent company's adopted year end

8. Computation of Taxable Income

8.1 Exemptions

8.1.1 Partial exemptions (amounts exempt irrespective of the identity of the recipient):

The Second Schedule to the Business Tax Act covers exemptions in general.

Amounts that are exempt from tax include:

The taxable income not exceeding R.96,000 per tax year of the handicraftsmanship activities:

• where the business is a person being an individual
• the person is doing handicraftsmen activities
• the person is in possession of a certificate of approval approved for the purpose by the Ministry responsible for Industry - Section 19 and Second Schedule Interest, Dividends and Royalties derived by a resident of Seychelles.

The Act also empowers the Minister for Finance to exempt interest payable on a loan charged on the public revenue of the Seychelles

8.1.2 Absolute exemptions (taxpayers enjoying completed exemption from tax on income):

The following persons are exempt:

• Taxable income (not exceeding R96,000 per tax year) derived from of handicraftsmanship activities, where the business is a person being an individual and is in possession of a certificate of approval approved for the purpose by the Ministry responsible for Industry;
• The income of the Seychelles Public Transport Corporation established under the Seychelles Public Transport Corporation Decree 1977;
• The income of the Seychelles Housing Development Corporation established under the Seychelles Housing Development Corporation Act, 1980;
• The income of a business of a religious, scientific, charitable or public educational institution;
• The income of a business of a society or club which is not carried on for the purposes of profit or gain to its individual members and is

(i) a friendly society

(ii) a society, association or club established for musical purposes or for the encouragement of music, art, science or literature, or

(iii) a society, association or club for the encouragement or promotion of games or sports,

• The income of a trade union registered under the Industrial Relations Act, 1993;
• The income of the National Provident Fund and Social Security Fund;
• Income from the farming activities of a person being an individual carrying on the business of a farmer who is approved for the purpose by the Ministry responsible for Agriculture;
• Income from the fishing activities of a person being an individual carrying on the business of a fisherman who is registered as such by the Seychelles Fishing Authority;
• The income of the Central Bank of Seychelles established under the Central Bank of Seychelles Act, 1982;
• The income of the Seychelles Pension Scheme established under the Seychelles Pension Scheme Act, 1990;
• The income of the Seychelles Fishing Authority established under the Seychelles Fishing Authority (Establishment) Act, 1984;
• The income of the National Sports Council established under the National Sports Council Act, 1982;
• The income derived by the owner of a taxi who holds a licence under the Licences Act, 1986 from the operation of the taxi;
• The income derived by a person in a tax year from the renting of a building or part of a building for use exclusively as a dwelling;
• The income of a ship registered under Part III of the Merchant Shipping Act, 1992;
• The income, by way of interest, and by redemption of Depreciation Bonds, derived during any tax year commencing with the tax year 1995 by a person who subscribes to those Bonds during a period starting on the 1st January, 1995;
• The income, by way of interest and by way of redemption of any Central Bank of Seychelles bonds of the Series FXM;
• The income of the Seychelles Credit Union established under the Cooperatives Act, 1987; and
• The income of the reinsurance business of a registered insurer solely carrying on reinsurance business under the Insurance Act, 1994.

8.2 Deductions and recoupments

8.2.1 Allowable deductions

The Act in Section 41 (1) makes provision for all losses or outgoings, that is, all business related expenses, to be allowed as a deduction. It is for taxation purposes regarded as the general deduction provision.

There are also certain other specific sections dealing with specific expenses.

Section 41 (1) - General Deductions formula:

A taxpayer who conducts a business may deduct expenditure and losses actually incurred in the production of assessable income during the year of the assessment provided the expenditure is not:

- capital;

- of a capital, private or domestic nature;

- in relation to the gaining of exempt income; and

- excluded by any other provisions of the Act.

Although as a general rule all expenditure necessarily incurred by a business for the purpose of gaining or producing assessable income is allowable as a deduction, there are special provisions for spreading some of these expenditures over a number of years. Example in the case of borrowing expenses and depreciation.

Specific Deductions:

Repairs

A deduction is available if it can be demonstrated that the repair was incurred in carrying on a business for the purpose of gaining or producing assessable income and is in the nature of restoration rather than replacement.

Bad Debts

Such an amount is allowable as a deduction provided it can be demonstrated that it became bad during the year of assessment and it had already been returned as assessable income in the current or a prior year.

It is also necessary to prove that all reasonable efforts to recover the debt have failed and that the taxpayer was reporting on accruals rather than cash basis.

Expenses of Borrowing

Deduction for a borrowing expense is allowable in full in the year it is incurred if it is less than R1,000. If however, the amount borrowed is not fixed and exceeds five years, recoupment of the expenditure is limited to five years.

If the period is fixed and exceeds five years, it is also limited to five years.

Subscriptions to Associations

Allowable in full in the tax year provided the amount does not exceed R1000 per association. If the amount is in excess of R1000, R. 1000 is allowable under Section 56 and the excess may be allowed under Section 41(1).

Gifts and Donations

Amounts of R. 20 or greater donated to an approved institution and having received the approval of the Minister of Finance is allowable as a deduction.

There is also a list of Special Deductions in the Seventh Schedule where deductions are allowable at between 100 to 200% of the payment made.

The criteria for such special deduction is to demonstrate that the donation will assist in economic development of Seychelles

8.2.2 Valuation of inventory/trading stock

For tax purposes, the cost of trading stock held and not disposed of at the end of the year of assessment of a business is included in the gross income.

There are three valuation methods which a business can choose from to report movement in stock level, namely:

Cost Price

Market Selling Value

Replacement Value

For tax purposes, any amount of stock consumed by the owner of a business or his associates, must be reported in the Trading Account of the business as goods consumed.

Where the Commissioner is satisfied that by reason of obsolescence the value of trading stock is reduced, the Commissioner can determine such value.

Trading stock of a business at the close of one tax year is always for tax purposes the opening trading stock figure at the beginning of the ensuing year.

8.2.3 Reserves and provisions

No provision is made.

8.2.4 Non-deductible expenses

The following amounts are not deductible:

• Amounts transferred to a reserve;
• Private expenses that are not incurred in relation to the gaining or production of assessable income; and
• The owner of a business cannot claim a salary to one self

8.2.5 Recoupments

Depreciation previously allowed as a deduction is recouped upon any sale of property where a profit is made on the disposal of a particular category of asset.

8.3 Depreciable regime

8.3.1 Tangibles (movable and immovable assets, for example plant and machinery)

Section 45 to 52 and the Third Schedule deal with the rules to be applied to deductions for the decline in value of depreciating assets used for income-producing purposes.

The Third Schedule has to be read in conjunction with these sections because the authority to allow depreciation is found in the sections whereas the rates to be applied plus other specific information is contained in the Third Schedule.

The rates in the Third Schedule have been simplified by grouping various categories of assets into one. For example, a claim for depreciation on any item of office furniture is allowable under Furniture and Fittings.

Section 46 and Paragraph 9 (5) of the Third Schedule provide for assets acquired before 30 June in any tax year to be allowable at the full rate in the first year, whereas if such asset is acquired after 30th June in any tax year, the apportionment rule applies.

For example the normal rates of depreciation for a motor vehicle is 20% in Tax Year 1 to Tax Year 5. If the Motor Vehicle was purchased in February 2002, the depreciation allowable would be 20% in Tax Year 1. Whereas if the Motor Vehicle was purchased on 1 August 2002, the depreciation allowable would be 20%/12x5 months

A unit of property is allowed to be depreciated at 100% of cost except where the Minister (who is responsible for approving a different rate) is of the opinion that the unit of property will be used in a manner conducive to economic development. (Paragraph 8(1) of the Third Schedule).

Any asset item costing R.5000 or less is allowed to be depreciated at 100% in the tax year in which it is acquired.

Where a unit of property in a business in respect of which depreciation had been allowed is disposed off, lost or destroyed and any consideration is received therefrom is less than the depreciated value of that property, the loss on disposal is allowable as a deduction.

If on the other hand, a profit is made on disposal, the excess to the extent of depreciation already allowed is assessable income

There is no depreciation allowed on Land.

Taxpayers may opt to claim depreciation at accelerated rates as per Paragraph 9(1) of the Third Schedule. An election must be made in writing to the Commissioner whenever accelerated rates of Depreciation are to be applied.

Where a business is in a loss situation, and the loss is made up of a trading and a depreciation component, the depreciation component of the loss is allowed to be carried forward indefinitely if the business continues to incur losses. There is a time limit of 5 years to carry forward a trading loss. More information can be found in Section 64 or in the Paragraph on Losses.

1. Plant Used for Manufacturing Purposes

The depreciation allowance is 20%+20%=40% in Tax Year 1, and 20% in the next 4 years

Total 120%

The allowance is only available for new plan.

2. Manufacturing Building

4% per annum for 25 years

3. Hotels

20% in Year 1 and 10% over the next 8 years

4. Office Buildings

50% in Year 1 and 25% in each of the following 2 years

However, there are a number of other conditions attached to each of these categories of depreciation. Reference needs to be made to Third Schedule.

8.3.2 Intangibles/incorporeals (for example, copyright, patents, goodwill and other intellectual rights)

No depreciable regime.

8.4 Treatment of losses

Section 64 provides that a loss can be carried forward by a business for 5 years next preceding the tax year being assessed. If in the 7th year the business is still making losses, the first year loss will lapse, that is on a first in first out basis.

Losses that represent depreciation may be carried forward indefinitely.

Businesses in a loss situation cannot claim a deduction for gifts and donations to increase the loss.

9. Foreign Exchange Losses and Gains

Businesses have to account for tax purposes for all their foreign exchange gains and losses.

Exchange differences can only arise on foreign currency transactions

These exchange differences can occur between:

- the transaction date and the realisation date

- the transaction date and the translation date (i.e. the last day of the tax year)

Foreign Exchange gain is assessable income whereas foreign exchange loss is an allowable deduction. It does not suffice to assume there will be a loss or gain. The event must have actually been realised for it to be assessable or allowable,

10. Branch Profits Tax

Branch profits arising out of a branch operating in Seychelles is liable to tax in Seychelles akin to any other resident business operating in Seychelles. The rules of Section 21(1) applies

Profits arising out of a branch operating in Seychelles is taxed at the same rate as all other businesses, viz

0% on the first R.24,000 of taxable income

25% on the next R.24,000 of taxable income

30% on the next R.48,000 of taxable income

40% on the remainder

11. Group Taxation/Consolidated Returns

No group taxation.

12. Presumptive Tax Measures (for example, a minimum tax in the form of a gross asset tax)

No presumptive taxes.

13. Rates

The standard rates of tax payable by the owner of a business in respect of the taxable income derived by the business are:

0% on the first R.24,000 of taxable income

25% on the next R.24,000 of taxable income

30% on the next R.48,000 of taxable income

40% on the remainder

14. Rebates

Some Businesses in possession of an IPA Certificate are entitled to tax rebates (the type of which are defined in their Certificate)

15. Withholding Taxes

Section 82

Withholding Tax is applicable on income which consists of:

(a) a dividend that is paid by a company;

Resident - NIL

Non-resident - 15%

(b) a royalty that is paid by any person to a non-resident

Where SSF is paid - NIL

Where SSF is not paid - 15%

(c) interest that is paid by any person

Resident - NIL

Non-Resident - 15%

(d) amount distributed to a partner as the partner's share in the partnership profit

Resident - NIL

Non-Resident - NIL

(e) amount distributed to a beneficiary as his share of the income of a trust estate

Resident - NIL

Non-Resident - NIL

(f) notwithstanding any other provision of this Act, amount paid by the

Government or a public body to a non-resident by way of remuneration, fee or

allowance under a contract approved by the President - 5%

(g) amount paid any person in respect of services as a musician - 10%

(h) amount paid in respect of income paid to Interlotto Ticket Vendors - 10%

Section 83 stipulates that section 82 of the Act does not apply in the case of income that consists of interest which is paid to a bank, a finance company, an insurance company or a person whose principal business consists of the lending of money, or to income which is exempt income.

16. Beneficiaries of Revenue

The Government of the Republic of Seychelles.The funds realized by taxation are immediately remitted to Government for its use in economic and social development projects and normal government expenditure

C. Income Tax on Individuals (National Government)

1. Name of Tax and Levied in Terms of Which Act (Name, Number and Year

Seychelles does not impose an Income Tax, but only a Business Tax.

2. Department Responsible for Administration

3. Definition and Classification

4. Time Tax is Levied

5. Basis of Taxation

5.1 Source-based or residence based

5.2 If source, define:

5.2.1 Actual source

5.2.2 Deemed source

5.3 If residence,

5.3.1 Define resident

5.3.2 Exclusions from the definition of resident:

5.3.3 Ceasing of residency provided for in the Act

6. Included in Tax Base

7. Year of Assessment

8. Computation of Taxable Income

8.1 Exemptions (do not only indicate the heading, but provide a brief explanation)

8.1.1 Partial exemptions (amounts exempt irrespective of the identity of the recipient):

8.1.2 Absolute exemptions (taxpayers enjoying completed exemption from tax on income)

8.2 Deductions and recoupments

8.2.1 Allowable deductions

8.2.2 Valuation of inventory/trading stock

8.2.3 Reserves and provisions

8.2.4 Non-deductible expenses

8.2.5 Recoupments

8.3 Depreciable regime

8.3.1 Tangibles (movable and immovable assets, for example plant and machinery)

8.3.2 Intangibles/incorporeals (for example, copyright, patents, goodwill and other intellectual rights)

8.4 Treatment of losses

9. Foreign Exchange Losses and Gains

10. Rates

11. Rebates/Tax Threshold

12. Fringe Benefit Taxes (Benefits Flowing from an Employer-Employee or an Office Relationship)

13. Allowances

14. Treatment of Pension, Provident or Retirement Annuity Fund Income

15. Treatment of Professional Income

16. Treatment of Investment Income

17. Withholding Taxes

18. Beneficiary of Revenue

D. Income Tax on Non-Residents (National Government)

1. Name of Tax and Levied in Terms of Which Act (Name, Number and Year

The provisions of the Business Tax Act of 1987 are applicable to residents and non-residents.?As a result Non-resident persons doing business in Seychelles are liable to Business Tax or Withholding Tax in Seychelles depending on the nature of the income, so long as the income has a source in Seychelles.

2. Department Responsible for Administration

3. Included in Tax Base

4. If Sourced-Based, Define (If Not Already Done)

4.1 Actual source

4.2 Deemed source:

5. Rates

6. Beneficiary of Revenue

E. Income Tax: Treatment of Dividends, Interest, Royalties and Fees

1. Dividends

For the purposes of the Act, the term “dividend” includes:

(a) a part of a dividend;

(b) in relation to a company that is being wound up or liquidated, any amounts that are distributed to shareholders, other that such amounts which represent paid up capital subscribed for cash consideration; and

(c ) Any advances made by the company for the benefit of its shareholders or relatives of shareholders;but does not include:

(d) money paid by a company to a shareholder where such money is debited against any amount standing to the credit of a share premium account of a company; and

(e) money paid or credited to a shareholder to the extent that it is paid or credited as a result of the revaluation of property not used for the purpose of producing assessable income as detailed in Section 81 of the Act.For the rate at which tax is withhold, see B 15 above.

2. Interest

For interest to be exempt under section 19(2) the Minister of Finance:

- must issue a certificate exempting either in whole or in part from business tax, the income of a business where the business is owned by a non-resident

- and the Minister is of the opinion that any activities of the business has assisted in economic development of Seychelles, example loans from external parties for the economic development of Seychelles. Section 19 refers

Other interest are subject to a withholding tax.

For the rate at which tax is withhold, see B 15 above.

3. Royalties

The Business Tax Act contains a number of definitions of a Royalty, most of which are for avoidance of doubt. For example:

- royalty or royalties includes any payment, whether periodical or not, and however described or computed, to the extent to which it is paid as consideration for

(a) the use of, or the right to use, any copyright, patent, design or model, plan, secret formula, process or know-how, whether the know-how is technical, managerial or otherwise, trade mark, or any other intellectual property or right;

(b) the use of, or the right to use, any industrial, commercial or scientific equipment;

(c) the supply of scientific, technical, industrial or commercial knowledge, information or services; and

(d) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any property, equipment, knowledge, information or services referred to in this definition; and includes royalties or other amounts paid in respect of the operation of mines or removal of natural resources, but notwithstanding the preceding provisions of this definition, does not include any payment made as consideration for services performed by a non-resident travel agency for a resident travel agency.

For the rate at which tax is withhold on royalties, see B.15 above.

4. Fees

Fees e.g. management/consultancy fees are subject to Gods and Services Tax at the rate of 15% and also subject to Business Tax on the net profit for the business at the rates detailed in the First Schedule.

5. Rents

Commercial rent e.g. the rent of commercial complex, factories, warehouses, store rooms are subject to tax as per the rates in the First Schedule of the Act.Residential rent is as per the Second Schedule, exempt from business tax.

F. Income Tax: Specific Industries

1. Mining Tax

None

2. Insurance Business

In the case of a company carrying on life insurance business in Seychelles either exclusively or in addition to general insurance, the gains or profits are the investment income less the management expenses including commission

Where such a company receives premium income outside Seychelles, the gains or profits shall be the same proportion of the total investment income less the agency expenses in Seychelles.

Deductions for an insurance company are the direct or indirect management fees including commissions paid.

Section 67 specifically deals with the income and deductions of resident insurance companies other than life insurance business activities. In terms of the section income has to be calculated:

(a) by taking the total of the gross premiums and interest and other income received or receivable in Seychelles, (less any premiums returned to any persons and premiums-paid on re-insurances and less any dividends which have borne tax in accordance with the provisions of this Act) during the year preceding the tax year;

(b) by deducting from such total the reserve for unexpired risks at the percentage rate adopted by the company in relation to its operations as a whole for such risks at the end of such year and adding thereto a reserve similarly calculated for unexpired risks outstanding at the commencement of such year; and

(c) by deducting from the balance calculated in accordance with paragraphs (a) and (b) the following amounts:

(i) the actual claims paid or outstanding (less the amount recovered in respect thereof);

(ii) the agency expenses in Seychelles; and

(iii) a fair proportion of the expenses of the head office of the company

For Life Insurance businesses receiving premiums from people in Seychelles, the position is simply to include investment income derived in respect of moneys invested from all premiums received. The premiums themselves are not assessable income.

Deductions are allowed for direct/indirect management fees including commissions paid in reference to the operation of the life insurance business.

3. Farming

Taxed in the same manner as other businesses unless the taxpayer is an individual person carrying on the business of farmer and registered as such with the Ministry responsible for Agriculture. If so, the income is exempt.

4. Ships and Aircraft Owners

Ships and Aircrafts are taxed under Section 69 of the Act.Their taxable income is 5% of the amount paid or received in respect of carriage, irrespective of whether the amount is paid in or out of Seychelles.

5. Other

G. Income Tax: Administrative Procedures (National Government)

1. Payment Periods

There is no Personal Income Tax in Seychelles but rather a Business Tax.

Taxpayers are required by law to lodge a business tax return by the 31st March every year and a business tax assessment determined based on the actual declaration made in the business tax return.

The taxpayer is given 30 days after the service of the notice of assessment to effect payment

2. Rulings

2.1 Possibility of advance rulings

No formal procedure exists within the Act or Regulations

2.2 Publication of rulings

N/A

3. Codification of Revenue Practices

None

4. Refunds

Since taxpayers are issued with a provisional tax assessment at the beginning of each tax year and are required to pay their tax liability as determined therefrom in twelve monthly instalments, this credit is at the end of the year, allowed as a deduction against the business tax assessed and any excess provisional tax paid is refunded

5. Interest, Charges and Penalties

Provisional tax is 10% flat + 20% per annum as per Paragraph 6 and 10 of the Provisional Tax Regulations and 20% per annum on overdue Business Tax balances as per Section 123 of the Business Tax Act.

The Act makes provision for penalties in the case of:

False returns and statements;

False declarations;

Understating of income; and

Fraudulent avoidance of tax.

(S 144, 146, 147 and 148).

H. Income Tax: Anti-Avoidance Provisions (National Government)

1. Transfer Pricing Legislation

None

2. Thin Capitalisation Legislation

None

3. Controlled Foreign Entities (CFES)

None

4. Provide a Brief Discussion of General Anti-Avoidance Provisions (Both under common and statutory law)

Section 179 of the Business Tax Act provides that where a contract is entered for the purpose of evading taxes, example:

• to alter the incidence of any business tax
• relieve any person from liability to tax-prevent the operation of the Act

the Commissioner has the power to consider such contract void for the purposes of the Act

5. Transactions Between Connected Persons

None

I. Capital Gains Tax on Corporations (National Government)

1. Name of Tax and Levied in Terms of Which Act (Name, Number and Year

None

2. Department Responsible for Administration

3. Basis of Taxation (Source-based or residence-based)

4. Time When Tax is Levied

5. Included in Tax Base

6. Exemptions/Exclusions

7. Allowable Deducations

8. Non-Deductible Expenses

9. Roll-Overs

10. Treatment of Losses

11. Rates

12. Rebates

13. Tax Period

14. Withholding Taxes

15. Beneficiary of Revenue

J. Capital Gains Tax on Individuals (National Government)

1. Name of Tax and Levied in Terms of Which Levied (Name, Number and Year)

2. Department Responsible for Administration

3. Basis of Taxation (Source-based or residence-based)

4. Time When Tax is Levied

5. Included in Tax Base

6. Exemptions

7. Allowable Deducations

8. Non-Deductible Expenses

9. Treatment of Losses

10. Rates

11. Rebates/Annual Deduction

12. Tax Period

13. Withholding Taxes

14. Beneficiary of Revenue

K. Special Taxes (Other Than Income Tax) on Certain Industries/Types of Income

1. Name of Tax and Levied in Terms of Which Act (Name, Number and Year

Petroleum Income Tax Act provides for an income tax to be levied on petroleum income. However, as no oil is produced in Seychelle the tax is not imposed.

2. Department Responsible for Administration

3. Taxpayer

4. Included in Tax Base

5. Tax Rate

6. Beneficiary of Revenue

L. Taxation of Capital

1. Name of Tax and Levied in Terms of Which Act (Name, Number and Year

None

2. Department Responsible for Administration

3. Taxpayer

4. Included in Tax Base

5. Tax Rate

6. Beneficiary of Revenue

M. Donations Tax (National Government)

1. Name of Tax and Levied in Terms of Which Act (Name, Number and Year

None

2. Department Responsible for Administration

3. Taxpayer

4. Included in Tax Base

5. Tax Rate

6. Beneficiary of Revenue

N. Other (National Government) (National Government)

1. Name of Tax and Levied in Terms of Which Act (Name, Number and Year

None

2. Department Responsible for Administration

3. Taxpayer

4. Included in Tax Base

5. Tax Rate

6. Beneficiary of Revenue

O. Relief From Double Taxation

Double tax agreements are in force with:

• China;
• Indonesia; and
• South Africa

Seychelles is currently in the process of negotiating a number of Double Taxation Agreements with about 15 countries. However, none (other than that for South Africa) have been ratified and put into force.