Corporate tax in Seychelles

Summary
Corporate Income Tax Rate (%) 33 (a)
Capital Gains Tax Rate (%) 0
Branch Tax Rate (%) 33 (a)
Withholding Tax (%)
Dividends
15 (b)
Interest 0 to 33 (c)
Royalties from Patents, Know-how, etc. 15
Management Fees 15 (d)
Branch Remittance Tax 0
Net Operating Losses (Years)
Carryback 0
Carryforward 5

a) This is the maximum rate. For details regarding the rates, see Section B.

b) This withholding tax applies to dividends paid to nonresidents. The withhold­ing tax is considered to be a final tax. See Section B.

c) A 15% rate applies to interest paid by non-financial institutions to residents and nonresidents other than banks, finance companies or other enterprises that are principally engaged in the business of lending money. The withhold­ing tax is considered to be a final tax for nonresidents.

d) Management and technical fees payable to nonresidents are taxable at a rate of 15%. Management fees paid by financial institutions to nonresidents are subject to withholding tax at a rate of 33%. The withholding tax is considered to be a final tax.

Taxes on corporate income and gains

Corporate income tax. Under the Business Tax Act, resident and nonresident corporate and non-corporate businesses are subject to business tax on their income derived from the Seychelles.

A company is a resident of the Seychelles if it is incorporated there. In addition, a company not incorporated in the Seychelles that carries on business in the Seychelles is a resident if its central management and control are located in the Seychelles or if its voting power is controlled by shareholders who are residents of the Seychelles.

Rates of corporate income tax. Corporations and trustees are sub­ject to business tax at a rate of 25% on the first SCR1 million of taxable income and at a rate of 30% on the balance.

For telecommunications service providers, banks, insurance com­panies, and alcohol and tobacco manufacturers, the rate of busi­ness tax is 25% on the first SCR1 million of taxable income and 33% on the remainder.

Companies listed in the Seychelles securities exchange are sub­ject to business tax at a rate of 25%.

The Tourism Investment Act 2003 has been repealed. The Eighth Schedule to the Business Tax Act offers various tax incentives to certain businesses to encourage investment in the Seychelles. These incentives include reduced rates of business tax, tax credits, special deductions and accelerated depreciation. The businesses listed in the schedule include, but are not limited to, farming enti­ties, agricultural processors, fisheries processors, boat owners and persons carrying on the businesses of hotels, guesthouses or self-catering. The rates of business tax for businesses under this sched­ule are 0% on the first SCR250,000 and 15% on the balance.

Capital gains. Capital gains are not taxable in the Seychelles.

Administration. The tax year is the calendar year.

Annual tax returns are due on 31 March.

The tax shown on the annual tax return is payable on submission of the return.

Companies must make monthly provisional tax payments during the tax year, based on the income for the preceding year. The pay­ments are due by the 21st day of the month following the month for which a payment is due. At the beginning of each tax year, the Revenue Commissioner issues a provisional tax assessment, which sets out the required provisional payments.

Dividends. Withholding tax is not imposed on dividends paid to resident persons. Dividends paid to nonresidents are subject to withholding tax at a rate of 15%. Dividends received from non­resident companies are not taxable.

Foreign tax relief. Seychelles does not grant relief for foreign taxes paid.

Determination of trading income

General. Taxable income is the income reported in companies’ finan cial statements, subject to adjustments required by the tax law.

Expenses incurred to earn taxable income are deductible, unless they do not pertain to the business of the taxpayer.

Inventories. For tax purposes, inventory may be valued at the lower of cost or market value, or at replacement cost.

Provisions. Provisions are not deductible for tax purposes.

Tax depreciation. Under the Business Tax Act, hotels are de­preciated at a rate of 20% for the first year and 10% for the fol­lowing eight years. Other buildings, ships and aircraft are depre­ciated at a straight-line rate of 4%. Computers, research and de­velopment expenditure, data handling equipment and approved environmental machinery is depreciated at a rate of 40%. For other assets, normal depreciation is calculated using the follow­ing straight-line rates.

Asset Rate
Plant and machinery 20.00%
Office equipment 20.00%
Vehicles 20.00%

Capital expenditure of up to SCR100,000 on the assets described above is fully deductible in the year of expenditure.

Relief for losses. Business tax losses may be carried forward for five years for relief against future income of the same trade. Tax losses may not be carried back.

Groups of companies. Consolidated returns are not allowed. Each company must submit its own tax return.

Other significant taxes

The following table summarizes other significant taxes.

Nature of tax Rate (%)
Value-added tax
Standard rate 15
Rate for items listed in the First Schedule
of the Value-Added Tax Act
0
Contributions to Seychelles Pension Fund,
on monthly salaries and allowances paid
to employees; paid by
Employer 2
Employee 2
Trades Tax (customs duty), on imported goods Various
Tourism Marketing Tax; payable on annual
turnover by tourism operators listed in the
Eighth Schedule of the Business Tax Act,
banks, insurers and telecommunication
service providers, if they have annual
turnover of SCR1 million or more
0.5
Corporate social responsibility tax; payable
by businesses with annual turnover of
SCR1 million or more; tax payable at rate
of 0.50% of monthly turnover, but businesses
may elect to pay 0.25% of monthly turnover
and claim a 0.25% offset for donations,
sponsorships or projects paid for by the
business during the current year of payment
and approved by the Corporate Social
Responsibility Committee; alternatively,
the business may remit the entire 0.50%
of monthly turnover to the Seychelles
Revenue Commission
0.5

Miscellaneous matters

Foreign-exchange controls. The Seychelles currency is the Sey­chelles rupee (SCR).

Seychelles does not impose exchange controls. However, under the Foreign Exchange Act, a person, other than an authorized dealer, may not as a business buy foreign currency from or sell foreign currency to any person other than an authorized dealer.

Payments to, receipts from and transfers to and from a person out­side Seychelles with respect to international transactions must be made through authorized dealers.

Debt-to-equity rules. Seychelles does not impose any thin-capitalization rules.

Transfer pricing. Seychelles does not have transfer-pricing regula­tions. However, the Business Tax Act requires transactions between related parties to be conducted using internationally approved transfer-pricing guidelines.

Treaty withholding tax rates

 

Dividends Interest Royalties
% % %
Bahrain 5 5 5
Barbados 5 5 5
Bermuda 0 0/5 0/5
Botswana 5/10 (a) 7.5 10
China 5 10 10
Cyprus 0 0 5
Ethiopia 5 5 5
Indonesia 10 10 10
Isle of Man 0 0 5
Kenya 0/5 0/10 0/10
Luxembourg 0/10 0 0
Malaysia 10 10 10
Mauritius 0 0 0
Monaco 7.5 5 10
Oman 5 5 10
Qatar 0 0 5
San Marino 0/5 (c) 0/5 (c) 0/15
Singapore 0 12 8
South Africa 05/10/17 7.5 10
Swaziland 0/7.5 0/7.5 0/10
Thailand 10 10/15 (b) 15
United Arab Emirates 0 0 5
Vietnam 10 10 10
Zambia 5/10 (a) 5 10
Zimbabwe 10 10 10
Non-treaty countries 15 0 to 33 15

a) The 5% rate applies if the beneficial owner of the dividends is a company that holds at least 25% of the capital of the payer of the dividends. The 10% rate applies to other dividends.

b) The 10% rate applies to interest paid to financial institutions, including insur­ance companies. The 15% rate applies to other interest payments.

c) The dividend or interest is taxed in the contracting state if the beneficial owner of the dividend or interest is a resident of the other contracting state through a permanent establishment.

Tax treaties with Belgium, Kuwait, Lesotho, Malawi and Sri Lanka and have not yet been ratified.