Seychelles
line-he
Asset protection
Anonymous banking
Cyprus

Introduction

The Seychelles are a group of 115 islands in the centre of the Indian Ocean, about 2,000 km east of Africa and to the north of Madagascar, lying mostly between 4 and 5 degrees south of the equator. The archipelago lies outside the cyclone belt so the weather is stable all year round, with an average maximum daily temperature of 29 degrees. Rain falls most heavily in December and January.

There are two groups of islands: the 32 quite closely grouped Granitic islands include Mahe, the principal island, while the 83 Coraline islands are spread out over a wide area between the Granitic group and Madagascar. Mahe itself is 27km in length and 12 kms wide with a total area of 154 sq kms; it is mountainous, rising to a peak of 905 metres.
The Seychelles environment is one of the most unspoiled in the world with many species of birds, fish and rich flora, some of which are unique.
Victoria, the capital, on Mahe has the deepest port in the Indian ocean. The international airport on Mahe has direct flights to many cities in Africa, Europe, the Middle East, Australia and the Far East.

The population of the Seychelles is approximately 82,000, of whom about 70,000 live on Mahe. The indigenous population is a well-fused mixture of African, Malagasy and French strains; the official languages are a French-based Creole, English and French, with Creole being the most widely used. Business is conducted in French and English.

Political System

The Seychelles is an independent republic and a member of the Commonwealth. Under the constitution of 1979, a unicameral People’s Assembly, comprising 34 seats (25 elected by popular vote, nine allocated on a proportional basis to parties winning at least 10% of the vote) is elected for a term of five years. Reforms to the constitution implemented in 1993 made way for a multiparty system after a long period of one-party rule. Currently the Assembly is dominated by the Progressive Front with 23 seats, while the National Party has 11.
The Executive President is elected for a five year term and may be re-elected three times. In 1996 the position of Vice President was created. In May, 2004, James Michel (previously Vice-President) became President, replacing France Albert Renee, who had been in office since 1977, and was last re-elected in 1998 with 59.5% of the vote. The Cabinet of 13 Ministers is appointed by the President.
The legal system originated from French civil law, but most modern criminal and business legislation is closer to Anglo-Saxon common law practice. There are magistrates’ courts, a Supreme Court, and a Court of Appeal.
Seychelles is a member of the Commonwealth, the UN, the OAU, and the Non-Aligned Movement, as well as a large number of other international bodies

Economy

Originally based on cotton-growing, the Seychelles’ economy switched to coconut plantations after the abolition of slavery. In modern times, tourism and fishing have become economic mainstays. Services account for 72% of the economy, while tourism contributes over 70% of foreign exchange earnings. The international airport, opened in 1971, handles 250,000 passengers annually.
The islands lie on many international shipping routes, so that cruise liners are a growing source of tourist business; the Government has also opened the Seychelles Industrial Trade Zone (SITZ) which is successfully targetting trans-shipment and re-processing trade.
The official unit of currency is the Seychelles Rupee, divided into 100 cents. Recently the official exchange rate against the dollar has been pegged at USD1 = SR7.99. However, in recent times the black market has been much higher, with the result that local prices have been very high.
After a reverse during the Gulf War, the economy rebounded, with growth averaging 4-5%. However, the artificially high exchange rate has held back tourism, and growth in 2002-2004 averaged only 1.5%. Growth turned negative again in 2005-06, but according to the Seychelles Central Bank, growth in excess of 5% is predicted for 2007 to 2008. Inflation was 5.7% in 2007. The public finances are not strong, and a budget surplus of 7% in 2003/2004 had turned into a small deficit by 2006. Unemployment, which was recently recorded at levels of 10%, moderated to 2% in 2006. GDP per head is USD16,600 (2007 est).
Tourism was damaged by 9/11, and just as the islands were recovering in 2004, with economic reforms under the new president beginning to have an effect, the Asian tsunami dealt a very heavy blow to the Seychelles, severely damaging tourism, infrastructure and the fishing industry. GDP fell by 3% in 2005. The longer term economic effects are not yet clear.
In the last 20 years the Government has made a sustained effort to attract ‘offshore’ financial services, particularly in banking and insurance.
Most of the country’s debt with sovereign partners has been frozen as a result of a one-year moratorium announced by the Paris Club for countries affected by 2004 tsunami.

Business Environment

The Seychelles is politically stable, with good air and sea transport links and modern telecommunications. The Government has been consistently business-friendly over a long period, and has actively supported the development of the offshore sector. Inevitably, in a country this small, professional services do not have the breadth available in a larger jurisdiction, but there are adequate banking and legal facilities.

There is no discrimination against foreigners with a serious business purpose, except that they need official approval to own land. There are licensing regimes for financial institutions and trust managers. There is an adequate level of secrecy in professional transactions, but the Court can order disclosure under a number of international agreements. The Anti-Money Laundering Act 1996 allows the Central Bank to overturn suspect transactions.

Seychelles International Trade Zone

The International Trade Zone Act 1995 and the International Trade Zone Regulations 1995 provide for the establishment of free trade zones, which are delimited by a declaration of the Finance and Communications Minister, and can be for one company or many. The existing International Trade Zone (SITZ) on Mahe is established under the Act. Activities within the Zone are governed by the Seychelles International Business Authority (SIBA), which issues licenses to incoming companies.

The concessions available to licence holders in SITZ include:

• Exemption from customs duties on capital equipment to be used in SITZ;
• Exemption from Business Tax, Trades Tax and Withholding Tax;
• Exemption from social security contributions;
• Exemption from fees in respect of ‘gainful occupation permits’ (work permits);
• Entitlement to employ 100% foreign labour;
• A licence holder can apply for permission to sell within the domestic sector.

Seychelles Foreign Investment Regime

The Seychelles government is keen to create a suitable environment for foreign investment. The Investment Promotion Act 1994 legislates inward investment Incentives are granted to approved projects in the domestic and export sectors, including tourism, agriculture, manufacturing and the service industries. Procedures for approval have been streamlined and the incentives include the following:

• Following the issue of a Certificate of Approval, subsequent tax changes cannot be to the detriment of the investor;
• Exemption from import duties on primary and intermediate inputs;
• Entitlement to employ 50% of foreign staff (first 25% at special rate of SR 500 per month; next 25% at the standard rate of SR 1,500 per month);
• Accelerated depreciation up to 150% for certain asset classes;
• Concessionary business tax rates of 15% (usually 40%) plus credits giving an effective rate of 9%.

For substantial investments, further incentives can be obtained from the Government on a negotiated basis. The International Corporate Service Providers Act, 2003, substantially improved and simplify the regime for incoming investment. Previously, the Seychelles International Business Authority (SIBA) had power to issue a licence to offshore businesses, but entitlement to fiscal concessions depended on obtaining a certificate from the Ministry of Finance under the Investment Promotion Act.

The new Act streamlined the procedure for establishing an offshore business, avoiding the need for a separate IPA application to the Finance Ministry.
In June, 2004, the creation of the Seychelles Investment Bureau (SIB) brought the country’s promotion and facilitation of investments under one umbrella, offering a focal point of contact for all matters relating to investment in Seychelles. SIB has been mandated to coordinate the development of the Investment Code, an instrument that will allow a more transparent and stable investment environment.
In September, 2005, SIB launched a new website, which is intended to act as the main marketing tool and the first point of contact for domestic and foreign investors who are considering doing business in the country.
The SIB, established in 2004, is a semi-autonomous executive arm of the President’s Office. Besides promoting the Seychelles as an investment and business centre, the SIB’s other functions include:

• acting as the central agency of the Government dealing with matters relating to business and investment in Seychelles;
• facilitating investment projects and business activities;
• coordinating investment promotion policies, planning and marketing strategies to attract investments;
• facilitating and coordinating incentive schemes established by law to encourage investments;
• and advising the Government on investment policies and elimination of administrative and other barriers to the flow of investments.

In July, 2005, the Investment Bureau celebrated its first year of existence. During that period, the institution has approved more than 100 development projects valued at around R1 billion (US$192,600).

There are three major categories of investments: (i) tourism; (ii) residential and commercial projects, (iii) industrial projects. The tourism projects total some R800 million and these represent foreign direct investment (FDI), projects by Seychellois-foreign partnerships, or projects by Seychellois alone. In the other sectors of investment, the majority of promoters are Seychellois.

Economic Environment

Since Seychelles’ independence in 1976, per capita output in this Indian Ocean archipelago has expanded to roughly seven times the old near-subsistence level. Growth has been led by the tourist sector, which employs about 30% of the labor force and provides more than 70% of hard currency earnings, and by tuna fishing. In recent years the government has encouraged foreign investment in order to upgrade hotels and other services. At the same time, the government has moved to reduce the dependence on tourism by promoting the development of farming, fishing, and small-scale manufacturing. The vulnerability of the tourist sector was illustrated by the sharp drop in 1991-92 due largely to the Gulf War. Although the industry has rebounded, the government recognizes the continuing need for upgrading the sector in the face of stiff international competition.

he services sector–including transport, communications, commerce, and tourism–has accounted for close to 70% of GDP in recent years. The share of manufacturing has been between 15-20% of GDP, although it fluctuates from year to year owing to changes in output from the Indian Ocean Tuna cannery. Public investment in infrastructure has kept construction buoyant, with its share of GDP at around 10%. Given the shortage of arable land, agriculture, forestry, and fishing (excluding tuna) make a small contribution to national output.

GDP in 2007 was at $710 million (official exchange rate) and income per capita was at $16,600 (purchasing power parity). This puts the island in the World Bank’s “upper middle-income” bracket with the result that Seychelles is low on the agenda of international donors and aid flows are limited. However, given the small size of the economy, the island remains vulnerable to external shocks.

Although the per capita income is over $16,000 (PPP), residents often have difficulty obtaining even basic foodstuffs, such as rice and sugar. Government mismanagement and excessive economic regulations, including a manipulated exchange rate, have resulted in foreign exchange shortages and a parallel market currency exchange rate double the official rate.

In 2005 and 2006, the government implemented several measures toward the liberalization of the trade regime and the privatization of state-owned entities, such as the removal of import licenses and the partial sale of the public insurance company SACOS. In October 2006, the Minister of Finance announced measures to start the process of a gradual liberalization of foreign exchange transactions. These limited measures, however, are unlikely to influence an agreement with the International Monetary Fund (IMF), which continues to press for devaluation as an important step toward resolving the persistent shortage of foreign exchange.

Although Seychelles is eligible for the African Growth and Opportunity Act (AGOA), it has failed to take advantage of AGOA thus far. Seychelles is not qualified for apparel benefits under AGOA and, in any case, its apparel manufacturing capacity is negligible.
GDP (2007, official exchange rate): $710 million.

Economy Facts:

Annual growth rate (2007):
6.3%.

Per capita income (2007, purchasing power parity):
$16,600.

Average inflation rate (2005):
0.9%.

Natural resources:
Fish.

Agriculture:
Copra, cinnamon, vanilla, coconuts, sweet potatoes, tapioca, bananas, tuna, chicken, teas.

Industry:
Tourism, re-exports, maritime services.

Trade:
Exports (2007)–$400 million: canned tuna, frozen/fresh fish, frozen prawns, cinnamon bark. Imports (2007)–$720 million. Major partners–France, Italy, U.K., Singapore, South Africa, Spain, Saudi Arabia.

GDP – composition by sector:
agriculture: 3,2%
industry: 30,4%
services: 66,4% (2005 estimate)

Labor force:
26,000 (1996)

Labor force – by occupation:
industry 19%, services 57%, government 14%, fishing, agriculture, and forestry 10% (1989)

Budget:
revenues: $343,3 million
expenditures: $332,2 million, including capital expenditures of $36 million (1994 est.)

Exports: $312,1 million (f.o.b., 1998)

Exports – partners:
UK 27.6%, France 15.8%, Spain 12.7%, Japan 8.6%, Italy 7.5%, Germany 5.6% (2004)

Imports:
$459,9 million (c.i.f., 2005)

Imports – partners:
South Africa, United Kingdom, People’s Republic of China, Singapore, France, Italy
Debt – external: $276,8 million (2005 est.)

In addition to the now booming tourism and building/real estate markets, Seychelles has renewed its commitment to developing its financial services sector. Government officials and industry participants believe this could overtake the tourism industry as the chief pillar of the economy by 2017. Indeed, the popularity of Seychelles in the offshore world is growing immensely with the sector setting records each of the last 4 years in a row. The recent passage of a revised Mutual Fund Act 2007, Securities Act 2007 and Insurance Act 2007 are meant to be the catalysts to move Seychelles from just another offshore jurisdiction to a full fledged Offshore Financial Center (OFC).
The Seychelles International Business Authority (SIBA) is charged with overseeing the quickly growing offshore industry. Seychelles is home to a number of offshore incorporation specialists including firms like Sterling Offshore Ltd., a Seychelles based firm of legal and business consultants specialising in offshore company formation, mutual funds, hedge funds and captive insurance.

Offshore Environment

History

Offshore business in Seychelles began its development in 1994 when the Government launched a series of legislative initiatives aimed at establishing the country as a thoroughly modern, world-class international offshore financial centre. Much of the legislation was based on that of successful jurisdictions such as the British Virgin Islands and the Bahamas.

In 1994 legislation was enacted covering the registration of offshore companies, offshore trusts and the licensing of international trade zone companies. Additional legislation was introduced covering the licensing of offshore banks, offshore insurance companies and the establishment of a securities industry; and in 2003, the government legislated for additional types of company: Special Licence Companies, Protected Cell Companies and Limited Partnerships.

The Seychelles International Business Authority (SIBA) was set up by the Seychelles International Business Authority Act 1994 to administer the offshore sector and deals with the registration of offshore companies as well as supervision of the Seychelles International Trade Zone (SITZ).
In May, 2003, the government said it wanted the offshore sector to become a ‘third pillar’ of the economy, revealing that SIBA’s efforts had led to a 40% increase in offshore incorporations.

At the end of 2004 there were more than 17,000 International Business Companies in the Seychelles. By 2008 the number of IBCs on the register had surpassed 50,000, making the Seychelles one of the fastest growing offshore centres in the world. An Interactive Gambling Bill was also passed in 2003, which incorporates this aspect of the gaming industry into existing law.

The International Corporate Service Providers Act, 2003, substantially improved and simplify the regime for incoming investment. Previously, the Seychelles International Business Authority (SIBA) had power to issue a licence to offshore businesses, but entitlement to fiscal concessions depended on obtaining a certificate from the Ministry of Finance under the Investment Promotion Act. The new Act streamlined the procedure for establishing an offshore business, avoiding the need for a separate IPA application to the Finance Ministry.
In July, 2004, it was announced that the promotion of the Seychelles investment sector is to become the responsibility of a new body, the Seychelles Investment Bureau (SIB), which will take on the task from a number of other government offices. Chief executive officer of the SIB, Joseph Nourrice, explained that the bureau will act as a one stop shop for the investment community and will coordinate all promotion activities. “The amount of procedures will be reduced tremendously,” he observed.

Previously, the Investment Desk at the Ministry of Finance had played a large part in the jurisdiction’s promotional activities, and the SIB has assumed the promotional role previously taken on by the Seychelles International Business Authority, which now concentrates on regulation.

An immediate priority for the SIB was the drafting of an investment code for the Seychelles which according to Mr Nourrice “will act as the backbone for our marketing tools”.
In August, 2005, SIBA said that the Seychelles’ offshore financial industry intend to boost the industry’s annual turnover to US$300 million per year over ten to fifteen years, transforming the offshore financial services sector into the largest pillar of the Seychelles’ economy.
Speaking to the Seychelles Nation, Ahmed Afif, managing director of the Seychelles International Business Authority (SIBA) envisaged a doubling in the number of offshore services providers, an increase in the number of licensed offshore banks from one to five, the establishment of a business park and significant growth in the 150-strong workforce currently employed by the offshore sector.

In March 2007, President James Michel announced in his annual State of the Nation address that the government was looking to expand the offshore sector with the addition of new products, including mutual funds, special license companies, a stock exchange and new products and services in the insurance sector, some of which have already been incorporated into legislation.

Offshore operations may take place within the following forms:

• Limited or Unlimited Companies Act Company
• International Business Company
• Limited Life Company
• Trust
• Special Licence Company (formed under the Companies Act)
• Limited Partnership

International Business Companies are permitted various activities within the Seychelles without compromising their offshore status under the Act; these include:

• professional contacts with lawyers, accountants etc.;
• preparation and maintenance of books and records;
• the holding of directors’ or shareholders’ meetings;
• ownership of shares in other Seychelles companies, whether under the Act or the 1942 Companies Law;
• ownership of Government or Central Bank securities;
• ownership of a vessel registered in Seychelles.

Companies operating within the Seychelles International Trade Zone may apply to the Seychelles International Business Authority, which governs its operations, to conduct trade with Seychelles partners or customers outside the Zone. Income from such activity must be accounted for separately, and will be subject to the Business Tax.
Banks and insurance companies operating offshore under license are prohibited from domestic trading, for which a separate license would be required; however they can undertake local activities broadly similar to those sketched out above for IBCs.

Incentives

Seychelles Insurance

The Insurance Act 1994 is modelled on the Insurance Act of Singapore; 1995 amendments provide for the licensing of offshore insurance companies, insurance managers and principal insurance representatives; captives are also covered by the Insurance (Non-Domestic Insurance Business) Regulations 1996. In 2003 the Protected Cell Companies Act, 2003 was passed. A PCC is a Seychelles domestic company that has the right to create one or more identifiable cells so as to segregate and protect cellular assets as permitted under the Act.
In 2008, new legislation was introduced, in the form of the the Insurance Act 2008.
Licensing of domestic and non-domestic (offshore) insurance companies is in the hands of the Insurance Authority under the Minister of Finance and Communications. Licenses are granted only to companies incorporated under the Companies Act 1972 or foreign companies which have registered under the Companies Act.
Applications for licences include at least the following information:

• A business plan detailing the extent of the commercial operations intended;
• Memorandum and Articles of Association, and enabling Board Minute;
• Certificate of incorporation or registration;
• List of shareholders, directors and managers including their addresses, nationalities and detauls of their relevant insurance expertise;
• Three references, one being from a reputable international financial institution.

The minimum paid up capital for general or life insurance companies is US$125,000, for reinsurance companies, US$1million, and for captive insurance companies, US$70,000. These sums must be deposited at a bank licensed by the Seychelles Central Bank (see above). Domestic insurance companies need minimum capital of SR 2m, of which 30% must be invested in prescribed Government securities, and must have adequate reinsurance arrangements. The Insurance Authority imposes a number of continuing prudential and supervisory requirements on insurance companies.
All licensed offshore (non-domestic) insurance companies are exempted from Seychelles taxes and duties for a 20 year period from the date the licence was granted, although a non-domestic insurer may elect to pay business tax in Seychelles on its taxable income as agreed with the Commissioner of Taxes.

Seychelles Investment Fund Management

The Government intends to foster the creation of a Mutual Funds sector in the Seychelles, and enabling legislation was put in place in 1997. The regulations made under the Act provide for a modern regulatory system aimed at attracting international mutual funds promoters from around the world.

Funds may be established either as investment companies or unit trusts. In the case of investment companies, a wide choice of vehicles are available. All funds must have a registered office and a licensed administrator in Seychelles.

The Act provides for a licensing regime for mutual funds and mutual fund administrators under the Central Bank. Licensed banks, insurance companies and International Business Companies are excluded from the operation of the Act. Applicants for licenses would need to be companies incorporated under the Companies Act 1972 or foreign companies which have registered under the Companies Act, or unit trusts.

An overseas mutual fund needs to have a local managing agent, or in the case of a unit trust, a resident trustee. The Act imposes prudential responsibilities on the Bank, and lays down some general principles for offering documents. A private mutual fund must have minimum paid-up capital of US$5m held by not more than 50 investors; a public fund needs authorised share capital of at least US$2m of which at least US$1m is paid-up (or issued and fully-paid in the case of a unit trust), or it can be listed on a recognised exchange.
Licensed mutual funds and fund administrators are exempt from taxes, including social security taxes.

In 2008, new legislation was introduced, in the form of the the Mutual Funds And Hedge Funds Act 2008.

Seeking to build on the success of the financial services industry, Seychelles’ the Mutual Fund Act was redrafted in 2008 to plug gaps in the previous legislation. The redraft extended the powers of the regulator, introducing additional rights to request periodical audits, request information for inspection and grant powers to enter, search and take copies of any licensed operations and guaranteeing compatibility with international standards enforced by FATF, IMF, International Organisation of Securities Commission and Offshore Group of Insurance Supervisors.
“As with all areas of the financial services industry it is essential that we, as the regulator of the jurisdiction, achieve the appropriate balance in the legislation between providing local firms with the competitive advantage they require, at the same time as ensuring that it is a well regulated industry which conforms to the international standards required to maintain investors’ confidence,” explained Conrad Benoiton, the Director General of the Central Bank’s recently created Securities and Financial Markets division, which is responsible for the registration as well as regulating and supervising of non bank business activities.
The redrawn legislation also allows expatriate employment levels of up to 50%, replicating existing regulations for the offshore sector, which have not negatively impacted upon the local labour market. The newly drafted legislation is also intended to bolster banking and legal services necessary for mutual fund operations.

Seychelles Ship Management and Maritime Operations

The Merchant Shipping Act 1992 governs the shipping industry in the Seychelles. Ships and yachts may be registered in the Seychelles under the terms of the Act. Consular and diplomatic representatives of Seychelles abroad are also empowered to issue provisional certificates of registration to vessels satisfying the ownership and registration criteria. The shipping law also provides for parallel registration of bareboat charters in the Seychelles registry; likewise, a Seychelles vessel may be parallel-registered abroad during chartering.
An International Business Company is the most effective vehicle for offshore ownership of a Seychelles-registered vessel or ship management operation. Such a company will be exempt from Seychelles taxation on profits and dividends. Sale and transfer of Seychelles-registered vessels or the companies owning them are also free of tax, as are the salaries of officers and crew of Seychelles-registered vessels operating internationally.

A normal range of documentation is required for Seychelles registration of a vessel. The age limit for registration is 15 years. The Government recognises most leading classification societies; for surveying and certification purposes the Government has appointed American bureau of Shipping, Bureau Veritas, Nippon kaiji Kyokai and Det Norske Veritas.
The Civil Aviation Act (amended in 1996) provides the framework for the registration of aircraft mortgages. As with ship registration, consular and diplomatic representatives of Seychelles abroad can issue provisional certification of registration.
The Seychelles is an increasingly popular centre for the leasing and insurance of ships and aircraft.

Taxation

Offshore Seychelles entities are subject to the following fee and tax structures:

International Business Companies

International Business Companies pay $ 100 registration fees.
The continuing annual renewal fee for IBC status is the same amount. There is a scale of fees in the International Business Companies Act covering inspection of documents in the Registry, copies of entries, increase of capital etc. etc. The fee levels are fixed for the life of an IBC, whatever subsequent changes may take place to fee levels.

IBCs are exempt from the Business Tax, from withholding taxes and from Stamp Duty; however they pay social security contributions on the salaries of employees unless the IBC is in the International Trade Zone or the employees are crew members of a ship in international waters.

Offshore (Non-Domestic) Banks

Offshore (Non-Domestic) Banks pay a license application processing fee of $2,000 and an annual license fee of $15,000. Banks are exempt from the Business Tax and withholding taxes, from customs duties and from Stamp Duty. They can if they wish elect to pay Business Tax at a rate which is agreed with the Commissioner of Taxes. Banks pay social security contributions in respect of their employees.

Offshore (Non-Domestic) Insurance Companies

Offshore (Non-Domestic) Insurance Companies pay license application processing fees and annual license fees as follows:

• License application processing fee $500 for an offshore license;
• Annual license fee $1,500 for either offshore general insurance or offshore life insurance;
• Annual license fee $3,000 for both offshore life and general business;
• Annual license fee $1,000 for a single-parent captive insurer.

Offshore insurance companies are exempt from the Business Tax, from withholding taxes, from customs duties and from Stamp Duty. They can if they wish elect to pay Business Tax at a rate which is agreed with the Commissioner of Taxes. There is a guarantee of exemption from future taxes for 20 years from the time of registration. Insurance companies pay social security contributions in respect of their employees.

Limited Partnerships

Limited Partnerships pay a registration fee of US$200. They may receive income from sources outside of Seychelles and distribute such income to foreign partners without incurring a Seychelles tax liability. In addition:

• An LP is exempt from all Seychelles tax or duty on income or profits of the LP;
• An LP is exempt from stamp duty on property transfers, share transfers and other business transactions;
• An LP is exempt from trades tax on all furniture and equipment imported into Seychelles for office use;
• An LP has exemptions under the Social Security Act.

These exemptions granted under the LP Act are guaranteed for twenty years and continue in force thereafter unless otherwise provided for by written law.

Special Licence Companies (CSL)

Special License Companies pay a US$200 application fee, an annual licence fee of US$1,000, and a US$200 annual filing fee. They may carry on permitted business inside as well as outside of Seychelles. The CSL entity is a Seychelles domestic company (under the Companies Act 1972), which is granted a special licence under the Companies (Special Licence) Act and has access to Seychelles’ steadily expanding network of double taxation avoidance treaties – of particular interest is its DTA with China.

In addition:

• A CSL is liable to Seychelles business tax at the rate of 1.5% on its world-wide income (as an exception to the Seychelles territorial tax system, any foreign income derived by a CSL will be deemed to be Seychelles-sourced income);
• A CSL is exempt from from withholding taxes on dividends, interest and royalties.
• A CSL is exempt from stamp duty on property transfers, share transfers and other business transactions.
• A CSL is exempt from trades tax on all furniture and equipment imported into Seychelles for office use.
• A CSL has exemptions under the Social Security Ac and from work permit fees for expatriate workers.

These exemptions granted under the CSL Act are guaranteed for ten years and continue in force thereafter unless otherwise provided for by written law.

Corporate legislation

General

The vast majority of companies formed in the Seychelles for offshore purposes are incorporated under the International Business Companies Act 1994 (see below). However this law did not supersede the existing Companies Law 1972, which is based on English law and is used to form various types of company used by businesses trading in the Seychelles, and also for offshore businesses which are not permitted to use the IBC form, such as banks, insurance companies and mutual funds.

Companies formed under the Companies Act 1972 can be private companies limited by shares, by guarantee, or hybrid; or they can be unlimited, but that is rare. Public companies can also be formed under the Act. For all these types of company, Memorandum and Articles of Association must be filed at the Companies Registry, along with the registration fee.
Foreign companies can re-establish themselves in the Seychelles by way of continuation without the necessity for reciprocal arrangements in the original country of incorporation. An IBC wishing to leave the Seychelles may do so.
In 2003, the government legislated for additional types of company: Special Licence Companies, Protected Cell Companies and Limited Partnerships.

Seychelles International Business Company

The International Business Company is the most widely used vehicle for offshore operations in the Seychelles; it normally takes the form of a private company limited by shares, but can also be a Limited Life Company.

The governing legislation is the International Business Companies Act 1994. Statutory requirements are minimal, and flexible:

• Only one director and one shareholder are required;
• Shareholders, directors and officers need not be resident in the Seychelles and there is no stipulation as to their nationality;
• There is no minimum capital requirement; shares may be either registered or bearer and may be issued in any currency;
• Accounts need not be kept; however, if they are kept there is no requirement for an audit.
• No returns are needed of shareholders, directors or officers;
• Shareholders and directors meetings need not be held in the Seychelles and can be held by telephone;
• The Memorandum and Articles of Association are the only documents to be held on the public record.

IBC status is granted subject to certain conditions:

• No business may be transacted with residents of the Seychelles;
• No ownership interest in real property in the Seychelles is permitted; property may be leased for office use only;
• Banking or trust business may be carried on only if an appropriate license is issued;
• Likewise, a licence is required to carry on insurance or re-insurance business;
• Engaging in the business of company management or providing registered facilities for Seychelles-incorporated companies is not permitted.
IBCs are permitted various activities within the Seychelles without compromising their offshore status under the Act; these include:

• professional contacts with lawyers, accountants etc;
• preparation and maintenance of books and records;
• the holding of directors’ or shareholders’ meetings;
• ownership of shares in other Seychelles companies, whether under the Act or the Companies Act 1972;
• ownership of Government or Central Bank securities;
• ownership of a vessel registered in Seychelles.

It is usual to use a registered agent in the Seychelles to incorporate an IBC (eventually it is obligatory to appoint one anyway). Fees for incorporation of an IBC are based on the company’s authorised share capital. Normally, the incorporation process takes no more than one day; however, for banks, trust companies and insurers the process is lengthier
Statutory incorporation fees used to be $100 for capital up to $100,000, and $1,000 for capital over $100,000. However, there is no longer any increase in licensing fees for share capital above $100,000. Share capital is unlimited.
The annual renewal fees are also set at $100, but are subject to a 7.5% tax. These fee levels are fixed for the life of the company, whatever changes may be made for new companies.

Seychelles Special Licence Company

Special Licence Companies (CSL) are formed under the Companies (Special Licence) Act, 2003 (the Act). Unlike the IBC, a CSL may carry on permitted business inside as well as outside of Seychelles. The CSL entity is a Seychelles domestic company (under the Companies Act 1972), which is granted a special licence under the Act. A CSL has substantial statutory tax advantages including access to the Seychelles Double Tax Agreements, of which that with China is of particular current interest.

Key features of the CSL are as follows:

• A CSL may carry on any business as permitted under the Schedule to the Act – including as an international holding company, a headquarters company, a franchise company, a marketing company, a company holding intellectual property, an investment company, etc.
• Bearer shares are not permitted;
• Nominee shares are permitted, but the name and address of beneficial owner is required to be disclosed to the Registrar of Companies. This information is not made publicly available by the Registrar.
• Foreign shareholders are permitted;
• There is a minimum of 2 Directors, who may be located outside of the Seychelles;
• A Seychelles-resident Company Secretary is required;
• Directors’ or shareholders’ meetings can be hekd anywhere, including by telephone or video-link;
• An annual company return and audited accounts must be filed;
• There is provision for “redomiciliation” – a foreign or Seychelles IBC may be continued as a CSL – and an CSL may redomicile to another jurisdiction.

Seychelles Limited Partnership

Limited Partnerships (LP) are formed under the Limited Partnership Act, 2003 (the Act). An LP has substantial statutory tax advantages including the ability to receive income from sources outside of the Seychelles and distribute such income to foreign partners without incurring a Seychelles tax liability. A Seychelles LP is highly-suitable for international joint venture activities.

Key features of the LP are as follows:

• The LP is required to have one or more general partners who are liable for the debts of the LP, and one or more limited partners who are not so liable in most circumstances.
• At least one general partner must be a Seychelles person (either a resident individual or an IBC or domestic company or CSL or an LP);
• A Seychelles registered office is required;
• An LP shall not carry on business in Seychelles, except to the extent necessary for the carrying on of the LP’s business outside of Seychelles;
• An annual certificate must be filed verifying compliance by the LP with the provisions of the Act.

Seychelles Protected Cell Company

Protected Cell Companies (PCC) are formed under the Protected Cell Companies Act, 2003 (the Act). A PCC is a Seychelles domestic company that has the right to create one or more identifiable cells so as to segregate and protect cellular assets as permitted under the Act. While each cell created by a PCC is separately identifiable and may have its own cellular assets, no cell will constitute a legal entity separate from the company (ie. only the PCC is a separate legal entity).

The Directors of a PCC have a duty to keep cellular assets separate from non-cellular assets, and to keep the assets attributable to each cell separate from the assets attributable to other cells. Liabilities attributable to a particular cell of a PCC cannot attach the assets of other cells.
As in other jurisdictions, the PCC has particular use and appeal for captive insurance and collective investment scheme applications. It is likely that approval will be limited to these areas and for non-domestic business only.

Seychelles Trusts

The International Trusts Act 1994 established, for the first time, a regime for international trusts in the Seychelles; it does not provide for domestic trusts. The Act was drafted after a thorough study of current practice in a number of leading offshore jurisdictions. Under the Act, the Seychelles International Business Authority (SIBA) is appointed as the regulatory body for trusts, alongside the Court.

The following are some of the key features of the Seychelles Trust regime:

• An international trust may be created in writing, by will or by oral declaration; deemed trusts are admitted, as are those resulting from a decision of the Court;
• Purpose trusts are permitted;
• The settlor must reside outside the Seychelles for the duration of the trust; at least one trustee must reside in the jurisdiction, but this trustee may be an IBC, which shall not thus be deemed as resident; an IBC may therefore be a settlor;
• The trust property may not include any Seychelles movable or immovable property.
• The names of settlors and beneficiaries are confidential under the Act, unless a Court orders disclosure under the Anti-money Laundering Act;
• The standard perpetuity period is 100 years; but it does not apply to purpose trusts;
• The accumulation of income is permitted;
• Forced heirship judgements are specifically excluded.

An international trust is exempt from tax in the Seychelles; a registration fee of $100 is payable to SIBA. Registration of trusts must be carried out by one of the two licensed trustees currently operating in the Seychelles.

Banking

Banking in the Seychelles is governed by the Financial Institutions Act 1984 as amended in 1995. Licences are issued by the Offshore Banking Department of the Central Bank and are granted only to companies incorporated under the Companies Act 1972 or foreign companies which have registered under the Companies Act. Licenses are issued for domestic banking, offshore banking, or both. When both are conducted, it must be through separate offices. Offshore banks are permitted to operate numbered accounts for their clients.
Applicants must supply extensive information to the Central Bank, including copies of the last three balance sheets and a business plan. The Bank imposes various prudential requirements and requires monthly balance sheet submissions.
All licensed offshore (non-domestic) banks are exempted from Seychelles taxes and duties for a 20 year period from the date the licence was granted, although a non-domestic bank may elect to pay business tax in Seychelles on its taxable income as agreed with the Commissioner of Taxes.

Although foreign banks operate branches in Seychelles, the government owns the two local banks — the Development Bank of Seychelles, which mobilizes resources to fund development programs, and the Seychelles Saving Bank, a bank for savings and current accounts.
The following banks are licensed and regulated by the Central Bank of Seychelles:

• Bank of Baroda
• Banque Francaise Commerciale Ocean Indien
• Barclays Bank
• BMI Bank
• Development Bank of Seychelles
• Habib Bank
• Nouvobanq
• Seychelles Savings Bank

The objectives of the Central Bank of Seychelles as per the Central Bank of Seychelles Act 2004 are;

a) to regulate the issue, supply and availability of money and its international exchange;
b) to promote price stability and the maintenance of both domestic and external value of the Seychelles currency;
c) to advise the Government on banking, monetary and financial matters, and in particular on the monetary implications of proposed fiscal or credit policies or operations of the Government;
d) to promote internal and external monetary stability;
e) to promote a sound financial structure;
f) to foster financial conditions conducive to the orderly and balanced economic development of Seychelles; and
g) to perform such other functions as may be assigned to the Bank by any law.
The Anti-Money Laundering Act 2006 established a Financial Intelligence Unit (FIU) as a unit of the Central Bank, bringing the Seychelles’ anti-money laundering regime more into line with international practices.

The FIU has the authority to request information considered relevant to an offence under the Act, and from reporting entities, supervisory agencies and law enforcement agencies. The FIU may enter into agreements with foreign states to facilitate the exchange of information to assist investigations into suspected cases of money laundering and terror financing.
The Anti-Money Laundering Act requires reporting entities to take “reasonable measures” to ascertain the purpose of any transaction in excess of SR100,000, or of SR50,000 in the case of cash transactions, and the origin and ultimate destination of the funds involved in the transactions.