Seychelles have been undertaking reforms

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The Seychelles Government will announce a series of tax reforms by the end of April. They will be aimed at expanding the tax base for businesses and changing tax rates.

Maurice Loustau-Lalanne, Minister of Finance, Trade, Investment, and Economic Planning, announced the upcoming reforms at the presentation of the 2020 OECD Tax Policy Review Report. Experts could not come to Seychelles due to an outbreak of coronavirus, so the meeting was online via Skype.

In March 2019, Seychelles appealed to the OECD for help, because at that time the tax system was complex and discriminated against certain sectors.

“The start of this assessment has been with the review of the Business Tax, as Government aims to level the playing field, reduce the tax burden on investors where it is present, and encourage entrepreneurship to flourish,” Lusto-Lalanne said.

The lowest level of business activity (15%) is shown by the following sectors:

  • Tourism

  • Agriculture

  • Fishing.

These sectors also have a tax-free threshold for the first $ 18,000 in profits (250,000 Seychelles rupees).

However, sole traders whose taxable income tax is less than 73,000 US dollars (1 million Seychelles rupees) may remain in the presumptive tax regime with a tax of 1.5% on turnover.

Small businesses are able to register as usual with exemption from first-income taxes of $ 11,000 (150,000 Seychelles rupees). Such companies start paying 25% tax only if taxable income is between 150,001 and 1 million Seychelles rupees. A tax of 30% is accrued on an income of over 1 million.

As for the high-tech sectors (telecommunications, banks, insurance companies, alcohol, and tobacco production), 25% tax is charged on first profit (1 million Seychelles rupees), profits above the threshold level are taxed at 33%.

“There is a need therefore to bring some uniformity, fairness, and equity in our business tax regime. The need to harmonize the business tax rates in the coming years by applying a new business tax rate schedule that applies to all businesses is our top priority, "said the Minister.

OECD spokesman Bert Brys said: “This [harmonization of tax rates] would entail lowering statutory tax rates on many operators while increasing tax levels on those that currently contribute little to the collection of revenues.”

The report also recommends expanding the business tax base by more accurately defining tax benefits.

For those paying a higher rate of 30 percent, we decided that we could reduce it to 15 percent as it would mean revenue loss. The recommendation was that we maintain the 15 percent on the first 1 million rupees of profit, and we implement a 25 percent tax rate above that 1 million. So those which were paying 30 percent will see a decrease in the amount they pay", explained Thesee