Seychelles Factfile



Country Status


Head of State

President France Albert Rene

Ruling Party:

Seychelles People Progressive Front




455.3sq km



Official language:

English, French, Creole


Seychelles Rupee

Hours of Business:

08.00 to 16.00



Unemployment Rate


Corporate Tax

25% - 40%

Personal Tax


1. Domestic Tax Provisions

In December 1994, the Seychelles Government opened a new Chapter in the history of Seychelles by embarking upon an ambitious and comprehensive legislative programme in order to diversify the Seychelles economy and transform this archipelago of the Indian Ocean region into a successful International Financial and Business Services Centre. This programme has introduced a fundamental distinction between domestic and international tax provisions in the Seychelles tax system. As a result, there is now no doubt that Seychelles falls into the category of international financial and business services centres which both levy no tax at all on certain types of corporate or business income and very low tax on others.

In Seychelles, the taxation of corporate or business income is governed by the Business Tax Act, 1987 (Chapter 20), as amended, and various regulations thereunder. These constitute therefore the legal framework under which taxation is levied in Seychelles. The Business Tax Act of 1987 and regulations thereunder are supplemented by Rules and Orders made by the Minister responsible for Finance and the Commissioner of Taxes. In addition, the Seychelles tax law is also influenced by the decisions of the Seychelles Supreme Court and the Court of Appeal and the decisions of certain foreign courts such as Australian and British courts. Please note that for historical reason the highest court in Seychelles is the Court of Appeal. However, although certain practices adopted by the Taxation Division of the Ministry of Finance have not the force of law, they are of paramount importance for professional tax advisers and taxpayers.

1.1 Tax Administration

As for the administration of the tax laws in Seychelles, it is carried out by the Taxation Division of the Ministry of Finance, which is headed by the Commissioner of Taxes. The latter is appointed by the Minister of Finance under Section 5 (1) of the Business Tax Act and is mainly responsible for the management and collection of the tax under the Act. The notices of assessments issued by the Commissioner of Taxes are, as the case may be, subject to objections and appeals. For example, a taxpayer or his representative may, within 60 days after receiving a notice of assessment, serve on the Commissioner of Taxes an objection in writing against the assessment. Whether a taxpayer or his representative dissatisfies with the decision of the Commissioner of Taxes in considering his objection he may, within 60 days after having been informed of his decision, request the Commissioner of Taxes, in writing, to treat his objection as an appeal and forward it to the Seychelles Supreme Court.

1.2 The Scope Of Taxation In Seychelles

The scope of Seychelles taxation is territorial, that is the tax on income is only imposed on income which derived, or deemed to be derived from a source in Seychelles, whether directly or indirectly, and which is not exempt income.

Although certain offshore entities such as offshore banks, offshore insurance companies etc. can elect to pay tax in Seychelles at a rate to be negotiated with the Commissioner of Taxes, any income derived by an offshore entity from its operations from within Seychelles is exempt income. According to section 21 (2) of the Business Tax Act, "income shall be deemed to be derived from a source in Seychelles where it is derived in respect of -

  1. a contract made by a person in Seychelles for the sale of goods, whether the foods have been or are to be, delivered in or outside Seychelles;
  2. anything done by a person in Seychelles, whether the payment therefore is made by a resident of Seychelles or a non-resident and wherever payment is made;
  3. anything done by a person who is a resident as owner or charterer or of any vessel, wherever the ship or aircraft may be operated;
  4. any activities carried on by, or any investment made by, a financial institution, as defined in the Financial Institutions Act of 1984, as amended, in the course of the operation of the financial institution in Seychelles etc".

In addition, according to Section 22 (1) of the Act, "the assessable income of a business also includes-

  1. any amount received as or by way of royalty;
  2. any bounty or subsidy received in or in relation to the business;
  3. the amount of any fee or commission received for processing a loan of money or the sale of property;
  4. any amount received as or by way of insurance or indemnity for or in respect of any loss-
    1. of trading stock which would have been taken into account in computing taxable income; or
    2. of profit or income which would have been assessable income;
  1. any amount received by way of insurance, indemnity, recoupment, recovery or reimbursement in respect of the whole or part of a loss that has been allowed or is allowed as an allowable deduction etc".

1.3 Resident And Permanent Establishment In Seychelles

In accordance with Section 2 of the Business Tax Act, "a company is resident in Seychelles if it is incorporated in Seychelles, or if not being incorporated in Seychelles, it carries on business in Seychelles, and has either its central management and control in Seychelles, or its voting power controlled by shareholders who are residents in Seychelles".

In practice, it the resident status of a company incorporated in Seychelles raises no difficulty, the resident status of a company incorporated outside Seychelles, and which has no permanent establishment in Seychelles through which it carries on business, is subject to interpretation. The Act does not state what tests are to be applied in determining where central management and control should be exercised.

Furthermore, except for licensed offshore entities, the presence of a permanent establishment in Seychelles could attract exposure to tax on profits, and consequently it is extremely important to know what is a permanent establishment under the Business Tax Act. Under Section 2 of the Business Tax Act, a "permanent establishment" is defined "as a place at or through which the person (including a company, partnership or any owner of a business) carries on any business, and, without limiting the generality of the foregoing, includes-

  1. a place where the person is carrying on business through an agent;
  2. a place where the person is using or is installing substantial equipment or substantial machinery;
  3. a place where the person is engaged in a construction project; and
  4. where the person is engaged in selling foods manufactured, assembled, processed, packed or distributed by another person for, or at or to the order of, the first-mentioned person and either of those person participate in the management, control or capital of the other person or another participates in the management, control or capital of both of those persons, the place where the goods are manufactured, assembled, processed, packed or distributed".

However, a permanent establishment under the Business Tax Act does not include-

  1. "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;
  2. a place where the person is carrying on business through an agent-

i) who does not have, or does not habitually exercise, a general authority to negotiate and conclude contracts on behalf of the person; or

ii) 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

  1. a place of business maintained by the person solely for the purpose of purchasing goods or merchandise".

1.4 No Tax On Personal Income And Capital Gains

One of the central features of the Seychelles tax system is the absence of the personal income tax. Accordingly, the tax under the Business Tax Act, 1997 is paid only by businesses including companies and other entities whose income is not exempt. Under the Business Tax Act, a 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. As for the word "person", it includes a company, partnership or any owner of a business. In the same vein, no tax is imposed on capital gains, which are outside the sphere of the Business Tax Act. In practice, as there is no tax on capital gains in Seychelles, the distinction between income which is liable to tax and capital which is not taxable is of crucial importance for existing or potential taxpayers.

It should be noted that Seychelles has no capital transfer, inheritance, wealth, gift, turnover or sales taxes as well as V.A.T.

1.5 Year Of Assessment And Rates Of Tax Applicable In Seychelles

Although according to Section 135 (1) of the Business Tax Act, the business tax is paid by installments, that is provisionally, it is an annual tax which is levied at the rates declared in the First Schedule to the Act upon the taxable income of a business derived in the tax year. The latter is defined in the Act as a period of 12 months beginning on the 1st January in any year and ending on the 31st December in that year. Consequently, although business tax is charged for a year of assessment, the tax is based on the income earned in the calendar year prior to the year of assessment and not on the income earned during the year of assessment.

As for the rates of tax payable by the owner of a business in respect of its taxable income, they are the following:

  1. 0% on the first R24,000 of taxable income
  2. 25% on the next R24,000 of taxable income
  3. 30% on the next R48,000 of taxable income
  4. 40% on the remainder.

Nevertheless, dividends and interests paid to a resident (individual) or a non-resident are not taxable in Seychelles. In the same vein, royalty paid to a non-resident for the use of or the right to use any copyright, patent, design or model, trademark and industrial, commercial or scientific equipment are not liable to tax in Seychelles. In addition, any amount distributed to a resident or a non-resident as his share in a partnership profit or in the income of a trust estate is free of tax in Seychelles.

1.6 Deductibility Of Expenses And Depreciation Of Capital Assets

The tax deductibility of expenses is generally governed by sections 40 and 41 of the Business Tax Act. As a general rule, all business expenses that are incurred in gaining or producing the assessable income, or are necessarily incurred in carrying on a business for the purpose of gaining or producing such income are deductible. These include depreciation, expenses for repairs, donations, rents, salaries, personnel costs, interests paid, bad debts, contributions for educational cultural and other charitable purposes etc. However, certain businesses and companies may take advantage of additional deductions over and above normal deductions already available in the Business Tax Act. For example, a deduction of 150% or 200% on certain expenses incurred by businesses or companies which make donations to public hospital and clinics, Environment Trust Fund, Children's Special Fund, Red Cross Society, or which pay Health insurance premiums for employees etc is allowed under the Business Tax Act. For some investments there are certain incentives. For example the allowable depreciation for a building the construction of which was commenced on or after the 1st January 1992 and which is used, or part of which is used, exclusively as an office, is of 50% of the cost of construction during the tax year the construction of the building or part of the building is completed and 25% of the cost of construction for each one of the next two succeeding tax years after the tax year referred above. In addition, any tax losses resulting from the depreciation of such building may be carried forward indefinitely.

1.7 Other Taxes

1.7.1 Stamp Duties

Stamp duties are imposed by the Stamp Duty Act of 1975 (Chapter 226) and are payable in respect of instruments related to anything situate or performed or done or to be performed or done within Seychelles. For example, transfer of immovable property or any interest in immovable property situated in Seychelles such as mortgage, shares etc. is subject to stamp duty. In the same vain, stamp duties are payable for the creation of a charge on a company. In generally, any instruments chargeable with stamp duty are specified in the schedule to the Stamp Duty Act, 1975. However, ship and aircraft mortgages are governed by the provisions of the Merchant Shipping Act of 1992 and those of Civil Aviation Act of 1949, respectively.

1.7.2 Social Security Contributions

In accordance with the provisions of the Social Security Act of 1987, a social security contribution is imposed on salaries paid to individuals working in Seychelles. The rate for employee is 5% on gross salaries. Regarding the employer the rates are 10%, 20%, 35% 40%, following that the amount of emoluments paid does not exceed r1,000, R2,000, R10,000 or exceeds R10,000. These contributions should be withheld at source by the employer and paid to the Social Security Fund managed by the Ministry of Finance.

1.7.3 Import Duties

Import duties are imposed by the Trades Tax Act of 1992 and the Trades Tax (Regulations) 1997 in accordance with the nomenclature established by the World Customs Organisation. They are levied ad valorem on some items and based on quantity, volume or weight for others. However, Seychelles offshore entities are exempted from import duties on office equipment and other items necessary for the carrying on of their commercial activities from within Seychelles.

1.7.4 Licence Fees

As there are in Seychelles no personal income, capital gains, distributions, wealth, gift or inheritances taxes etc. revenue is collected mainly by the imposition of customs duties on goods imported into Seychelles and licence fees collected under the Licences Act, 1986 and other laws such as Financial Institutions Act, Insurance Act, Immigration Decree, Merchant Shipping Act, Civil Aviation Act etc. Under the Licences Act of 1986, any domestic businesses are required to obtain a licence before engaging in business and paid annual licence fee to renew such licence.

2. International Tax Provisions

As mentioned above, the Seychelles tax system adopts the concept of territoriality. As a result, companies which are residents in Seychelles are subject to tax in Seychelles on profits realised in business run in Seychelles, or deemed to be realised in Seychelles, or, again, if the right to tax is reserved to Seychelles under a double taxation agreement. Profits realised by Seychelles Companies outside Seychelles may legally escape Seychelles tax altogether. In the same vein, losses made outside Seychelles cannot be offset against profits realised in Seychelles.

2.1 Double Taxation Agreements

Although the Government of Seychelles has selected some key countries all over the world for the negotiations of double tax treaties, for the moment Seychelles has signed only three tax treaties. Three treaties namely with Indonesia, South Africa and China have been negotiated and signed, while several others are in the course of negotiation with countries such as CZECH Republic, Cyprus, Russia, The Philippines, Thailand, Tunisia, Vietnam, Taiwan etc.

Generally, the double tax treaties negotiated by Seychelles are based on the OECD Model Treaty. Consequently, the benefits of these treaties should be available only to resident entities that are liable to tax in Seychelles under its tax laws by reason of their domicile, residence or other criterion of a similar nature. These treaties have very low withholding tax rates. For example, under the treaties negotiated with Indonesia and Russia, dividends, interest and royalties will be taxed at 10% while under the Seychelles – South Africa treaty, dividends, interest and royalties derived from sources within one Contracting State by a resident of the other Contracting State, shall be taxable only in that other Contracting State.

2.2 Offshore Entities: Tax Exemptions And Incentives

As already mentioned, Seychelles international business companies, trusts, offshore banks, offshore insurance companies, shipping companies and shipowners, mutual funds, mutual fund administrators, foreign employees etc enjoy full tax exemption in Seychelles. The full tax-exemption is also available to branches of foreign companies registered in Seychelles and engaged in offshore business activities, as well as foreign incorporated international business companies continued under the Seychelles International Business Companies Act. The above offshore entities are also allowed to import free from customs duties office equipment, furniture and other items that are necessary for the carrying on of their activities from within Seychelles.

As there is no personal income tax in Seychelles, the emoluments paid to a foreign employee by a Seychelles offshore entity are not taxable in Seychelles. In the same vein, the foreign investment income (dividends, interest and royalties) received by a Seychelles resident, whether foreigner or not, is also not taxable in Seychelles.

It should be noted that Seychelles offshore entities are also exempt from capital gains, distributions, wealth, gift or inheritance taxes, as well as from stamp duty on sale, transfer of any assets or of shares and on any documents to be executed and registered in Seychelles.

Finally, it is important to note that any companies licensed to operate in any zone declared as an international trade zone under the International Trade Zone Act, 1995 enjoy the same tax privileges than the above-mentioned offshore entities. The Seychelles International Trade Zones are thus opening the prospects of developing Seychelles into an important transhipment, manufacturing, processing or warehousing centre for the Eastern and Southern African market.

2.3 Bilateral Investment Treaties

Furthermore, in order to complement the network of double tax treaties that Seychelles is developing for the time being and to make the archipelago more attractive to foreign direct investment, at the beginning of this year, the Seychelles Government started negotiating bilateral investment treaties with some key countries, notably the exporting-capital and technology countries. On 28 May 1998, Seychelles concluded its first bilateral investment treaty for the protection and promotion of investment in Cyprus. At the present time, the Seychelles Government is discussing with U.S.A, Germany, U.K, Cuba, Sweden, etc. for the conclusion of similar treaties.

2.4 Amendments To Tax Laws

Discussions are already underway for amendments to the Seychelles Tax Laws to make it more attractive for international business and onward investments in the country.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.