Seychelles is now a known and respected jurisdiction in the global financial services market. Over the last ten years, the Seychelles offshore financial services industry has experienced a significant increase in know-how, business volumes and international profile. A central factor in Seychelles’ rise as an international financial centre has been its strategy of striking an effective balance between sound regulatory practice and the marketplace. Seychelles’ northern Indian Ocean location (GMT+4) has also proved a significant advantage in servicing the European, Asian, Middle Eastern and African markets.
The tax-exempt Seychelles International Business Company (IBC) has enjoyed substantial success, as shown by surging registrations over the last five years – 7,097 new incorporations in 2005, 8,238 new incorporations in 2006 and 10,295 new incorporations in 2007 (making it now one of the most popular IBC registration jurisdictions in the world). Seychelles is also steadily developing more value-added areas of offshore business, including CSLs (Company Special Licenses: Seychelles tax resident companies, which may access Seychelles double taxation avoidance agreements), international trusts, limited partnerships, securities and mutual funds.
International Business Companies (IBCs)
An IBC is a limited company that undertakes business activities licensed by the Seychelles International Business Authority (SIBA). These companies are, however, exempt from all forms of taxation and have been licensed with the exclusive aim of conducting international business outside of Seychelles. IBCs are commonly used for:
- holding companies;
- asset protection;
- international consultancy companies;
- companies involved in international trade.
Subject to the limit set by its objects, an IBC can generally do anything that a body corporate can do. However, the IBC Act specifically prohibits it from conducting business as a bank, insurer, re-insurer or trustee (all three types of offshore businesses are regulated by special legislation) and, except as specifically permitted by law, from conducting any business in Seychelles or owning or leasing immovable property in Seychelles. It is an attractive financial structure that can be converted to other resident companies such as CSLs.
Trusts set up under the International Trust Act 1994, provide an effective and legitimate means of protecting one’s assets. Various types of trusts may be set up such as charitable and revocable or irrevocable discretionary trusts. Some features of the trust include:
- Accumulation of income is unrestricted.
- The settlor may choose the law of the trust.
- There are no requirements to name the settlors or the beneficiaries, except if the beneficiaries are Seychellois citizens.
- The trust may own assets worldwide (except in Seychelles).
- It may hold shares and maintain bank accounts in Seychelles.
Companies Special License
The Companies (Special Licenses) Act, 2003, allows companies to take advantage of the Seychelles network of double taxation treaties as it is incorporated under the Companies Act 1972, and considered a tax resident under the Seychelles laws. The special provisions afforded under the Act provide it with a measure of confidentiality as well as a low tax status, calculated at 1.5 per cent of gross income. The CSL meets all the criteria of a modern legislation, mainly in relation to disclosure requirements; however, information disclosed in relation to these requirements is not accessible by the public.
To date, the Seychelles has a ratified double tax treaty with the following countries: China, Indonesia, Barbados, Botswana, Cyprus, Malaysia, Mauritius, South Africa, Thailand, United Arab Emirates, Vietnam and Oman.
Protected Cell Companies
Protected Cell Companies (PCC) are incorporated under the Companies Act 1972, and allow companies with specified activities to separate into identifiable cells without having to assume a separate legal entity. Cells within a PCC are protected against liabilities incurred by cells of the same company, and which are therefore attractive for a number of business activities. Qualified activities include offshore insurance and mutual funds businesses, and other collective investments.
Limited partnerships are registered under the Limited Partnership Act 2003, and are subject to the Seychelles Commercial Code. It provides for a general partner who must be a Seychelles person and one or more limited partners. Limited partnerships are commonly used for joint ventures.
An Effective Balance
Seychelles has managed to maximise its appeal and effectiveness as an offshore financial services centre by striking an effective balance between sound regulatory practice and the marketplace. With Seychelles’ financial industry gathering momentum, it is now well placed to serve the international world.
Dr Steve Fanny
Dr Steve Fanny is the Chief Executive Officer of the Seychelles Financial Services Authority (FSA), a post which he held previously when FSA was referred to as SIBA. Prior to his current appointment, he occupied the post of Chairman of the FSA Board of Directors. He holds a number of different professional qualifications in Accounting and Finance and a Masters in Audit Management, and Consultancy specializing in Forensic Accounting and a Doctorate in Islamic Finance with the Swiss Management Centre University.