Business in Seychelles

When we hear about Seychelles, we imagine perfect sand beaches, sun… but Seychelles is also a perfect place for business because it is a classical offshore zone.

Let’s start from its geography. Seychelles archipelago comprises 115 islands and islets situated in the Indian Ocean just south of the equator and to the north of Madagascar. It occupies an area of 405 sq.km. The largest islands are Mahe, Siluett, Prahl (Praslin) and La Digue, small granite islands, mostly coral. The largest island of the archipelago is Mahe. It is 27 km in length, 8km in width. On this island is situated the capital of the state, Victoria City, and the International Airport.

Recently, in Seychelles, as well as in similar tourism countries, the trend of development of the so-called offshore business experiences growth. That of  Seychelles began in development in 1994, when the government began a series of legislative initiatives aimed at creating the country’s international offshore financial centre of the world level. That’s when the laws were passed, covering the registration of offshore companies, trusts and licensing areas of international trading companies. Additionally, was introduced the legislation, which covered the licensing of offshore banks, insurance companies and the creation of securities. In May 2003 the Government established the offshore sector, which was designed to be an important factor in the economy. As a result, the government’s efforts led to the 40% increase in offshore.

For the information

Offshore is formed from the word OFFSHORE – “off shore, outside”. The international community can not come to a common definition of “offshore”. Offshore – is a territory that provides a preferential tax treatment for foreign exchange and foreign capital. Off-shore -is a legal entity incorporated under the laws of the country of registration. Off-shore – is a tool for tax planning, which legally will reduce the tax burden to a minimum, thereby significantly reduce costs and increase profitability.

Business activity and economic activity of this company (offshore) focuses exclusively on the foreign Member State. The owners of offshore companies are the residents – legal entities and individuals who have no official residency status in the territory where the company is registered. The company receives its income solely from global sources.

The main characteristics of the classic offshore jurisdiction are

1. exemption of taxes of the offshore companies
2. absence of statutory financial reporting, accounting and taxation
3. high degree of confidentiality of the company owner

Seychelles

Classic offshore zone, located in the Indian Ocean. Law on the Offshore International Business Companies Act was passed in 1994. Companies are registered with the resident status – IBC – International Business Companies.

Advantages

• IBC company is fully exempt from income taxes. No exchange controls.
• Easy establishment of IBC. Requires only one founder individual or entity.
• No requirements for the authorized capital. Allowed bearer shares.
• Privacy beneficiary.
• Member country of the Hague Convention on the abolition of the requirement of legalization for foreign public documents from 1961.
• Not included in the black list of international organizations.
• Low cost of registration and service companies. Beneficial use in trading schemes.

As of the end of 2004  there were more than 17,000 international business companies in Seychelles. By 2008 their number exceeded to 50,000, resulting that Seychelles have become one of the fastest growing offshore centers in the world. In 2003 was adopted the project, which included interactive gambling in lawful gaming industry of the country. The Law on International Corporate Services has greatly improved and simplified the regime of coming into the economy of investment. Earlier in the island it was allowed to issue licenses for offshore companies, but the right to receive tax benefits depended on obtaining a certificate of the Ministry of Finance in accordance with the Law on Investment Promotion. The Act streamlined the process of creating the business, eliminating the need to leave the application to the Ministry of Finance. In July 2004, it was announced that the promotion of foreign investment in the Seychelles is to create a new executive body called the Bureau of the Investment. It has taken upon itself a number of other government agencies. The Authority acts as a single investment community in order to coordinate the activities of encouragement. In addition, the number of necessary procedures for starting a business also declined significantly.

The law on the International Business Companies (International Business Companies Act) has incorporated the best that has been previously invented the “international offshore mind”, namely:

• the possibility of registration and legalization of names of offshore companies and charters to any language of the nations of the world (with an English or French);  ownership and management of an offshore company by one person (natural or legal);
• admissibility issue shares in bearer and registered such classes, types and fate, as owners of the company decide;
• lack of requirements for payment of a minimum share capital of offshore company;
• announcement of share capital in any currency (including non-convertible);
• holding meetings of directors and shareholders of the company in any country of the world;
• opportunity to keep minutes of meetings of directors and shareholders of offshore companies and financial records anywhere in the world;
• no annual financial and statistical reporting (the only thing needed, – the registrar of companies must know the address where those documents are stored);
• There is no register of directors and shareholders of an offshore company (file logger only stores copies of statutory documents and company registration certificate);
• Consideration of any issues of legal requirements relating to offshore companies, is conducting an open meeting;
• Require third party to disclose any information about the company can be satisfied only in connection with investigating cases of illegal possession, production and drug trafficking, illegal arms trade and money laundering;
• offshore company can be a director and owner of another offshore company;
• Admissibility of availability of office in the Seychelles and administration of the company from the island territories
• opportunity for companies to open bank accounts, as the Seychelles, and in any country of peace, fully relieved while on exchange control and having the right to invest in the economy of the Seychelles, including ownership of the vessel under the Seychelles flag and fishing in the coastal area of the country;
• offshore companies guarantee 100% repatriation of capital and income from activities outside the Republic;
• lack tax requirement of offshore companies for any taxes;
• lack of requirement for import duties on machinery, equipment, raw materials and semifinished products;
• the possibility of moving companies from other jurisdictions on the island, and mergers and consolidation of offshore companies with other companies;
• fixing annual fees for renewal (even if over time the state increases taxes, then previously registered offshore companies, they stay the same).

The law of the Seychelles International Trusts (International Trust Act) is attractive for foreign founders that, it does not impose any restrictions on international trust (International Trust), with the exception of the ban on trust land acquisition in Seychelles. At least one trust manager (Trustee) must be a resident of Seychelles, licensed. Typically, this function performs a corporate services provider (Corporate Service Provider).

The offshore sector also applies Seychelles International Trade Zone (International Trade Zone), which allows the following activities for companies:

• operation of assembly, finishing and packaging;
• production of goods, handling and processing of semi-finished products;
• redeployment and re-export of goods from Seychelles.

Companies that operate in international trade zone are not subject to tax. The cost of annual licenses ranges from US $ 550 to US $ 2000 depending on the type of business.

Last legislative innovation in the offshore sector of Seychelles – is the so-called company with a special license – Company Special License. These companies may be of interest to foreigners, who should show at least some paid taxes on their activities relating to the holding, investment, marketing and other activity. The tax rate for these companies is equal to 1,5% of the net income.

An offshore company may be liquidated for non-payment or untimely payment of annual fee for renewal. The annual state fee is paid not later than the registration date of the next calendar year. If they are not paid by 31 December of the year (during this period charges are consistently accrue for delayed payment), the company is automatically crosses with the Companies Register of the Seychelles and the action is published in the official press.

An offshore company can, in no later than 3 years, after its deletion from the Register be restored. If it is not restored within that period, the Registration Chamber automatically dissolves this company. To restore the company – you have to pay the fees that have accumulated, and fines, but it is possible that the former name of the company can no longer be used. If anyone will reserve the same name in the register during the time when the company listed was removed, the registrar shall not refuse the establishment of a new company with the same name.

All offshore companies are obliged to have in Seychelles a corporate services provider (registered agent), which is licensed and maintain a registered address.

Seychelles has a law that obliges all agents licensed for the registration of offshore companies to strictly follow the procedure – “know your customer”. Under this law, each agent should have detailed information on directors, shareholders, trustees and secretaries of offshore companies. This law requires a registered agent to maintain the confidentiality of this information, and establishes the procedure for its disclosure.

Any business activity in the domestic market of the Seychelles is possible only with the appropriate license (issued by the State Department licensing – Seychelles Licensing Authority). Companies or individual entrepreneurs intending to start in the country any new kind of business must complete the official form and submit it for consideration in the license management that can satisfy the request for a license or deny it. In the latter case, the applicant may appeal the denial of a license to the Ministry of Finance, which is authorized to adopt a different decision.

By Iana Roginska