Favourably and strategically situated in the Indian Ocean, enjoying political stability and having the right legal and administrative frameworks in place, nowadays the Seychelles is becoming one of the most attractive offshore jurisdictions. It is highly recommended for those seeking an efficient and secure offshore company structure.
Seychelles entered the offshore financial services industry in December 1994, following the enactment of the International Business Company Act 1994 and other legislation. Despite its small size and some other limitations, the Seychelles offshore sector had managed to succeed over the past decades. More than 30,000 Seychelles International Business Companies (IBCs) have been registered, with more than 600 new offshore companies being registered every month.
As a relative newcomer to the offshore industry, Seychelles has a greater number of company names available than some other jurisdictions. Seychelles IBC benefits from zero local taxation, very few restrictions or reporting requirements and superior confidentiality. It remains competitive even in the face of increased OECD enforcement and pressure from other well respected offshore centres. The government of Seychelles is encouraging more and more foreign investment through the development of the International Business industry. This strategy encompasses the registration of IBCs, the offshore trade zones, the registration of ships and aircrafts, as well as banking and insurance.
Following is a synopsis of the key positive facts that make a Seychelles IBC one of the most tax efficient and secure structures in the world.
1. Seychelles IBC is not subject to taxation within the Seychelles. It pays only the Government License fee. The law provides that all exemptions for a Seychelles IBC shall remain in force for a period of 20 years from the date of incorporation;
2. Incorporation fees are fixed for life. Even if the annual renewal fees are increased in the future, a company incorporated before such an increase came into effect will not be affected adversely. If the fees were reduced, however, the same company would be entitled to pay the reduced amount;
3. There is no requirement to file and submit any form of annual accounts or returns. However, if they are kept there is no requirement for an audit. No doubt this makes it simple to establish and operate an IBC;
4. There is no minimum share capital requirement and the capital may be denominated into any currency. Shares can be issued with or without par value;
5. Seychelles IBCs can be set up with bearer shares which do not have the beneficial owner’s name on record. It is possible to make use of nominee directors. That means such a company structure is private and confidential;
6. Corporate directors are allowed when creating the company;
7. Only one shareholder and one director are required, both of whom may be the same person. Their details do not appear on any public records;
8. Shareholders, directors and officers need not be resident in the Seychelles and there is no stipulation as to their nationality;
9. Shareholders and directors’ meetings need not be held in the Seychelles, may be attended by proxy, telephone meetings are possible. There is no requirement for a regular Annual General Meeting;
10. The Memorandum and Articles of Association are the only documents to be held on the public record. These documents do not contain any indication as to the actual shareholders or the beneficial owners;
11. No foreign exchange control or other financial controls are imposed;
12. Speedy incorporation procedures and simple ongoing administration. New IBC is usually incorporated within 24 hours;
13. Fee anniversary is 12 months from incorporation, not December 31st;
14. IBCs may engage in any lawful business in any country and may carry on transactions in whatever currencies they choose;
15. Although a locally established IBC cannot trade within the Seychelles, it may enter into business with any other Seychelles IBC, it can be used to own or to manage a yacht or private aircraft which is registered in Seychelles for example;
16. Local legislation actually permits the migration of companies which are already registered in other jurisdictions, which can be particularly useful;
17. Seychelles is not subject to the EU Savings Tax Directive, unlike some other offshore tax havens;
18. Seychelles has avoided entering any information-sharing agreements with foreign countries or organizations for exchange of financial aid;
19. Not highlighted by OECD;
20. Not yet widely perceived as a tax haven;
21. There is a continuous expansion of the Double Taxation Treaty network. Being a latecomer to the tax treaty network, it is concluding treaties, which are most relevant to the needs of new century;
22. Signatory to Hague Convention (1961) for Apostille.
In order to qualify as an IBC, the following restrictions are imposed:
1. IBCs must operate outside Seychelles, no business may be carried on in jurisdiction. However, these companies may invest in shares in local companies or buy government bonds in Seychelles;
2. It may not own real estate in Seychelles. Property may be leased for office use only;
3. It cannot be used for banking, insurance or registered agent business.
In that way, IBCs are the most popular unless operations take place in Seychelles International Trade Zone. Meanwhile, businesses trading in the Seychelles, as well as banks, insurance companies and mutual funds show preference for various types of companies formed under the Companies Act 1972. In 2003, the government legislated for new additional types of company: Special License Companies (CSL), Protected Cell Companies (PCC) and Limited Partnerships.
The CSL is a low-tax company, which is liable to pay 1.5% tax on its world-wide income, with access to the growing number of Seychelles Double Taxation Agreements. It is preferred vehicle for offshore operations requiring treaty benefits. CSL and Limited Partnership may set up an office in Seychelles for the purpose of doing business outside of Seychelles. The PCC is the vehicle for offshore insurance, mutual funds and other approved collective investment schemes. PPC companies are exempt from tax if their insurance or mutual fund activities are licensed by a Seychelles Authority. Just in case, an IBC can be at any time transformed into a CSL.
Generally over last year’s Seychelles has made steady progress. It enjoys highly comprehensive offshore tax haven legislation in the world. With two main types of offshore companies available in jurisdiction, the classic IBC, which is free of tax, and CSL paying low taxes, Seychelles retain a significant share of the global offshore business marketplace and look ahead with confidence.