Offshore Legal and Tax Regime

Please be aware that the following is simply a brief summary of some of the more important aspects of Seychelles’ tax law and should be considered only general information. Please do not substitute it for professional tax advice.

Overview and Recent Developments

Provisions for the licensing of trust management and company formation agents are made under the International Corporate Service Providers Act 2003.

The International Business Company, various types of Companies Act companies, the Trust, Special License Companies, and Limited Partnerships are the primary business forms that are useful for offshore operations in the Seychelles.

Forms of Offshore Operation

The following forms may be used to establish offshore operations within Seychelles.

• Limited or Unlimited Companies Act Company

• International Business Company

• Limited Life Company

• Trust

• Special License Company (formed under the Companies Act)

• Limited Partnership

Banks, insurance companies and mutual funds, none of which are permitted to use the International Business Company, must be formed under the Companies Act 1972.

Taxation of Foreign Employees of Offshore Operations

The government does not distinguish between foreign or Seychelles employees of offshore operations except for the exemption from social security contributions applying to the crew of ships and aircraft.

The different exemptions from Business Tax and social security contributions described above are not applicable to employees. Fortunately, however, taxation of employees through low social security contributions is really quite minimal.

Employers, on the other hand, are not only required to pay relatively high social security contributions in respect of employees, which is in fact an income tax in all but name, but also they are required to pay a \'Gainful Occupation Permit\' fee of $1,800 per employee per year unless they are a SITZ company for foreign employees.

Exchange Control

The government of Seychelles has not placed any restrictions on the payment of imports or invisibles, although import permits are required for certain products. According to the Exchange Control (Exemption) (Amendment) Order 1995, one may only legally deal in foreign currencies with an authorized dealer. As the government keeps an extremely over-priced currency rate against the US dollar for the Seychelles rupee, the currency is far from free and \'official\' rupees are hard to come by. Thus, there is a flourishing black market.

Offshore Activities

International Business Companies are allowed to participate in several different activities within the Seychelles without compromising their offshore status under the International Business Company Act. The following are a few of the activities an IBC may participate in:

• making professional contacts with lawyers, accountants etc.;

• preparing and maintaining of books and records;

• holding directors\' or shareholders\' meetings;

• owning shares in other Seychelles companies, whether under the Act or the 1942 Companies Law;

• owning Government or Central Bank securities;

• owning a vessel registered in Seychelles.

Companies operating within the Seychelles International Trade Zone have the option to apply to the Seychelles International Business Authority, which oversees its operations, to conduct trade with Seychelles partners or customers outside the Zone. Income from activities undertaken under these conditions must be accounted for separately, and will be subject to the Business Tax.

Banks and insurance companies operating offshore under license may not participate in domestic trading, for which a separate license would be required. Nevertheless, they can participate in local activities that are relatively similar to those listed out above for IBCs