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Taxation
in Seychelles The Seychelles has a territorial
basis of taxation; that is, profits are taxed only if they are derived or deemed
to be derived from a source in the Seychelles. There is no capital gains tax;
interest, dividends and other payments received from abroad are likewise not taxed.
There is no taxation of individual income, but social security contributions are
payable which amount to an income tax - see Personal
Taxation.
Scope of Business Tax The
Business Tax Act 1987 as amended governs company taxation in the Seychelles. The
Act states that resident, non-resident corporate and non-corporate businesses
are liable to pay business tax on their income derived from the Seychelles. A
company is considered resident if it is incorporated in Seychelles. A company
not incorporated in the Seychelles that conducts business there is resident if
its central management is located in the Seychelles or if its voting power is
controlled by shareholders who reside there. Income
is defined as all income received by a sole trader, partnership, trust estate
or company, less a number of types of exempted income of which the following are
some of the main headings: - the proceeds
of rental properties other than dwellings;
- profits from dealing
in or selling property;
- royalties;
- fees and
commissions in respect of the sale of property or the processing of money loans;
- lease premiums;
- income on which a final withholding
tax has been levied (see Withholding
Tax below - the 10% and 40% rates are considered to be 'final').
Rates
of Business Tax Tax rates are the same for corporate
and non-corporate businesses. The following rates apply:
| Taxable
Income, SR | Tax on lower
bands, SR | Rate on Excess,
% | | Exceeding |
Not Exceeding | | |
24,000 | | 0 |
| 24,000 | 48,000 |
| 25 | | 48,000 |
96,000 | 6,000 |
30 | | 96,000 |
| 20,400 | 40 |
Note that an entity with a Certificate of Approval
under the Investment
Promotion Act 1994 may be exempt from part or all of the Business Tax, or
may have special deductions or tax credits. Companies in the International
Trade Zone also have tax privileges. Calculation
of Taxable Base Allowable expenditure is that incurred
'in the course of carrying on business activities', excluding capital, private
and domestic expenses. A normal range of expenses are deductible. The following
list gives some of the main additional deductions that are permitted:
- Pension scheme contributions;
- Professional
fees incurred in preparation of the tax return;
- Net salaries
and wages, but only if social security contributions have been deducted; owners
and partners are not permitted a deduction of their salaries;
- Royalties
and other payments made to non-residents from which withholding tax has been deducted
(see below);
- Previous years' losses, which can be carried forward
only for five years; losses cannot be carried back; capital losses are not deductible;
- Non-capital expenditure on repairs to premises, plant and machinery;
- Losses incurred in property dealing;
- Specific
bad debt write-offs; provisions for this or other purposes are not deductible;
- Office buildings are depreciated at a rate of 50% for the first
year and 25% for the second and third years; hotels are depreciated at a rate
of 20% for the first year and 10% for the following eight years; other buildings
are depreciated at a straight-line rate of 4%; other assets are depreciated at
conventional straight-line rates;
- Interest on borrowings made
for the purpose of producing assessable income; the rate of interest chargeable
is limited by reference to Central Bank rates.
Filling
Requirements and Payment of Tax
The
tax year is normally the calendar year, ending 31st December. A tax return must
be submitted by March 31st following the end of the tax year, along with the signed-off
accounts. Withholding Tax There
are the following withholding taxes in the Seychelles:
- 15% on dividends paid to non-residents (this is a final tax);
- 10% on interest paid to non-residents other than financial institutions
(for whom a nil rate applies); this is a final tax;
- 40% on interest
payments by a Seychelles financial institution at maturity of a bearer security
issued by that institution; this is a final tax;
- 15% on royalties
paid to residents;
- 15% on royalties paid to non-residents on
certain types of royalty (copyrights, patent, design and trademark royalties are
exempt).
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