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Last updated: 4 May 2020
 

Offshore investment in Seychelles: Why not?

Among multiple choices of the most widely-chosen tax havens, Seychelles is a preferred destination for wealthy individuals and corporations. In this blog, we will walk you through interesting facts about Seychelles tax haven and why offshore investment in Seychelles through offshore company formation is popular.

1. How should you visualize a “Seychelles tax haven”?

In general, this part covers a picture of Seychelles tax haven in terms of its geographical location, economy, political structure, legal system, and Seychelles’ offshore sector development.

1.1. A modern archipelago’s “golden” site

The Republic of Seychelles, or typically known as Seychelles in short, is a country located in the Indian ocean, lying about 1.500 kilometers east of the mainland East Africa. Seychelles is a well-known archipelago which is made up of 115 small islands. Prominent among which, the Seychelles’ main and largest island – the Mahé is widely reputed as the home to the capital city Victoria, international airport as well as a large number of commercial centers of the country. The year 2020 estimates that Seychelles has a population of more than 98.000 people, and interestingly almost 90% of the country’s total live on the Mahé island.

There are 3 official languages used in the Seychelles archipelago, including English, Seychellois Creole (a kind of French-based creole language) and French. It is also good to know that residents living in Seychelles does not have to witness hurricanes and other disasters as many as other offshore jurisdictions like Caribbean countries.

Not only is Seychelles a picturesque tourism attraction, but it is also well-placed as a golden position for manufacturing and trading between Africa, Europe and Asia.  The gross domestic product (GDP) per capita of Seychelles is among the highest in Africa ($16,575, nominal, 2018 est.). The World Bank has also classified the Seychelles (the only country in Africa) as a High Income Economy since 2015, proving the potential and the robustly growing economy of the Seychelles tax haven.

Seychelles golden site

1.2. Open market economy and political stability

  • Open market economy

Seychelles tax haven represents a strong stability in both economy and politics. The economy of Seychelles from the outset has been primarily based on agriculture and tourism, but then the emergence of rapidly-developed offshore service industry has relatively brought this jurisdiction to a big step. How the offshore sector has been booming in Seychelles will be later discussed.

Another key highlight in the Seychellois economy is that it used to be a single-party socialist country throughout the 1970s and 1980s. Afterwards, the modification of dropping the centralized planning and using open market economy instead has contributed significantly to the general development of the country, along with the increase in private investments in particular. As a result, the strong economic performance has steered the Seychelles infrastructure, facility and many other aspects like healthcare or education towards great improvements as well.

  • Stable political structure

Like its economy, the politics of Seychelles tax haven was considerably influenced by the single-party socialism, which was activated after the 1976 independence from the UK and remained until 1993. Currently, Seychelles government has highlighted a framework of multi-party political system with the nation’s president being the head of both state and government. The government holds the right to exercise executive power, meanwhile the legislative power is vested in both the government and the National Assembly.

Seychelles has joined in reputable organizations such as the Commonwealth, the United Nations, the African Union and many others. Embassies of Seychelles are also spreading throughout the world such as in Paris, New York, Brussels, New Delhi, Beijing, London, etc.

1.3. A prime example of the mixed legislative system

Regarding its legislation, Seychelles represents a uniquely mixed-jurisdiction system of law. Why a mixture? The justice system of the Republic of Seychelles has been a combination of English Common Law and the French Napoleonic Code, which is the result of history roots from both French and English territory. It is noted that The National Assembly, which is the branch of the Seychelles legislative system, holds the power for forming as well as amending all laws, excluding some specific chapters as per in the Constitution. The constitution also highlights for an independent judiciary.

Seychelles legislative system

In respect of the offshore sector, Seychelles tax haven has also gone through many changes before determining both modern and strict legislation for this contributing sector in the islands. Towards an enterprise-friendly business environment, companies under Seychelles offshore-related laws are provided with a range of merits like wealth protection, tax optimization, confidentiality guarantee for both individuals and corporations. Further details on how a Seychelles offshore company can benefit startups and entrepreneurs will be discussed later.

Along with Companies Ordinance, Electronic Transactions Act, Financial Services Authority Act, etc., there are two Seychelles’ legislation (with its latest update) that can significantly influence the operation of international companies including:

1.4. The booming offshore sector in Seychelles tax haven

As the aforementioned, the offshore sector is a big contributing factor to the Seychelles economic growth. In fact, the introduction of offshore service was in 1994 after the offshore legislation - i.e., the legislation regulating the incorporation of Seychelles International Business Companies (IBCs) - had been set out and gone into effect, then offshore service industry has been well recognized as one of the key income-generating sectors for the Seychelles country.

Seychelles tax haven mostly has focused on offshore activities such as the incorporation of Seychelles IBCs, offshore trust, offshore insurance, investment fund management, offshore banking services and many other offshore related services. The Seychelles International Business Authority (also known as SIBA) was also established by the Seychelles government to encourage the prospect of the offshore service industry. This authority is to ensure a smooth process for offshore company incorporations as well as to give further assistance to other offshore services like foreign investment to be done in an appropriate manner.

During years, Seychelles tax haven has made efforts to introduce new legislation, review and make necessary amendments for the sector improvements in the jurisdiction. Offshore investment in the Seychelles jurisdiction is also a widely-chosen option thanks to its great benefits to investors and entrepreneurs.

2. Investing in Seychelles tax haven through the incorporation of an offshore company

Seychelles is a wise choice for offshore company

Seychelles is considered as a wise choice when it comes to offshore investments. As a “tax haven”, Seychelles offers your business a wide range of benefits. What are the highlights?

Seychelles imposes no tax in place for corporations which do not conduct their business activities within the Seychelles territory. In other words, an offshore company in Seychelles pays no taxes on income generated abroad. There are also no capital gains tax, dividends, interest, inheritance or property tax.

  • Seychelles as a tax-free entity for offshore companies is well guaranteed by legislation.
  • Seychelles offshore companies are significantly attached to their privacy and confidentiality guarantee. The jurisdiction implements strong protections against disclosure of information relating to the identities of the company’s beneficial owners, directors and shareholders.
  • Offshore banking in Seychelles has been growing fast. By its extensive and sophisticated offshore banking network, opening an offshore bank account is a good idea for corporations and individuals.
  • Seychelles IBC is the most common type of business entity in Seychelles tax haven.
  • Annual license fee is a must to any companies registered in Seychelles tax haven, including offshore companies.
  • There can be some restricted activities which require an offshore company (international business company for example) to obtain the Seychelles authority’s permission before operations such as banking, insurance, securities business, gambling business, etc.

You are advised to conduct a careful examination of offshore-related laws of Seychelles to make sure your company incorporation run smoothly. You also should engage professional offshore service providers to save time and resources for Seychelles offshore company formation.

3. Conclusion

Seychelles tax haven is obviously a good option for new investors and entrepreneurs to go offshore. In addition to Seychelles’ favorable location, robust economy, effective regulatory regime, this tax haven also includes a range of stand-out characteristics to prove its business-friendly environment for foreigners such as its tax-free feature for foreign-source income, strong privacy provisions and more. The fast-escalating offshore service industry in Seychelles promises strong support for offshore company operations and development.

Seychelles IBC is regarded as the most popular business form for foreign businesspersons when it comes to offshore incorporations in Seychelles. Note, notwithstanding, that albeit with a variety of benefits, there are still certain requirements like annual government charge, as well as limitations for business activities to be allowed to incorporate in Seychelles that offshore seekers should bear in mind.


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