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SEYCHELLES ANNUAL ACCOUNTING FILING REQUIREMENTS
Seychelles Annual filing requirements are mandatory for all Seychelles IBC. To improve compliance with international regulatory standards, all Seychelles companies are now required to comply with the International Business Companies (Amendment) Act, 2021.
This legislation mandates that all companies must maintain their accounting records at their registered office in Seychelles. Given that most IBCs operate outside of Seychelles, this means that they will need to produce their accounting records twice a year and keep them at their registered office address in Seychelles.
Relin Consultants guide below covers all the information you will need to understand Seychelles annual filing requirements below.
BI-ANNUAL ACCOUNTING RECORDS KEEPING IN SEYCHELLES
Holding companies that are also non-large companies, as defined by the Revenue Administration Act, are now required to keep their accounting records at their registered office in Seychelles twice per year, in accordance with section 175 (1A) of the Act.
Accounting records for transactions or operations from January to June must be kept in Seychelles by July of that year, and records for transactions or operations from July to December must be kept in Seychelles by January of the following year.
Additionally, accounting records for the past 7 years up to December 31, 2021 must be kept in Seychelles by February 6, 2022, and records for the first half and second half of 2022 must be kept in Seychelles by July and January of 2023 respectively.
It’s important to note that companies that are struck-off, dissolved or deregistered must also ensure that any outstanding accounting records are lodged at their registered office in Seychelles by January or July following the date of being struck-off, dissolved or deregistered, as per the guidance above.
Although the Amendment Act requires companies to keep their accounting records in Seychelles twice a year, it’s important to note that companies are required to keep their records on a continuous basis and should be able to provide them to the Seychelles authorities upon request.
ANNUAL FINANCIAL SUMMARY KEEPING IN SEYCHELLES
Every large entity and non-large non-holding entity is required to prepare an annual financial summary to be kept at their registered office in Seychelles within 6 months from the end of the entity’s financial year, according to section 175 (1B) of the International Business Companies (Amendment) Act, 2021. The financial year is defined as the calendar year unless it is changed by the legal entity.
Component of accounting records
The accounting records include documents related to the entity’s assets and liabilities, receipts and expenditure, and sales, purchases and other transactions that the entity is a party to. These records can take many forms, including bank statements, receipts, invoices, vouchers, title documents, contracts and agreements, and ledgers.
Location of accounting records
The accounting records need to be kept in either original or electronic form. If the original records are kept at a place other than Seychelles, the entity must inform its Registered Agent in writing of the physical address of that place, according to section 175 (2) (2A) of the Act. It’s important to note that the Seychelles authorities have the right to request the original records.
The accounting records are required to be kept at the registered office in Seychelles, but they are not required to be filed with the Registrar and are not open to public inspection.
Compliance inspections and penalties
Starting from February 2022, the Registrar will conduct on-site compliance inspections to ensure that legal entities in Seychelles are keeping reliable accounting records, and penalties will be applied for non-compliance.
An entity that contravenes section 175 of the Act may be liable to a penalty fee not exceeding US$10,000, and a director who knowingly permits a contravention may also be liable to a penalty fee not exceeding US$10,000, according to sections 175 (5) and (6) of the Act.
SEYCHELLES SUBSTANCE REQUIREMENTS
Seychelles substance requirements refer to the measures put in place by the Seychelles government to ensure that companies registered in the country have a sufficient physical presence and economic activity within the jurisdiction. The substance requirements are designed to prevent companies from using Seychelles as a “letterbox” or “shell” company, which is used to evade taxes or engage in illicit activities.
The substance requirements in Seychelles include the following:
A company must maintain a registered office and a physical presence in Seychelles, which can include an office or a physical location where the company’s books and records are kept.
A company must engage in economic activity that is commensurate with its legal form and the nature of its business. This includes maintaining a minimum number of employees, having adequate equipment and resources, and generating revenue from its operations in Seychelles.
A company must hold regular board meetings in Seychelles, and minutes of these meetings must be kept at the company’s registered office.
A company must maintain accurate and up-to-date records of its financial and operational activities in Seychelles.
A company must comply with Seychelles tax laws and regulations and file accurate and timely tax returns.
Companies that fail to meet these substance requirements may face penalties and fines, or even deregistration. It is advisable to consult with a legal or financial professional to ensure compliance with the substance requirements in Seychelles.
Not all types of business activities are required to meet the substance requirements in Seychelles. The requirement applies to companies that are engaged in activities that are considered to be “High-risk” activities such as:
- Trading of goods and services in Seychelles
- Holding companies and subsidiaries of other companies
- Investment fund management and administration
- International insurance, reinsurance, or captive insurance
- International ship or aircraft registration
- International trust or foundation management
These high-risk activities are closely monitored by Seychelles Financial Services Authority (FSA) and in order to maintain their licences, the companies must meet substance requirements as set out by FSA.
If you are in need of accounting and tax services for your business in Seychelles, please reach out to us. Our team of professionals has the expertise and experience to help you navigate the complex regulations and requirements for accounting and tax compliance in Seychelles. We can assist you with services such as:
- Bookkeeping and financial statement preparation
- Tax planning and compliance
- Payroll and employee management
- VAT registration and compliance
- Annual audit and financial
Don’t hesitate to contact us for any questions or inquiries about our services. You can reach us via email, phone, or through our website. We would be happy to discuss your specific needs and provide you with a customized solution for your business.
Is Seychelles tax-free?
Seychelles is known for its tax-friendly business environment, but it is not completely tax-free. The country has no corporate income tax, capital gains tax, or withholding tax, which makes it an attractive jurisdiction for businesses looking to minimize their tax liability.
However, there are still some taxes that businesses operating in Seychelles will be subject to, such as:
- Value-Added Tax (VAT): Businesses with an annual turnover of more than SCR 2 million (approximately USD 130,000) are required to register for VAT and charge VAT on the goods and services they provide.
- Social Security Contributions: Employers and employees are required to make social security contributions, which are used to fund the country’s social security benefits, such as pensions and health care.
- Property Tax: Properties owned by businesses, including land and buildings, are subject to property tax.
- Business Licence Fees: businesses are required to pay annual business licence fees which are based on the type of business and its turnover.
- Import Duty: Businesses that import goods into Seychelles will be subject to import duty and taxes.
It’s worth noting that the Seychelles government is continuously reviewing its tax policies to ensure that it remains attractive to businesses, so these taxes may change over time. It is always best to consult with a tax advisor or a professional who is familiar with the Seychelles tax system to get the most up-to-date information.
Why is Seychelles a tax heaven?
Seychelles is considered a tax haven because of its favourable tax policies and regulations, which allow businesses to minimise their tax liability. Some of the key factors that contribute to its status as a tax haven include:
- No Corporate Income Tax: Seychelles has no corporate income tax, which means that businesses operating in the country do not have to pay taxes on their profits.
- No Capital Gains Tax: Seychelles also does not have a capital gains tax, which means that businesses do not have to pay taxes on the sale of assets or investments.
- No Withholding Tax: There is no withholding tax on dividends, interest, or royalties, making it an attractive jurisdiction for companies that receive income from other countries.
- Privacy: Seychelles has strict privacy laws that protect the confidentiality of business and personal information, which makes it an attractive option for businesses that want to keep their financial information private.
- Business-friendly regulations: Seychelles has a business-friendly environment and has made it easy for businesses to set up and operate, this is why it is a popular choice for international trade, e-commerce, and investment.
These tax policies and regulations make Seychelles a particularly attractive jurisdiction for businesses looking to minimise their tax liability and maintain confidentiality. However, it’s worth noting that many countries, organisations, and international bodies consider tax havens as countries that provide favourable tax policies that lack transparency and regulations, which can be used to facilitate tax evasion, money laundering and illicit activities.
Therefore, it is always important to consult with a tax advisor or legal professional to ensure compliance with tax laws and regulations when doing business in Seychelles.
Does Seychelles tax capital gains?
There is no capital gains tax in Seychelles. Foreign-received interest, dividends, and other payments are also not taxed.