21 May 2024

Seychelles: A wealth of opportunities

Banking & Finance
| The European |

Much loved as a tourist destination, Seychelles is also home to a world-class business infrastructure – CEO of the FSA Seychelles Randolf Samson has the details

The Republic of Seychelles is an archipelago of 115 islands around 1,500km off the east coast of Africa. A former British colony, Seychelles gained its independence in 1976, becoming a democratic republic. With pristine waters and white sand beaches, the beauty of the country is there for all to see, and the local economy is driven by tourism, commercial fishing, and a thriving international financial industry.

Seychelles is an established and reputable international financial services jurisdiction, offering international businesses and investors a range of sophisticated products that meet the increasingly demanding criteria of flexibility, adaptability and security. Enhanced by a robust regulatory and compliance framework, Seychelles’ wide-reaching domain includes banking, insurance, company registration, trust, foundations, investment funds and securities, supported by excellent infrastructures, including secure telecommunications, and a robust legal and fiscal environment underpinned by political and economic stability.

The regulatory environment has been carefully developed through a partnership between the public and private sectors. This has allowed Seychelles to find the right balance between the international requirements of global best practices and the needs of international businesses and investors.

Seychelles financial services offering boasts the following key features:

  • Portfolio of sophisticated and versatile structures
  • Close collaboration between the regulators and private sector
  • Stable political environment
  • 24-hour incorporation of International Business Companies
  • Modern telecommunications infrastructure
  • Efficient and fast processing of residence and work permits
  • No foreign exchange controls
  • Skilled, professional and bilingual workforce
  • Good regulatory practices and compliant with international standards

Where business is a pleasure

Seychelles enjoys one of the highest standards of living in Africa and, with its celebrated climate and quality of life, it has attracted and developed a high- level talent pool of professionals to deliver expert services to international clients.

Seychelles, like many other well-regulated and respected international financial centres, has long been a jurisdiction of tranquillity and of careful and constructive development. With the adaptation of a territorial taxation system, all companies (including International Business Companies (IBCs) and Companies (Special Licences), are not subject to any Seychelles’ tax or duty on income or profits if they do not derive assessable income (i.e. Seychelles’ sourced income) in Seychelles. However, special rules apply to companies forming part of a multinational group where any foreign sourced income will not be
taxed in Seychelles if the company is a “qualifying company” as defined under Eleventh Schedule of the Business Tax Act.

Among the first legislations enacted in 1994 to introduce the international financial services sector in Seychelles were the IBC Act and the International Trusts Act. The enhanced versatility of the Seychelles’ IBC makes them ideal for any business, from personal services companies to collective investment schemes operating locally or internationally. Seychelles operates one of the fastest IBC registrars in the world, with same day incorporation.

The Seychelles enacted a modern Trusts Act in 2021 to replace the International Trusts Act, 1994.
A trust is created when the owner of the assets (the settlor) transfers ownership of those assets to a trustee to hold and administer under the terms of a trust deed for the benefit of one or more beneficiaries or for a charitable or other purpose. As the assets of a trust are not the property of the settlor, trusts are useful vehicles for wealth management purposes including to hold and protect family wealth and for “outside estate” succession planning. A Seychelles trust is required to have a Seychelles resident trustee licensed by the FSA. A Seychelles trust and its trustee are not liable to tax in Seychelles in respect of the foreign income or profits of the trust.

The growing reputation of Seychelles on the international scene has seen the demand to develop a greater range of products. This has resulted in the development of new interests. Companies (Special Licences), commonly referred to as CSLs, introduced in 2003 are permitted to engage in any range of activities, including international holdings, intellectual property licensing and services.

“Seychelles has attracted a high-level talent pool of professionals”

Seychelles foundations are provided under the Foundations Act, 2009. Analogous trusts, the wealth protection and succession planning benefits of a foundation stem from the divestment of ownership of assets by the founder. When a founder donates assets to the foundation, those assets cease to belong to him or her and the foundation itself becomes the sole legal and beneficial owner of its assets. Unlike a trust (which may only hold property through a trustee), a foundation is a separate legal entity, capable of holding property in its own right. Like a trust, a foundation has beneficiaries, though they have no ownership interest in foundation assets unless a distribution is made to them. A foundation’s council is responsible for carrying out the foundation’s objects and for the management and distribution of its assets.

A Seychelles foundation must have a minimum of one councillor, who may be an individual or company. It is not obligatory to appoint a Seychelles resident licensed councillor. The names of councillors, beneficiaries and protectors are not required to be filed with the FSA and are not publicly accessible. Similar to a trust, a foundation may appoint a protector. A Seychelles foundation is not liable to Seychelles tax in respect of its foreign income or profits. The Foundation Act provides for a two-year claim limitation period protecting foundation assets from claims by creditors of the founder and exclusion of foreign forced-heirship laws.

The Seychelles Limited Partnership (LP) allows two or more legal persons to form an LP but the partnership must consist of one or more General Partners and one or more Limited Partners. At least one general partner must be a Seychelles IBC or a CSL. A body corporate may be a General or Limited Partner and a General Partner may hold an interest as a Limited Partner.

Collective Investment Schemes in the Seychelles are licensed and supervised under the Mutual Fund and Hedge Fund Act, 2008. Seychelles allows for companies incorporated either under the Companies Act 1972 or the International Business Companies Act, 2016-unit trusts or partnerships to be licensed as private, professional or public funds, giving fund managers a long list of potential fund vehicles. These companies can be constituted in Seychelles or in any recognised jurisdictions. An Exempt Foreign Fund status is available to funds that can satisfy the FSA that it is in good legal standing and holds a valid licence or other authorisation from one of the recognised jurisdictions. An Exempt Foreign Fund must be already licensed in a recognised jurisdiction, administered by a Seychelles licensed fund administrator.

A Protected Cell Company (PCC) is a Seychelles company that is able to create one or more cells with segregated assets and liabilities. Each cell, however, does not constitute a separate legal entity. A PCC only needs one set of directors, company secretary and registered office. It can be incorporated from the onset as a PCC or converted from an existing company. Creditors to a particular cell only have recourse to the assets of that specific cell and the non-cellular assets of the PCC. PCCs can be incorporated under the Protected Cell Companies Act, 2003 or under the IBC Act, 2016.

“Seychelles operates one of the fastest IBC registrars in the world”

The Insurance Act, 2008 modernises and allows for greater flexibility within the regulatory framework
of the Seychelles insurance industry. Provisions are made for the regulation of a wide variety of products including captive insurance, reinsurance, short-term and long-term insurance.

The Securities Act, 2007 provides the regulatory framework for securities trading within the Seychelles. The legislation safeguards investor confidence by licensing and regulating all components of the market from the securities exchange, Clearing Agencies, Securities Facility, securities dealers to the investment advisors and enforcing internationally accepted guidelines. Persons holding a licence under the Securities Act, 2007 can benefit from business tax at a rate of 1.5% on its worldwide taxable income, if the minimum substance requirements are met.

Kick back on Mahe island

Upholding due diligence

In 2020, Seychelles enacted a new Anti-Money Laundering and Countering the Financing
of Terrorism Act to replace the Anti-Money Laundering Act 1996 and introduce a new Beneficial Ownership Act in order to consolidate the country’s fight against money laundering and terrorist financing. Needless to say, the growth of Seychelles international financial services sector has been taking place in the shadow of a growing interest in the sector by various international agencies, such as the OECD and the FATF.

To support our international obligations and to gain greater credibility, Seychelles committed itself to other several international organisations namely the International Organisation of Securities Commission (IOSCO), Committee of Insurance, Securities, and Non- Banking Authorities (CISNA), Financial Action Task Force (FATF), European Union and the International Association of Insurance Supervisors (IAIS).

The country has rapidly become an internationally recognised pacesetter. From diversifying its tourism industry and also its economic base, exploring new avenues to fortify its non-banking sector, that will work alongside new and cutting-edge digital innovations such as fintech and the blockchain exchange.

ABOUT THE AUTHOR

Randolf Samson has been CEO of the Financial Services Authority Seychelles (FSA) since the start of 2023. Prior to his appointment, he was Director of Anti-Money Laundering and Countering the Financing of Terrorism section within the FSA.

Further information

fsaseychelles.sc

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