In light of the evolving situation concerning the COVID‐19 pandemic in the Seychelles and considering the health and wellbeing of the its staff, licensees, stakeholders and their families as a whole, the Financial Services Authority (“FSA”) has deemed it necessary to adopt certain strengthened measures vis‐à‐vis its day to day operations until further notice.

In accordance with new measures put in place by the Department of Health, in an effort to restrict access and movement of the persons to and from the FSA’s offices, the FSA offices at Bois de Rose and Providence will remain closed as of Thursday 9, 2020 until further notice. The FSA will advise as soon as possible with respect to modified work practices such as document drop‐off, delivery and a revised opening hours’ timetable.

The FSA strongly recommends that at this juncture all licensees and stakeholders similarly adopt enhanced/ escalated measures in line with recommendations recently issues by the Department of Health with respect to the restriction of the movement of people and social distancing. In this regard we reiterate recommendations made in past FSA communications that licensees make use of electronic resources in communications to the FSA and other bodies so as to help in the containment of the present situation.

Be advised that the FSA will be providing updates via its website and email as and when these are possible.

Financial Services Authority

The Financial Services Authority (“FSA”) is continuously monitoring the COVID‐19 outbreak and its effects on its operations as well as on the operations of the different licensees, market participants and sectors under its purview. It is important to note whilst the situation concerning the global pandemic continues to evolve at a rapid pace, the health and wellbeing of our staff, licensees and stakeholders and their families remain an absolute priority for the FSA.

National Anti-Money Laundering and Countering the Financing of Terrorism Committee holds second meeting

Tuesday 12th March 2019: The National Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Committee, has started work towards its objective of strengthening the Seychelles’ AML/CFT  framework.

The Registrar of International Business Companies (“Registrar”) as part of its mandate to ensure compliance with the International Business Companies Act 2016 as amended (“IBC Act”) would like to advise all international corporate service providers that it would be commencing a testing program in relation with section 174 of the IBC Act, which relates to keeping of accounting information. This is to also ensure that such records are accessible by competent Authorities upon request.

The Inclusive Framework on Base Erosion and Profit Shifting (“BEPS”) brings together over 115 countries and jurisdictions to collaborate
on the implementation of the OECD/G20 BEPS Package.

The BEPS initiative is an OECD initiative, approved by the G20, to identify ways of providing more standardized tax rules globally.

BEPS is a term used to describe tax planning strategies that rely on mismatches and gaps that exist between the tax rules of different jurisdictions, to minimise the corporation tax that is payable overall, by either making tax profits “disappear” or shift profits to low tax operations where there is little or no genuine activity. In general BEPS strategies are not illegal, rather they take advantage of different tax rules operating in different jurisdictions, which may not be suited to the current global and digital business environment.

Seychelles committed to the BEPS project in 2016 and is therefore required to comply with the 4 minimum standards set out under BEPS. These minimum standards are on harmful tax practices, tax treaty abuse, country-by-country reporting and dispute resolution mechanisms. In terms of harmful tax practices component, the FSA had been working in close collaboration with other government stakeholders and the private sector in order to identify whether any of the Seychelles’ preferential tax regimes are potentially harmful.

Following the review of all relevant preferential tax regimes, amendments were made to the following legislations in order to bring them in line with BEPS:

• The International Business Companies Act has been amended to allow IBCs to carry on business in Seychelles. This is in line with the amendments made in the Business Tax Act to move Seychelles tax system to a territorial system. The tax exemption clause under the IBC Act has been removed. Only IBCs deriving “Assessable Income” in Seychelles will be required to submit Annual Returns and Audited Accounts (in line with the Companies Ordinance 1972) to the FSA.
• Similarly, in light with concurrent amendments in the Business Tax Act to move Seychelles tax system to a territorial system, the Companies (Special Licences) Act has been amended to remove the 1.5% business tax concession and withholding tax exemptions. CSLs incorporated on or before the 16th October 2017 may still be able to enjoy these tax concessions and exemption until the 30th June 2021 (other limitations apply).
• The Insurance Act has been amended to remove tax exemption provision applicable to non-domestic insurers. Non-domestic insurers licensed on or before the 16th October 2017 may still be able to enjoy these tax concessions and exemption until the 30th June 2021 (other limitations apply). Moreover, the Second Schedule of the Business Tax Act was amended earlier this year to remove the tax exemption applicable to reinsurance business.
• The licensable Export Services activities under the International Trade Zone Act has been amended to remove the activities falling within the scope of the OECD work on BEPS. Under the revised export services regime, the holder of an Export Services License will not be allowed to provide any services other than repair and reconditioning of goods, warehousing and rental of storage space or logistic services provided that these activities relate to goods physically handled in the zone, in Seychelles. Export Services operators licensed on or before the 16th October 2017 may still be able to enjoy all concessions and exemptions accorded under the International Trade Zone Act until the 30th June 2021 (other limitations apply).
• The Securities Act and Mutual Fund & Hedge Fund Act have been amended to require licensees to meet the minimum substance requirements in order to benefit from the concessionary tax rate afforded under these legislations. The Regulations provides that the substantial activity requirements shall be met if the licensee (including fund administrator) undertakes its core income generating activities in Seychelles by employing, a reasonably adequate number of suitably qualified persons to carry out the core activities. The licensees are also expected to incur an adequate amount of operating expenditures for such activities.

Following the enactment of these new pieces of legislations, the FSA will now monitor the various new requirements, including the implementation of the minimum substance requirements, in collaboration with the Seychelles Revenue Commission. These new regulations will take effect as of 1st January 2019.

Aside from the BEPS amendments, other non-BEPS amendments were also made to the International Business Companies Act which include:

• limit access to the filed register of directors
• increase of the automatic dissolution period of a company from 5 years to 7 years
• extension of the Registrar’s power to restore a struck off company (rather than a Court restoration order being required) under all circumstances, except where a company is struck off for fraudulent purposes or for a reason which jeopardize the reputation of Seychelles as a financial center.

In view of these amendments, Seychelles hopes to reinforce its commitment to the work of the international community towards best practices.