Payet said removing Seychelles from the list was good news for the country’s business community. (401 (K) 2012 / Flickr) Photo license: CC BY-SA 2.0
(Seychelles News Agency) – The European Union removed Seychelles from the blacklist of tax havens after the island nation amended its legislation to bring it into line with international standards, a senior government official said on Wednesday.
Secretary of State at the Ministry of Finance Patrick Payet told reporters that “the government has welcomed the good news and remains committed to working with international institutions to ensure that our legal framework conforms to international standards.”
Payet said removing Seychelles from the list was good news for the country’s business community.
Blacklisted countries face reputational risks, which can affect their ability to access funds from international development lenders.
Seychelles was blacklisted from the EU’s gray list after a meeting of the Economic and Financial Affairs Council on Tuesday. The western Indian Ocean island nation was blacklisted by the European Council in February last year for having a damaging preferential tax regime.
Payet said Seychelles was blacklisted because the EU was concerned about the territorial tax system adopted in December 2018, as it believed that “it may facilitate double non-taxation and there may be income which are not taxed in any jurisdiction “.
Before the amendments to the Business tax law, only income raised in the Seychelles and originating in the Seychelles should be taxed in accordance with the law on business tax.
Another EU concern was that Seychelles had not achieved a rating at least broadly in line with the Organisation for Economic Co-operation and Development (OECD) global forum for exchanging tax information with other countries.
“In April of last year, Seychelles obtained a partially compliant mark in their exam and since then the government has introduced new laws and amendments to some laws to ensure that we are in line with international standards,” added Payet.
Changes have been made to the Business tax law in which a revision has been made in the definition of permanent establishment relating to the location of a business or where the business activity takes place.
Under the changes, if a business were to be taxed, any tax exemption for activities conducted outside the Seychelles by a company registered in Seychelles, the company must pay its taxes in the country where it accumulates income in accordance with the Establishment Review stable. There would be no exemption on revenue collected from intellectual rights.
All the amendments entered into force on September 16 and with this development, Seychelles requested further review of their information exchange framework.
“The OECD has requested that an expert visit be made to assess the request. This is why the EU has kept Seychelles on the gray list for this criterion until the experts complete their review,” said Payet.
The removal of Seychelles from the blacklist will be good news for the banking system.
“We saw that when people made payments abroad, a lot of questions were asked. There was income coming from abroad, especially in the tourism sector, and a lot of questions were asked, so it took longer. There was also pressure on the corresponding banking relationships. Removal from the blacklist will open the door to the business world and this will allow our economy to recover, ”Payet said.