Monday, February 22, 2021
The Seychelles Ministry of Finance has said it is confident that it will be removed from the EU's list of non-cooperative jurisdictions when it is next reviewed.
In a February 16 statement, the Ministry said: "The Seychelles has taken the key steps in reforming its territorial tax regime to address concerns of the European Union (EU). Together with addressing the concerns of the Global Forum on Transparency and Exchange of Information for Tax Purposes, these changes are intended to ensure that the Seychelles is removed from the EU's list of non-cooperative jurisdictions later this year."
The Ministry explained that the Business Tax (Amendment) Act, 2020, which was enacted on December 28, 2020, will narrow the scope of the exemption from tax for foreign income. The Ministry said, specifically, it will ensure the following applies for large companies:
The new conditions apply only to those companies which (with their affiliates) exceed a size threshold. The purpose of this size threshold is to exclude small companies that do not have an impact on the EU market, the Ministry said.
The Act also updates the definition of "permanent establishment" to align with the latest model definitions of the Organisation for Economic Cooperation and Development (OECD) and the United Nations, said the Ministry.
Further, the Ministry outlined the work the territory has been undertaking on tax transparency, having been rated only "partially compliant" by the OECD Global Forum in 2020.
Work has continued to strengthen availability, access, and exchange of information for tax purposes, the Ministry said, in particular on beneficial ownership information and access to accounting information. For instance, the Ministry said The Beneficial Ownership Act, 2020, came into operation on the August 28, 2020, and ensured that the definition of beneficial owner satisfies the Financial Action Task Force (FATF) and OECD requirements.
The Ministry said: "The above steps mark a critical point in the work on tax policy reform and the revised regime is now the subject of discussion with the EU's Code of Conduct Group and the Global Forum. Once the new rules on availability of information have been passed, the Seychelles will test the system with firms to build a track record under the new system. Following the success of such testing, the Seychelles will be reviewed by the Global Forum, with the view to achieving a rating of 'Largely Compliant' or above [necessary for removal from the EU tax blacklist]."
"The timing of this review means that the Seychelles will not be in a position to satisfy the requirement of a 'Largely Compliant' rating by the time that the EU's non-cooperative jurisdiction list is reviewed by the Economic and Financial Affairs Council of the EU in their meeting this week."
"Consequently, discussions with the Code of Conduct on the final details of the territorial regime are ongoing, with a view to the removal of the Seychelles from the non-cooperative jurisdiction list at the next review point in October 2021."