Seychelles' tax system to be reviewed by the Organization for Economic Co-operation and Development
July 12, 2019
Wednesday 10th July 2019, VICTORIA, SEYCHELLES; A review that would seek to enhance the country’s business tax system is expected to be carried out in the country as from the 22nd to the 26th July 2019, by the Organization for Economic Co-operation and Development (OECD
As was announced in the 2019 budget speech on 5th November 2018, by the Minister for Finance, Trade, Investment and Economic Planning, Maurice Loustau Lalanne, a new business tax regime will be discussed with the stakeholders and the business community, with implementation expected to be from 2020, if deemed feasible. The intent is for the implementation of a simpler option that would also aim to simplify the operations of the Seychelles Revenue Commission.
The tax policy review would provide an independent, in-depth and comparative assessment of the country’s business tax system, as well as concrete and tailored tax policy recommendations. The review would support the implementation of Seychelles’ business tax system and analyse the effects of alternative tax policy choices. The review would benchmark Seychelles’ tax system against comparable countries and assess Seychelles’ different tax reforms proposals.
Several consultative sessions would also be organized during the week long schedule aimed at:
• Discussion on areas for business tax simplification
• Discussion of the advantages/ disadvantages of the use in Seychelles of:
o differentiated statutory CIT rates across sectors
o a progressive CIT rate schedule (including a 0% rate)
• Assessment of the domestic investment climate including the impact of a wide range of special regimes from a tax policy perspective
• Discussion of the tax depreciation rules and their impact on incentives to invest
• Analysis of tax incentives in terms of their design and effectiveness, tax revenue foregone, administrative complexity and possibilities for abuse, and alignment with international standards and best practices; the focus would be on tax incentives for domestic and foreign direct investment
• Assessment of Seychelles’ international competitiveness: calculation of corporate effective tax rates on FDI, including dividend and other withholding taxes on outbound payments
• Discussion of interest limitation rules, loss carry-forward provisions, etc. and their design in the context of Seychelles • Discussion on tax compliance and strategies used by companies for tax planning
• Discussion on the design of the tax regime for micro enterprises, including the presumptive taxation regime for unincorporated businesses, as well as a discussion of different reform options, including an evaluation of:
o alternative levels for the threshold of the turnover tax
o a fixed turnover rate for the economy or a differentiated rate across sectors
o a proportional or a progressive turnover tax rate
• An evaluation of the alignment of the presumptive taxation regime and the standard tax regime, in order to prevent that businesses, face tax-induced disincentives to grow into the regular tax regime
• Analysis of the tax-induced incentives for business to incorporate or not by comparing the tax burden across different legal forms
- Discussion on broader tax reform options to finance the CIT reform revenue shortfall
To note, the OECD is aninternational organisation that works to build policies for better lives. They work with governments, policy makers and citizens to establish international norms and finding evidenced based solutions to a range of social, economic and environmental challenges. They work on issues to improve economic performance and creating jobs to fostering strong education and fighting international tax evasion. They provide provide a unique forum and knowledge hub for data and analysis, exchange of experience, best practice sharing and advice on public policies and global standard setting. The CFA within the OECD, covers international and related domestic tax policy issues and amongst other responsibilities are tasked to assist governments on their tax reforms.
The Finance Department is also issuing a tentative calendar of consultative meetings and invites all relevant stakeholders to engage actively during this review process.
- Wednesday 24th July 2019: ICCS, room 1 from 0900 to 1200.
Department of Fisheries, Seychelles Fishing Authority, Seychelles Fishermen and Boat Owners Association, Department of Agriculture, Seychelles Agricultural Agency and Seychelles Farmers Association.
- Wednesday 24th July 2019: liberty House from 1430 to 1630
Financial Services Authority & Seychelles International Financial Services Association
- Thursday 25th July 2019: STC Conference room from 0930 to 1230
General Consultation- all other stakeholders
- Thursday 25th July 2019: STC Conference room from 1330 to 1530
Department of Tourism, Seychelles Tourism Board, Seychelles Hospitality and Tourism Association and Hôteliers, Tour Operators, dive centres
- Friday 26th July : (venue and time to be confirmed)
Praslin Island Businesses, Praslin Business Association and La Digue Island businesses