Seychelles upgraded to largely compliant in matters relating to tax transparency and exchange of information
November 06, 2015
Representatives from different Governmental organisations, led by Ms. Jennifer Morel from the Financial Services Authority (FSA), attended the 21st Meeting of the Peer Review Group (PRG) in Paris from 21st to 24th September 2015 to defend Seychelles supplementary report on tax transparency and exchange of information. The purpose of the meeting was to determine Seychelles’ new status, having completed its supplementary review which was launched in April this year.
In her opening statement at the PRG meeting, Ms. Morel stated that “The Seychelles team- the private sector included- had worked hard to redress areas of concern in accordance with the issues flagged by the Peer Review Group (or PRG) in 2013. We are confident that our supplementary report addresses the concerns related to those areas where we were previously non-compliant. We would like to take this opportunity to express our appreciation for the work done by the assessment team, the Global Forum Secretariat and the PRG Group in evaluating our Supplementary Review.”
Ms. Morel further pointed that “Although we are small and we lack adequate resources, we recognise that fighting tax evasion is key to our own growth and we are determined to show our full engagement. This is why we have committed to the new standard for exchanges as early as 2017. As such, we signed the Multilateral Competent Authority Agreement in May and in July, in collaboration with the Global Forum Secretariat and the Organisation for Economic Co-operation and Development OECD, Seychelles hosted an Automatic Exchange of information Workshop. By hosting this workshop we are emphasizing the importance for all countries to be fully engaged in the new standard. We firmly believe that, to successfully implement the principles of the common reporting standard, we must all be engaged in the process at the onset.”
Seychelles, since 2009, has been party to the Global Forum on Transparency and Exchange of information for Tax purposes which is the multilateral framework charged with the in-depth monitoring and peer review of the implementation of the standards of transparency and exchange of information for tax purposes. The ultimate goal of the Global Forum is to help jurisdictions to effectively implement the international tax standards. All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, have to be reviewed. Seychelles have completed both Phases of the review but given its “non-compliant” rating for Phase 2 in 2013, it was allowed to request for a supplementary review in March 2015.
To correct the deficiencies in the 2013 Phase 2 Review in relation to the availability of information, Seychelles amended the International Business Companies Act (IBC Act) to abolish bearer shares and to require all share registers to be kept at the international business company’s (IBC) registered office in Seychelles so as to enhance the effectiveness and efficiency of the FSA monitoring process.
New provisions were introduced to require IBCs to submit an Annual Return, in the form of a declaration that the IBC is keeping accounting records in accordance with the IBC Act which can be made available through its registered agent and that the share register located at the registered office is complete and updated.
The IBC Act was also amended to increase the penalty fee in instances of non-compliance with the share register and accounting record keeping requirements and to provide for additional grounds for striking-off which includes, failure to comply with a request for information from the Seychelles Revenue Commission and failure to pay penalty fees imposed by the FSA.
In an effort to improve the availability of information relating to ownership and accounting records, in March 2015, Seychelles introduced new obligations on International Corporate Service Providers (CSPs) to monitor compliance of IBCs, Limited Partnerships and Foundations with ownership and accounting record keeping requirements and to inform the FSA of any continued non-compliance by the specified entity or foundation.
During the past 2 years, the FSA had conducted Focused Onsite Inspections at the registered office of all 65 of its licensed ICSPs. In cases of non-compliance identified by the FSA, immediate enforcement action was imposed i.e. financial sanction or striking off the register the name of the IBC, and in most cases recorded the non-compliant IBCs complied with the requirements following the imposition of the applicable sanction.
Seychelles rectified the Double Taxation Conventions (DTCs) that were not up to international standards. Additionally, Seychelles became a signatory to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters on the 24th February 2015.