Seychelles denounces EU Council’s decision to add it on Annex I of its list of non- cooperative jurisdictions for tax purposes
October 18, 2023
The European Union (EU) Council has added Seychelles to Annex I of the EU list of non-cooperative
jurisdictions for tax purposes (the so called EU blacklist), in view of Seychelles’ rating of Partially Compliant
by the Global Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum) for
Exchange of Information on Request.
The Minister for Finance, National Planning and Trade, Mr. Naadir Hassan denounced the Council’s
determination and stated “the addition of the Seychelles on the EU blacklist on the basis of rigid application of
criterion set purely for non-member states goes contrary to the purported principles of the list being promotion
of good tax governance standards.”
“The EU have had a complete disregard for the specifics relating to Seychelles’ rating, despite extensive
engagement with them, illustrating the progress made and evidencing the reforms undertaken and their
effectiveness in practice. Their automatic listing of the country despite this evidence of political commitment to
the standards on tax transparency illustrate a careless approach to the harm such listing entails. It is inexcusable
that historic deficiencies which have been fully remedied should continue to have such significant impact on the
jurisdiction. We call on the EU to review their listing procedures to provide greater transparency,
consistency and equitable treatment, such that any country, small, big or well-connected is justly
considered. The fact that the list consists predominantly of small island developing states highlights the
injustice of the application of their listing criteria.”
The EU Council applied a strict application of their criterion 1.2 of their tax transparency criteria, which
provides that if a jurisdiction is overall not compliant or partially compliant with the Global Forum’s standard
on exchange of information on request (the Standard), then that jurisdiction is proposed to be added to the EU
list of non-cooperative jurisdictions for tax purposes. However, these tax transparency criteria apply to purely
non-member states, and certain exceptions to strict application of these criteria have been made in certain
instances.
“Seychelles is calling on the EU to immediately act to review the listing criteria to effectively provide a fairer
governance structure and level the playing field for all jurisdictions. Non-member states cannot be held to
higher standards than member states.”
The Seychelles’ rating of Partially Compliant against the Standard is primarily due to difficulties encountered in
responding to exchange of information requests relating to one single registered agent which left the jurisdiction
together with all its records in 2018, following the public disclosures in 2016 of documents linked to the
activities of several service providers focusing on offshore operations (“the Panama Papers”). These
disclosures resulted in a significant increase in the number of exchange of information (EOI) requests received
by Seychelles related to this one registered agent, and unfortunately, as they had already left the territory
together with all records, the Seychelles competent authority was unable to obtain the information to satisfy the
requests.
Statistically this translated to the Seychelles being unable to provide legal and beneficial ownership information
to respectively 26% and 35% of the EOI requests received through the period under review (April 2019 to
March 2022), and it is purely these statistics which the Peer Review Group (PRG) contended hindered the
country’s upgrade to a Largely Compliant rating in relation to element A1 of the Standard (being availability of
legal ownership, beneficial ownership and identity information) and consequently hindered an overall rating of
Largely Compliant.
The Seychelles authorities however have repeatedly contended that these very same statistics can illustrate the
disproportionate impact of this single registered agent which left the territory in 2018 given that should the
cases involving this registered agent be excluded from the analysis, Seychelles was successful in satisfying
more than 99% of the requests for legal ownership and more than 91% of the requests for beneficial ownership
through the review period.
Alongside a swathe of other reforms in the interest of tax transparency undertaken by the country since 2020,
the Seychelles specifically amended legislation to address this vulnerability by requiring that all registered
agents which leave or cease operations in the territory hand over their records to the Financial Services
Authority, and this mechanism has proven successful in permitting the competent authority to access records in
practice. The Report and the PRG both acknowledged the disproportionate impact of this one single legacy
matter, however, the determination remained that there was no precedence for discounting this impact on the
statistics.
The Seychelles intends to submit a further request for supplementary review to the PRG at the earliest
opportunity, and remains positive for the outcome of the same, being conscious of the extensive legislative
reforms which have already been implemented including:
- legislative reform underpinning availability and access to information, including the following:
o The Beneficial Ownership Act, 2020
o The Anti-Money Laundering and Countering the Financing of Terrorism Act, 2020
o The Trusts Act, 2021
o The Limited Partnerships (Amendment) Act, 2021
o International Business Companies (Amendment) Act, 2021
o Foundations (Amendment) Act, 2021
- strengthening supervision (reporting requirements) and monitoring,
- strengthening enforcement and penalties,
- streamlining exchange of information processes,
- implementing a tracking system, building a statistics database,
- focusing on capacity building both in the administration and of taxpayers, and
- extending the exchange network to include all relevant jurisdictions.
Whilst lamenting the unfairness of the EU listing, “the Seychelles will not permit this to impede on our
objective of being a key player in the promotion of tax transparency, and will continue to address any
deficiencies which detract from the achievement of this objective”, said Minister Hassan.