Seychelles needs to ingest more resources in the implementation of the Base Erosion and Profit Shifting (BEPS)
March 27, 2018
Monday 26th March 2018, VICTORIA, SEYCHELLES;This came out during the courtesy call made by Mrs. Ingela Willfors ,a United Nations Tax Expert from the Ministry of Finance of the Republic of Sweden during her meeting with the Minister of Finance, Trade and Economic Planning, MFTEP for the twinning program on Base Erosion and Profit Shifting Project between Seychelles and the Kingdom of Sweden .
During her meeting with Minister Larose on Friday 23rd March 2018, Mrs. Willfors highlighted Sweden’s tax system and shared Sweden’s best practices in relation to the implementation of the Base Erosion and Profit Shifting (BEPS) project, but more specifically the implementation of the Multilateral Instrument (MLI) to implement Tax Treaty Related measures to Prevent Base Erosion and Profit shifting. The MLI which modifies Tax Treaties/Double Taxation Avoidance Agreements (DTAA’s) was signed by Seychelles in June 2017 at the Organisation for Economic Co-operation and Development(OECD) Conference Centre in Paris. This was signed by the Principal Secretary for Finance, Mr. Patrick Payet but Seychelles has not yet ratified the Instrument.
Mrs. Willfors, briefed the Minister of her findings and recommendations on Seychelles progress and capacity in implementing the BEPS project during her five-days visit to the relevant stakeholders implementing the Project in Seychelles, which included the Seychelles Revenue Commission (SRC), the Financial Services Authority (FSA). Mrs. Willfors pointed out that Seychelles has to implement both some short and long term measures but given the deadlines provided by OECD the most pressing actions in the project should be prioritized. Her main recommendation was that while recognizing Seychelles is a small country with limited resources and like many other developing countries were asked to join the program at a later stage compared to the G20 OECD countries, in order to remain a joure with the minimum standards and to implement the actions as fast as possible, more resources need to be injected in the Project by Seychelles to ensure compliance.
Dr. Larose welcomed the initiative and expressed his enthusiasm to work with Ms. Willfors and her team. He also noted the difficulties in implementing such a huge project, but nonetheless, reassured Ms. Willfors that Seychelles is committed to remaining compliant with International Tax Standards and will work on implementing her recommendations.
The visit by Ms. Willfors is one of many which will take place during the two years of the Twinning program with Seychelles. The Twinning program is a form of assistance to the Seychelles for the BEPS Project, whereby tax officials from the Kingdom of Sweden, the experienced partner, will guide Seychelles in its implementation of the BEPS project which is a relatively new standard.
The BEPS project is an international obligation which Seychelles committed itself to at the request of OECD in 2016 to conform to international standards on tax matters. It includes fifteen (15) Actions; four of which are minimum standards and should be implemented by all countries within a set time, these are Action 5,6,13 and 14.
It is a new framework established by the OECD, that allows countries and jurisdictions to work jointly for the implementation of the package of measures against tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations . This framework brings together countries and jurisdictions as Associates on an equal footing with OECD and G20 countries in the OECD’s Committee on Fiscal Affairs.
Adherence to the BEPS Project involves changes to Seychelles current legislations and implementation of new ones. Seychelles will undergo peer reviews under the project. This year’s review will be undertaken by OECD on Action 5, which relates to countering harmful tax practices more effectively; Action 6 on Preventing Tax treaty abuses and Action 13 , Country by Country Reporting. Another review is also expected in 2 years’ time on Action 14. Action 14 refers to Mutual Agreement Procedures in bilateral Double Taxation Avoidance Agreements.