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Why use Seychelles?. Abacus Seychelles. Contents. Where is Seychelles? Tax system in Seychelles Why use Seychelles as an offshore jurisdiction? Offshore in Seychelles Seychelles International Business Company and its possible uses Special License Company and its possible uses

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contents

Abacus Seychelles

Contents
  • Where is Seychelles?
  • Tax system in Seychelles
  • Why use Seychelles as an offshore jurisdiction?
  • Offshore in Seychelles
  • Seychelles International Business Company and its possible uses
  • Special License Company and its possible uses
  • Other offshore products and their uses

+4Hrs GMT

South of Equator

Population 80,000

where is seychelles

Abacus Seychelles

Where is Seychelles?
  • Independent nation comprising of a group of islands situated in the Indian Ocean
  • Democratically elected Government
  • Strategically located 7 degrees south of equator
  • Modern reliable infrastructure
  • Currency: Seychelles Rupee
  • English, Creole and French are official languages
  • Gujarati widely spoken
  • Situated at GMT +4 hours; i.e. one and half hours behind India
  • Population of 80,000
  • Large Indian presence in telecommunication, construction, tourism, health and retail sector
  • Bharti and Tata Groups have presence
  • Double tax treaty with India being negotiated

+4Hrs GMT

South of Equator

Population 80,000

tax system in seychelles

Abacus Seychelles

Tax system in Seychelles
  • Source based – Only income earned from doing business in Seychelles is subject to tax (one exception to the source based rule – the Special License Company)
  • Only one head of income subject to tax - business tax
  • No taxation of salaries, house properties, capital gains or income from other sources
  • No transfer pricing regulations
  • Tax rate for domestic companies upto 40 per cent

+4Hrs GMT

why use an offshore jurisdiction like seychelles

Abacus Seychelles

Why use an offshore jurisdiction like Seychelles?
  • Reasons for going offshore and utilising offshore companies for tax planning include:
    • Ease of setting up companies and doing business
    • Residence of intangible and intellectual property
    • Free remittance of profits and capital
    • Access to tax treaties
    • Security of property rights
    • Low transaction costs for example zero capital / stamp duty on share transfers
    • Banking privacy
    • Enhanced privacy
    • Customs and duty exemptions
    • Fewer restrictions
    • Sanctity of contracts
    • Foreign investments inducements
    • Higher yields and returns
    • Bank facilities

South of Equator

Population 80,000

offshore in seychelles

Abacus Seychelles

Offshore in Seychelles
  • Offshore legislation introduced in 1994
  • Initial offshore legislation provided for International Business Companies (IBC) or non resident Seychelles company
  • Success of the IBC lead to development of more value added areas of offshore business
  • Since 2003, Seychelles started a rapid expansion of its treaty network
  • Use of domestic companies called Special License companies to avail of treaty network
  • No sanctions imposed against it by OECD
  • Other products include
    • Free trade zones
    • Trusts
    • Limited liability partnerships
slide7

Abacus Seychelles

IBC
  • Unique type of company which can undertake any activity outside the Seychelles except for banking, insurance, mutual funds and trusts
  • Minimum of one shareholder and director
  • Zero tax liability in Seychelles
  • Can be incorporated within 24 hours
  • Competitive license fee fixed for life
  • No requirement to disclose shareholder
  • No requirement to file annual returns with the Registrar
  • No filing requirements
  • Minimum paid up share capital USD 1
  • All civil proceedings heard by Judge in Chambers
  • Change of domicile can be effected easily
  • Confidentiality is guaranteed
  • Is considered as a non resident company and cannot avail treaty benefits
possible uses of an ibc

Abacus Seychelles

Possible uses of an IBC…

Offshore recruitment agency and outsourcing

Domestic recruitment

agency in India

Manpower

Supplies manpower to offshore recruitment agency

Manpower recruited by offshore agency

Supplying manpower under contract

Customer overseas

Seychelles IBC – Offshore recruitment agency

possible uses of an ibc1

Abacus Seychelles

…Possible uses of an IBC…

Advantages of this structure

  • Ability of the offshore recruitment agency to assume responsibility for non-wage obligations:
    • Employee’s retirement and savings plans
    • Superannuation liabilities
  • No fringe benefit tax, perquisite taxation, etc
  • No withholding taxes on salary paid to employee
  • As a result employees take home pay higher
  • No service tax / VAT or GST or other domestic taxes payable on fees received by offshore recruitment agency from customer
  • Zero tax in Seychelles on fees received from customer
  • Zero tax liability for employee in Seychelles on salary received
  • Could simplify employees tax liability – ie avoid being taxed both in the country of receipt of salary and in the country to which deputed too under the contract but this would need to be examined on a case to case basis as is dependent on the residential status of each employee
  • Structure could also be used by large companies who regularly depute individuals to overseas branches / group concerns

Issues

  • Ensuring an arms length price between the domestic recruitment agency in India and the Seychelles IBC
possible uses of an ibc2
…Possible uses of an IBC…

Royalty / Intellectual property (IP) company

Company X

Company Y

Company Z

Pays royalty/ income for use of IP to IBC

Seychelles IBC

Transfer IP / royalty to a Seychelles IBC

  • Royalty / IP income exempt from tax in Seychelles
  • IP protected from competitors – no publicly available information about the Company
  • However, the ability to transfer an IP to an offshore jurisdiction depends on domestic laws
possible uses of an ibc3
…Possible uses of an IBC…

International trading company

Case study

  • Mr X an Indian businessman, resident in India buys from Bangladesh, processes it in Pakistan and sells it in Japan
  • Mr X wonders if he can structure the business in a tax effective manner using offshore

Possible Offshore solution (Indian tax implications to be examined by Indian tax advisors)

Mr X

Seychelles IBC – Zero tax liability in Seychelles on profits accruing

Bangladesh – Purchases raw material

Pakistan – processes leather

Sold in Japan

possible uses of an ibc4

Abacus Seychelles

…Possible uses of an IBC

International e-training

  • Mr Y, a leading international tax expert based in India wishes to offer international tax training courses over the internet
  • The participants will be from countries all over the world who will pay via the internet; lecturers will also be from all over the world
  • He structures the business in a tax effective manner using offshore

Lecture A – Europe

Lecturer B – US

Mr Y

Paid directly by IBC

Offshore bank

Seychelles IBC – Zero tax liability in Seychelles

Student A

Pay directly into the offshore bank

Hosts training website

Student B

possible uses of an ibc5

Abacus Seychelles

…Possible uses of an IBC

Advantages of structure

  • Profits from the e-training course are exempt from tax in Seychelles
  • Easier to pay lecturers – no exchange controls
  • Lecturers not liable to pay tax on money received by them from the IBC in Seychelles – no withholding taxes, etc
  • Mr Y is liable to pay tax in India on only income received by him from the IBC – ie salary or dividends distributed to him
possible uses of ibc

Abacus Seychelles

…Possible uses of IBC

Other possible uses

  • Service based activities like marketing, sales and distribution, agency agreements
  • Financial and consultancy services
  • Combined with larger structures to make them more tax efficient
  • Invoicing and reinvoicing
  • Few of the large companies undertaking activities from Seychelles – Heinz, Lehman brothers, Chelle Medicals (listed on the Singapore Stock market)
  • Regional headquarters (eg for Asia Pacific or EMEA) - No PE risk or risk of attribution of regional profits
special license companies csl

Abacus Seychelles

Special license companies (CSL)…
  • Seychelles domestic company
  • Used to avail treaty benefits

Taxation

  • Liable to Seychelles business tax at the rate of 1.5% on its world-wide taxable income (exception to source based rule)
  • Exempt from withholding taxes on dividends, interest and royalties
  • Exempt from stamp duty on property transfers, share transfers and other business transactions

Compliance

  • Minimum of 2 Directors – preferably Seychelles resident to prove management and control in the Seychelles
  • Seychelles resident Company Secretary required
  • Annual company return, tax returns and audited accounts to be filed
treaty network

Abacus Seychelles

Treaty network…

Ratified/In Force

China

Indonesia

Oman

South Africa

Botswana

Mauritius

Malaysia

Thailand

Vietnam

Negotiations Concluded

Egypt

UAE

Bahrain

Russia

Czech Republic

Tunisia

Namibia

Kuwait

Negotiations in

Progress

Lesotho

Cuba

Bahrain

Ivory Coast

Burundi

Malta

Morocco

Philippines

Uganda

Signed

Zimbabwe

Vietnam

Belgium

Cyprus

Qatar

Agreement to Negotiate

Israel

Portugal

Turkey

Tanzania

Zambia

Sweden

Kenya

India

international trade zone

Abacus Seychelles

International Trade Zone
  • Undertaking redistribution, light assembly, manufacturing, processing and export services from the Seychelles
  • Can undertake management services from Seychelles and offer the following benefits:
    • Tax free operations of regional headquarters eg (for Asia Pacific or EMEA) - No PE risk or risk of attribution of regional profits
    • License fee fixed for life
    • Residency guaranteed for owners and operators
  • Benefit from trade agreements which Seychelles has signed
    • Preferential access to EU and US markets using the Lorne convention and African Growth Opportunities in America
    • Member of the Common Market for Eastern and Southern Africa
offshore trusts

Abacus Seychelles

Offshore Trusts

What assets can be held by an offshore trust?

  • Shares and stocks in both quoted and unquoted companies.
  • Investment portfolios.
  • Real and intellectual property
  • Bank deposits.
  • Life assurance policies issued on the life of the Settlor
  • Most other types of asset

Advantages of Offshore Trusts

  • Confidentiality
  • Wealth protection
  • Tailored to specific family requirements
  • Recognized in all common law jurisdictions
  • Increasing recognition in important civil law jurisdictions
  • An important tool in international income, capital gains and estate tax planning
  • Used by corporations for employee benefit plans, retirement and stock option schemes, insurance plans and special financing arrangements
seychelles trusts

Abacus Seychelles

Seychelles Trusts

Key features

  • Seychelles trust legislation is modern, comprehensive and provides for the formation of versatile offshore trusts
  • Simple process facilitated through a Seychelles licensed trustee
  • A copy of trust deed not required to be filed
  • One off registration fee of USD 115 payable to Registrar

Advantages

  • Zero tax on income
  • An international trust can hold property worldwide (except for land in Seychelles)
  • Transfer or disposition be a person creating an international trust cannot be invalidated by any foreign rule of forced heirship
  • No restrictions on the accumulation of income
  • Settlors or trustees can themselves be beneficiaries
  • Law governing an international trust is the law chosen by the settlor to be the proper law
  • No requirement to mention the name of the settlors or the beneficiaries (except for beneficiaries who are Seychellois nationals)
  • Provision for discretionary trusts, purpose trusts, charitable trusts, etc
seychelles trusts possible solution

Abacus Seychelles

Seychelles trusts.. Possible solution?

Pre – migration tax planning – RETURNING NRIs

  • DR C, a prominent Indian Doctor who worked in UK for 25 years wishes to retire and return to India
  • DR C wonders if he can mitigate his tax liabilities through pre migration tax planning

Possible solution 1

  • Dr C transfers all his foreign assets to a trust established by him prior to moving to India
  • Trust administers the assets for the beneficiaries as determined by Dr C

Issues

  • If the beneficiaries are Indian tax residents, would they be subject to tax on income accumulated in the trust but not distributed by the offshore trust?
re visit

Abacus Seychelles

Re visit
  • Where is Seychelles?
  • Tax system in Seychelles
  • Why use Seychelles as an offshore jurisdiction?
  • Offshore in Seychelles
  • Seychelles International Business Company and its possible uses
  • Special License Company and its possible uses
  • Other offshore products and their uses

+4Hrs GMT

South of Equator

Population 80,000

thank you for your interest in seychelles

Abacus Seychelles

THANK YOU FOR YOUR INTEREST IN SEYCHELLES
  • Let’s keep the dialogue on Seychelles going
  • Write to us at:
  • anuj@abacus-offshore.com
  • malika@abacus-offshore.com
  • Abacus Seychelles Ltd
  • Mont Fleuri
  • Mahe, Seychelles
  • www.abacus-offshore.com
  • +248 610 780