Seychelles tax haven EU blacklist ends

 Seychelles tax haven EU blacklist ends

Seychelles tax haven EU blacklist ends.

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Seychelles  business community  have welcomed  the end of the country’s  nearly 3 years tax haven blacklist after the island nation amended its legislation to meet international standards, a top government official  told the media.

The Secretary of State in the Ministry of Finance, Patrick Payet, said government has welcomed the good news and will continue to work with international institutions to ensure that international standards are met.

“The removal from the blacklist will open the door for the business community and that will allow our economy to recover,” said Payet

Countries on the blacklist face reputational risks and this may affect their ability to access credit lines from international development lenders such as IMF and World Bank.

Seychelles was reserved from the blacklist to the EU’s grey list after a meeting of the Economic and Financial Affairs Council on last week.

The island nation in the western Indian Ocean was blacklisted by the European Council in February last year for having a harmful preferential tax regime.

Payet said that Seychelles was blacklisted because the EU was concerned with the territorial tax system adopted in December 2018 as it felt that it will facilitate double non-taxation and that there can be revenue that is not being taxed in any jurisdiction.

Previously the amendments in the Business Tax Act, only revenue amassed in and coming from Seychelles were to be taxed in line with the Business Tax law.

Another apprehension of the EU was that Seychelles did not get a rating at least largely compliant with the Organisation for Economic Co-operation and Development (OECD) global forum on the exchange of tax information with other countries.

“In April last year, Seychelles got a rating partially compliant in its review and since then the government has brought forth new laws and amendments in some laws to ensure that we are in conformity with international standards,” added Payet.

Amendments were made to the Business Tax Act in which a review was done in the definition of permanent establishment relating to the location of a business or where the business activity is taking place.

Under the amendments, if a business would be taxed, any tax exemption for activities taking place outside Seychelles by a company registered in Seychelles, the company must pay its taxes in the country where it is amassing revenue in line with the permanent establishment revision.

 There would be no exemption on revenue collected on intellectual rights.

All amendments became effective on September 16 and with this development, Seychelles has requested a supplementary review on its exchange of information framework.

“The OECD has asked that a visit is done by experts to evaluate the request. That is why the EU has kept Seychelles on the gray list for this criteria until the experts complete their review,” said Payet.

The removal of Seychelles on the blacklist will be good news for the banking system.

Tafadzwa William Mutsika

Tafadzwa Mutsika is an award-winning print, broadcast, and online journalist with more than 10 years of experience in the field. Tafadzwa has experience in financial reporting and Public relations since 2010. He is also a part-time lecturer in journalism and media studies. Possess excellent communication and presentation skills. Areas of Interest: Mining, energy, tax law, insurance, and corporate governance. Hobbies include -painting and sculpture.

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