Ministry and partners discuss steps to boost forex inflows |05 July 2012

This follows President James Michel’s announcement in his National Day address last month that government would be introducing such measures.

“The Ministry of Finance, Trade and Investment, and all partners must take measures to improve the foreign exchange yield generated by the tourism industry and which should all be entering the country but is presently not, and also to address the problem
of foreign exchange flight,” the President said in his address.

The Ministry of Finance, Trade and Investment has announced that it will in the coming months either introduce new laws or tighten existing ones that will aim at boosting foreign exchange revenue and yield from export of services, especially tourism.

“It is felt by many observers - a view shared by government - that a significant amount of revenue due to the country from licensed tourism activities are not being fully taxed due to among other things, transfer pricing, which in turn results in less inflows in the official system than should be the case,” says a communiqué from the ministry.

The communiqué says the Ministry has already started consultations with the tourism trade and it will shortly begin discussions with the Attorney General’s office to explore the feasibility of introducing legislation that would require all yacht/liveaboard and hotel reservations from outside Seychelles to be done through a locally registered licensed tour operator or travel agent in Seychelles or direct to the establishment.

In addition, it will also liaise with the Registrar General and the Ministry of Land Use and Housing to consider strengthening legislation to plug in leakages through evasion of taxes due on land sale, notably through offshore companies and other structures.

The ministry has stressed that all these steps will be indirect measures and it will at all cost avoid any form of exchange control.

“The government of Seychelles remains fully against exchange controls,” says the communiqué.
The ministry is also considering several other measures that would help ease the pressure on the demand for foreign exchange. To this end it will:

• carry out an assessment on the merit of a possible increase in import tax or levy on conventional vehicles;
• reduce certain taxes on electric or hybrid vehicles to encourage people to shift to more environmentally friendly modes of transport; and
• introduce business tax rebates for companies or individuals who re-invest their profits or dividends on viable but socially-oriented projects like private schools, clinics, housing estates etc.

In addition to these, several measures are being considered by government-owned banks to assist the public through better and cheaper access to financing.

Moreover, as also announced by President Michel, government will soon announce several measures that will be implemented shortly with the aim of improving the business environment.
 
“The Ministry of Finance, Trade and Investment recognises the importance of effective consultations with various stakeholders and would thus like to reassure the business community that it will engage all key stakeholders on these proposed policies,” adds the communiqué.