Assembly approves amendments to Business Tax law, supplementary appropriation bill | 12 December 2020
Assembly members yesterday approved amendments to the Business Tax Act as well as to the supplementary appropriation bill and a motion before completing its work for this year before going into recess.
The Assembly will resume its sittings in January 2021 on the date the president chooses to pronounce his state-of-the-nation address.
Minister for Finance, Economic Planning and Trade Naadir Hassan presented the amendments to the Business Tax Act. He noted that the main reasons for the amendments were to meet European Union obligations in relation to taxation.
He reminded Assembly members that in 2019 the Business Tax Act was amended to cover a territorial tax system under which only revenue amassed in and coming from Seychelles were to be taxed in line with the Business Tax law.
Minister Hassan explained that this tax system was viewed by the European Union’s Code of Conduct on Business Taxation grouping as ‘harmful’ or not in line with tax standards and as a result placed Seychelles on a list of countries not cooperating with the EU tax system.
“The EU has raised certain concerns in relation to Seychelles’ Territorial Tax system highlighting its potential to facilitate double non-taxation, noting that it is possible that some revenues are not being taxed in any jurisdiction,” Minister Hassan explained.
He went on to point out to Assembly members that before the 2019 amendment to the Business Tax Act Seychelles was assessed in 2017 under the Base Erosion Profit Shifting from the Organisation for Economic Corporation and Development (OECD) to review different business tax systems for different sectors namely international business companies (IBC), offshore banking, Seychelles international trade zones (SITZ), overseas securities dealers, insurance of non-domestic risks…
In 2018, Seychelles moved to amend these laws to bring them in line with recommendations and standards required by the European Union. Considering the amendments, the Code of Conduct Group in 2019 informed Seychelles that the amendment in the Business Tax Act was harmful and this should have been addressed by December 2019. But Minister Hassan pointed out that at that time there was no guidance or publication as to the new EU approach which made the task of the government more difficult to better understand what and where the problem was.
But all the same talks started between the finance ministry, Financial Services Authority (FSA), Seychelles Revenue Commission (SRC) and the international financial industry.
It was in September 2019 that Seychelles received guidance and clarification from the EU as to the tax requirements it wants Seychelles to implement in relation to taxing revenues amassed from outside the country.
“The guidance was also revised in December 2019 and Seychelles was placed on the list in February 2020 because of the short period of time it had to implement the new tax regime with a significant impact,” Minister Hassan explained.
He stressed that for Seychelles to meet the standards and requirements of the EU, the amendments being proposed in the Business Tax Act will provide for: A review of permanent establishment relating to the location of a business or where the business activity is taking place and if it 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 …
Minister Hassan went on to further detail the amendments explaining that while they are necessary to meet the requirements of the EU they would also provide more protection for Seychelles.
A lengthy debate by Assembly members on both sides followed Minister Hassan’s presentation before the amendments were approved.
Assembly members also approved a supplementary Appropriation bill that provides for a supplementary estimate already approved by Assembly members.
The last item on the agenda yesterday as a motion tabled by Sebastien Pillay, leader of the opposition, which in accordance with Section 64(2) of the Interpretation and General Provisions Act asked that the Assembly annuls SI 148 of 2020 and requests that a new SI correcting the anomalies that exist in SI 148 is published as soon as possible as well as pertinent regulatory and policy frameworks that are necessary if SI 148 is applied.