Sifsa officers learn more about financial services |15 November 2022
The Seychelles International Financial Services Association (Sifsa) took part in a workshop organised recently by the Seychelles Revenue Commission (SRC) for its officers.
It was also attended by representatives from the Ministry of Finance and the Financial Services Authority (FSA).
Sifsa explained financial services, the products, revenue streams and taxation matters related.
Launching the workshop, the chairman of Sifsa, Marco Francis, stressed the reason for working together in cohesion to ensure the best rating internationally.
He explained that in the past due to lack of communication, the ratings had been bad.
“With a collaborative spirit, we can move forward together to build the jurisdiction while satisfying international norms,” he said.
Abacus (Seychelles) Limited then presented a brief video which detailed the history of financial services, internationally and in Seychelles.
This was followed by a brief overview of financial services and the International Business Company by Lindy Marengo of SFM Limited.
Malika Jivan, the chair of Education Committee, then took an interactive session, explaining the various products, their uses, the revenue streams and taxation issues arising regarding source of income, substance requirements, TIN, tax return, etc.
The Sifsa representatives explained that investors chose Seychelles over 100 other jurisdictions including Switzerland, UK, around the globe due to speed, efficiency, certainty of law and ease of doing business.
An IBC could be registered in a day, subject to due diligence.
The IBCs started in 1994 but took off in 2006. It took a great deal of marketing to build the industry. Over the past 20+ years, it is estimated that the IBC has contributed over USD 100 million directly to the coffers. Since 2014, the lack of clarity in taxation law, sudden introduction of laws without a proper time frame to comply, has resulted in a huge slowdown of IBCs.
The process of how CSPS carry out due diligence on their clients, their screening tools like World check, risk screen were demonstrated to the SRC using examples from within the audience.
The SRC asked many questions on the accessibility to information. Mr Francis explained that the FSA has full accessibility to the information through the licensed ICSPS.
There is a need to keep updated accounting records. The Beneficial Owners are filed in the Central Database of the FIU. Therefore, information on the IBCs was highly accessible.
The Security Dealer, their business and composition of revenue was analyzed. It was explained that the revenue of a Security Dealer like a tour operator includes their brokerage and the cost of underlying security.
There are direct costs like swaps, introducing brokers commission associated with the revenue. Three percent (3%) taxation of revenue may result in the effective tax rate on profit to be 30% - 50%.
The industry expressed concern on the impact of this change. Their main concern was that the competitor jurisdictions tax at 15% of net profit.
The change may result in a flight of security brokers turning the R100 billion industry to negative (R30 million). This is because they would give up office spaces, release staff and fly out of the jurisdiction resulting in a negative impact. They were of the opinion that a round table discussion with all players should be held to:
- Understand where the government would like to take the industry
- Agree on a way forward to be compliant, increased contribution to the economy and ensure knowledge transference with all relevant stakeholders.
The Revenue Commissioner also requested the industry to send in their case studies and examples to insert in the guidance notes on substance which are expected later this month.
Sifsa has thanked the Revenue Commissioner and the SRC for hosting a productive discussion and workshop.
“We, from the private sector, look forward to more such collaborative forums to build financial services in Seychelles to contribute more to the economy and be compliant with international norms,” a spokesperson for Sifsa said.
Contributed