SEYCHELLES
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Seychelles Strategy
2017
POLICY, PLANS AND PRIORITIES
Seychelles Strategy 2017 was issued in March 2007 and has been followed by a
series of substantial economic reform measures that started in the latter part of
2008. The Strategy outlines the aims of doubling GDP over ten years and reducing
public debt to 60% of GDP. Sound macroeconomic management, competitiveness
and good governance, equity and sustainability were to be the foundation for the
Strategy.
The principal steps set out in the Strategy include:
 stimulate private sector development and expand the size and value of tourism,
fisheries and off-shore financial services,
 increase Seychelleois stakeholding in economic activities through capacity
building and training,
 improve utilities (electricity, water, ICT) performance,
 reduce State involvement in commercial activities,
 permit private sector participation in public transport provision,
 improve public sector efficiency,
 fiscal policy – management, budgetary discipline, tax reforms, expenditure
effectiveness,
 prudent monetary and exchange rate policy,
 achieve high international environmental standards,
 transparent and fair land allocation,
 national food security and supply,
 improve health care, housing, and social protection for vulnerable people.
The Strategy did not spell out the detailed actions to be taken to achieve the goals,
but in 2008 Seychelles experienced an economic crisis with spiralling debt and
defaulted on payments to creditors. This proved to be a catalyst for taking more
urgent and widespread actions within the aims and context set by the Strategy.
Actions Taken
Among the measures implemented in recent years are:
Exchange Rate /
Monetary Policy
(i) Market based monetary policy with weekly auctions of Treasury Bills and
establishment of a deposit facility at the Central Bank introduced,
(ii) Rupee floated and removal of exchange restrictions,
(iii) Memorandum of Understanding between Government and the Central
Bank to formalise terms and conditions under which the Bank
transacts for the Government.
Goods and Services
Tax (GST) / Indirect
Tax
(i) Base extended including extension to all telecommunications and reinstated on locally produced soft drinks and LPG,
(ii) Tourism services raised from 7% to 10%,
(iii) reduced cascading through option of levying tax on imports or sales,
(iv) Taxes on locally produced and imported cigarettes raised and harmonised
and rates on locally produced and imported alcohol adjusted for
inflation. In 2010 GST was removed on locally manufactured alcohol
and cigarettes and Excise Tax was introduced.
(v) VAT replaced GST in January 2013 (15% on taxable supplies, 0% for zerorated goods.
Removal of tax
exemptions
(vi) withholding based personal income tax has replaced social security
contributions, the labour income tax base has been expanded to
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include resident expatriates and sector concessions eliminated, a
harmonised rate of 15% for all employees is set for Jan 2011,
(vii) Introduction of 15% tax on residential rental income,
(viii)
Removal of exemption on interest income by companies,
(ix) Environmental levy raised from SCR 10 to 25 per month,
(x) Fees, fines and rents and royalties adjusted for inflation,
(xi) All provisions for discretionary exemptions in the Trades Tax and Business
Trade Acts repealed,
(xii) Revised Business Tax Act to reduce rate and broaden base – as a first
step, the maximum rate has been revised downward by 7 percentage
points, to 33%. The tax-free threshold was abolished for companies
and reduced for sole traders and partnerships.
Elimination of
Subsidies
Household:
(i) Universal product subsidies replaced with targeted social safety net,
(ii) Seychelles Rupee (SCR) 90 electricity rebate for households eliminated,
(iii) Bus fare raised to operating cost recovery levels.
Production:
(i) Fishermen fuel subsidy coupons abolished,
(ii) Subsidies for Agro Industries, Hatcheries, Seychelles Trading Company
(STC) and Coevity Prawns abolished,
(iii) LPG subsidy by the state oil company, Seychelles Petroleum Corporation
(SEPEC) abolished.
(iv) Reduced public sector workforce by 17%.
Legislation
A substantial volume of legislation has been enacted in recent years including
enactment of Welfare Act to establish a Social Welfare Agency, Public Debt
Management Act, Public Officers Ethics Act, Public Procurement Act, Public
Enterprise Monitoring and Control Act, Fair Trading Commission Act, Fair
Competition Act, Seychelles Revenue Commission Act, Business Number Act,
National Clearance and Settlement Systems Act and amendments to the Central
Bank Act. Legislation on customs management, national statistics, public audit,
public finance and employment is to be introduced.
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INVESTMENT PROMOTION
2.1
Institutions
SIB
Seychelles Investment Board (SIB) is a one-stop shop for all matters relating to
business and investment in Seychelles. SIB’s main function is to promote
investment and facilitate the investment process in a way which is in line with the
administrative, policy and legal framework. The main objective of SIB is to
establish the investment framework and promotional capabilities to achieve an
optimal sustainable level of business and investment in Seychelles. Legislation to
reform the Investment Code and establish SIB as a statutory body was announced
in the Budget 2010 Address.
SIBA
Seychelles International Business Authority (SIBA) is established by the SIBA Act
1994 to promote Seychelles as a location for international business and to monitor,
supervise and co-ordinate the conduct of international business activities. SIBA’s
Board of Directors has members from public and private sectors. SIBA is a onestop shop that covers licensing and regulation of the primary offshore business
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activities. It is the authority or Registrar for International Business Companies,
International Trusts, Protected Cell Company, Companies Special License, Limited
Partnerships. SIBA regulates International (Free) Trade Zone activities. SIBA hosts
and disseminates educational information for other offshore entities / services
including the Mutual Funds, Offshore Banking, Offshore Insurance, and Ship /
Yacht Registrations. SIBA provides name approvals quickly and issue licences with
minimum bureaucracy, whilst still maintaining appropriate due diligence processes.
SIBA will become the Financial Services Commission and will also oversee all
insurance activities.
SEnPA
The Small Enterprise Promotion Agency (SEnPA) was created in August 2004 to
help promote and develop small enterprises, crafts and cottage industries in
Seychelles.
DBS
Development Bank of Seychelles (DBS) has a primary role to provide Seychelles
entrepreneurs long term financing. It supports the implementation of sound and
viable projects and invests in sectors such as agriculture, fishing, and tourism.
Under the Delegation of Functions (DBS Decree) Order 2009 statutory functions,
powers and duties that had been vested in the President and Minister for Finance
in a number of sections of the DBS Decree are delegated to the Central Bank of
Seychelles (CBS).
2.2
Investment and Export Incentives
Investment agreements made under the 1991 investment law that preceded the
Investment Code 2005 continue to distort the market.
In tourism and fisheries the previous incentive regime, based on negotiating
individual investment agreements with investors, has been replaced through the
Tourism (Incentives) Act 2008, and the Agriculture and Fisheries (Incentives) Act
2005. There is now a set package of fiscal incentives subject to an entitlement
certificate.
Steps are being made to harmonise tax and other incentives and to remove
distoring exemptions and concessions so that the following paragraphs are subject
to change.
The tourism sector benefits from concessions in Trades Tax and GST (Goods and
Services Tax), Social Security, Gainful Occupation Permit (GOP), Fuel,
Accelerated Depreciation and Market and Promotion. The industrial sector and
artisans benefit from the following Trades Tax concessions 5% on raw materials,
10% on Capital Goods, 10% on Packaging materials, 10% on semi-finished items.
Artisans are eligible for business tax concession and subsidised rental rate for
selling on public and government premises.
The Investment Code provides that incentives granted under a written law for a
specified activity, during a specified period, shall not be adversely affected during
the period.
2.3
ITZ
EPZs, Freeports and other Special
Economic Zones
The International Trade Zone (ITZ) Act 1995 provides for the establishment of
international trade zones and regulates operations in the zones. The Minister of
Finance can by notice in the Official Gazette declare any area of land within the
territory of the country as an ITZ. The notice will also define the boundaries of the
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area, as well as the entity to manage the area. A number of areas are declared as
ITZ. The aim is to combine the benefits of a free port and export processing zone.
The distance from major markets hinders the competitiveness of products
originating in the Seychelles. The ITZ provide opportunities for lower costs,
employment and skills transfer as well as an improvement in the balance of trade.
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2.4
Tax Reforms
Tax Reforms
The tax system is undergoing a process of reforms which are eliminating
distortions and easing compliance.
Changes in Business Tax
i) The Business Tax rate has been reduced further for companies, from 33% to
30% except for Telecoms, Insurance companies, Banks and manufacturers of
Alcohol and Tobacco.
ii) Corporate Social Responsibility Tax (CSR) was introduced in January 2013 and
is applicable to all businesses with an annual turnover of above 1 million rupees.
The rate is 0.5% of the annual turnover, paid monthly on monthly turnover. In April
2013, this was changed: to 0.25% paid directly to SRC and 0.25% paid to a chosen
charity, Non Government Organisations and so on. Otherwise the 0.5% is paid
directly to the Seychelles Revenue Commission (SRC)
iii) Tourism Marketing Tax (TMT) was Introduced in January 2013 and is applicable
to all tourism businesses, banks, insurance companies and telecoms with an
annual turnover of 1 million. The rate is 0.5% of the annual turnover, paid monthly
on monthly turnover.
iv) Change of rate to 15% of taxable income across the board for private medical
services and private educational services, regardless of the type of entity.
v) Companies listed in the securities exchange will have an applicable rate of 25%
of taxable income.
f) Residential rent has been transferred from under GST to Business Tax, at the
same rate of 15%
Income Tax
Income tax was introduced in July 2010 to replace social security fund. 18.75% on
emoluments and 20% on non-monetary benefits. In October 2010, the rate of
18.75% was reduced to 15%.
Presumptive Tax
Introduced in 2013 at a rate of 1.5% on Annual turnover for all small businesses
with an annual turnover of less than 1 million rupees. Businesses who do not wish
to be in this regime can opt out upon request and approval by the Revenue
Commissioner
Value Added Tax
Replaced GST as at January 2013 and is compulsory for businesses with annual
re of a threshold of 5 million, this will be changed to 3 million next year. 15% on
taxable supplies, 0% for zero-rated goods. Then there’s the exemption list (quite an
exhaustive list).
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Excise Tax was reduced on Alcohol and Tobacco, as VAT is applicable on these
goods. Consequently the rate of excise tax on these goods were reduced by 15%.
2.5
Customs and GST
International Trade & Export
Promotion
The Trades Tax Act, 1992 and the Trades Tax Regulations regulates procedures
for the application of customs tariff, customs procedures, rules on customs regime
and formalities. The tariff structure is based on a system of applied rates.
Modifications to applied rates may be made by the Minister of Finance and Trade
under the Trades Tax Act.
There are no legal restrictions on import payments. Importers require an import
licence issued by SLA. Import permit restrictions apply only to restricted goods. All
goods are subject to customs duty (Trades Tax Act) and a Goods and Services
Tax (GST). GST is not applied to imports of essential food and medicines.
Customs duties have been lowered in recent years from an average applied duty of
28.3% (all products) in 2005 to 8.95% in 2007. All permit requirements for the
export of goods have been abolished. The list of products requiring an import
permit before Customs clearance has been reduced and IT based procedures are
modernised. Progress is awaited on enacting a Customs Management Act to be
introduced in National Assembly in Q4 2010 and a new Harmonised Systems
Code. Average tariff rates are high, while enterprises in certain sectors are granted
substantial tariff exemptions or reductions.
There are no export credits and export credit guarantees.
2.6
Other Issues
The Strategy 2017 emphasises training and capacity building to improve job
prospects of Seychellois.
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ACCESS AND ADMISSION OF
FOREIGN INVESTORS
3.1
Foreign Investment & Capital
Mobility
Foreign investment in Seychelles (portfolio, direct investment, additional
investments in existing entities in the form of loans or equity capital) is freely
permitted, provided it does not involve alienation of land (See Foreign Ownership
of Property).
Reserved Activities
& Strategic Sectors
The Investment Code of Seychelles Act 2005 reserves a number of activities for
Seychellois investors and lists strategic sectors in which investment by a foreign or
domestic investor may be permitted subject to conditions to protect the public
interest. Strategic areas include activities in which state enterprises currently
operate. Strategic areas listed in the Code are production and national distribution
of electricity and water, storage and distribution of petroleum, airport and seaport
infrastructure, and other sectors mining of natural resources, manufacture of arms
and ammunition, airspace related activity, genetic centres, broadcasting and
telecommunications services (except for internet reseller), animal feed, hatchery,
parent stock and abbatoir, and production, distribution and storage of hazardous
substances.
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AfDB Comment on
Investment Code
Africa Development Bank (2009) Seychelles 2009-2010 Interim Strategy Note Feb
2009 states that “Although the Investment Code of 2005 is a major improvement to
the Act of 1991, the Code is still restrictive, unclear in some areas, and
bureaucratic. For example, the list of restricted and strategic areas is long and
limits competition. Several of the listed activities could attract foreign investors and
inject new capital and know-how to the economy.”
Budget 2010 and
Investment Code
The Budget 2010 Address stated that amendment to the Investment Code to
streamline the investment approvals procedure, clearly set out decision criteria and
specific recourse and appeals mechanisms and a law to establish SIB as an
Investme
SIB and SIBA
Approvals
Applications for approval of projects for investment are to be submitted to SIB and
approval is required to obtain licenses to implement the project. The Code does not
specify the institutional set-up, mandate and functions of SIB, and there is no
provision for consultation with the private sector or recognition of the role of the
private sector. Applications to invest in an International Trade Zone are made to
Seychelles International Business Authority (SIBA) set up under the SIBA Act
1994.
Tourism
Seychelles Tourism Board (STB) is responsible for all tourism-related activities,
which includes policy formulation, marketing and promotional activities,
establishment and monitoring of standards of tourism products and services and
the management of the Seychelles Tourism Academy. Foreign investment in the
tourism is welcomed, especially where major capital investment is required or local
expertise is not available. In line with the programme of economic liberalisation and
diversification, most State owned tourism enterprises have been privatised mainly
to foreign owners. Ownership and investment in small hotels of not more than 15
rooms is reserved for Seychelles nationals and majority ownership of tour
operators must be held by Seychelles nationals.
3.2
Foreign Investor:
Steps to Set Up
Foreign Investment Establishment,
Registering and Licensing
Processes
A foreign investor setting up a business in the Seychelles takes the following steps:
 Expression of interest from investor/ potential investor to which SIB responds
within two working days.
 Investor submits a business plan / project memorandum to SIB
 SIB liaises with relevant ministries, departments, authorities and so on who
provide views, comments and approvals to SIB
 SIB communicates the approvals/rejection to the investor who, if succesful, may
then apply for a business license with the Seychelles License Authority (SLA)
 The business should be registered with the appropriate authority – in most
instances registration is with the Register of Companies.
 Once a license had been received, the investor, if a foreigner, proceeds with the
application for a Gainful Occupational Permit (GOP) from the Immigration
Division, Department of Internal Affairs. However, clearence for any posts must
be given by the Employment Division before a GOP can be issued.
 Approvals are required to lease, rent or buy premises or land from the
Government or private sector. The ministry responsible is the Ministry of Land
Use and Housing (MLUH).
 A construction permit is required if the business is involved in construction.
Application is made to from the Planning Authority, Ministry of National
Development.
 An Environment Impact Assessment (EIA) from the Department of Environment
may be required.
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 If the business is in food or chemical processing, or activities that can put the
health or life of the public or employees at risk, an Occupational Safety and
Health inspection is required and the Department of Health, Ministry of Health
and Social Development should be contacted.
 Within 7 days of commencing business, registration is required to be made with
the Social Security Fund, Ministry of Finance.
 The investor is also required to register with the Seychelles Revenue
Commission for tax payment purposes.
Companies Act
Companies trading in Seychelles are governed by the Companies Act 1972.
Promoters should register the company at the office of Registrar General. The Act
stipulates that in order to engage in any business activity a company shall be
registered with the Registrar of Companies. A declaration should accompany the
Memorandum of Association to be submitted by the company. An overseas
company which establishes a place of business or commences to carry on
business in Seychelles shall, within fourteen days after the establishment or
commencement deliver to the Registrar of Companies for registration:
 A certified copy of the charter, statutes, memorandums, certificate or articles of
association or incorporation of the company or the other instrument which
constitutes the overseas company or contains the regulations which govern it,
and, if the instrument is not written in the English language, a certified
translation thereof.
 A list of the directors and secretary of the company containing the particulars as
mentioned in subsection (3) section 310 of the Companies Act.
 The name of persons or person who has or have been appointed to be the
managing agent or agents of the overseas company in Seychelles, and the
particulars in respect of that person or each of those persons mentioned in
subsection (3) of section 310 of the Companies Act.
 The names of two or more persons who have been appointed to accept on
behalf of the company service or process and any notices required to be served
on the overseas company, and the particulars in respect of those persons
mentioned in subsection (3) of the above-name section of the Act.
Any of the persons appointed for the purposes mentioned above may be an
individual or a firm resident or acquiring on business in Seychelles, or a company
formed or incorporated in Seychelles.
Budget 2010 and
Companies Act
Budget 2010 Address stated that amendments to the Companies Act would be
introduced.
SLA and Licensing
The Seychelles Licensing Authority (SLA) was established on 1 September 1984 to
deal with all types and aspects of licensing and it also provides interested persons
with guidelines on obtaining licenses. It is a regulatory body established under the
Licenses Act to grant, renew, refuse, suspend and revoke licenses where there
has been a breach of the licenses regulations and conditions. SLA has power to
attach or vary conditions of the licence. SLA took over licensing responsibilities
from several Government Ministries and Departments. It is the sole body with the
power to issue licenses following approvals from relevant government agencies
operating under power given in legislation. For example SLA is responsible for
licensing and controlling tourism activity including any class of tourist
establishments, tourism guides, travel agents, tour operators etc. The licence is
issued by SLA after consultations with the Seychelles Tourism Board, Ministry of
Finance and the Town and Country Planning Authority.
Licenses are granted for activities in Services – Health Services, Professional and
General Services, Trade, Goods, Animals and Vessels, Premises, Fishing
activities, Road Transport / Vehicles, Manufacturing, Broadcasting &
Telecommunication
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Licences within a sector of economic development will be granted only when the
approvals for related procedures have been given. These may include, but are not
restricted to approvals by the SIB with the sector of investment, permission from
the Planning Authority, approval for a Gainful Occupation Permit if required. The
cost of a licence will vary depending on the type of activity and duration of the
licence. There is a processing fee when issuing most of the licences and the
processing fee also vary in cost depending on the type of activity and duration of
the license. A licence is valid for various terms varying from 1 year to 5 years.
Budget 2010 and
Licensing
The Budget 2010 address stated that legislation will be submitted to the National
Assembly during 2010 for a modern Licensing Act to redefine the role of the SLA
and introduce modern principles governing the coverage and issue of licences.
Banking and
Financial Regulation
Commercial banks (domestic and non-domestic banking business), are regulated
under the Financial Institutions Act 2004. The Insurance Act regulates domestic
and non-domestic insurance business. Regulation and supervision of both sectors
is carried out by CBS which is responsible for receiving applications and issuing a
licence, for domestic or offshore banking, and insurance and related services Apart
from the small size of the domestic insurance market there are no restrictions on
establishing a foreign insurance or reinsurance company.
The Securities and Financial Market Division of CBS regulates the Mutual funds
under the Mutual Funds and Hedge Funds Act, 2008 and securities business under
the Securities Act, 2007 as well as offshore Insurance. Currently there is no
securities market in Seychelles. The Securities Act gives CBS power to grant
licenses, permits or authorities with revocation rights upon licence holders failing to
comply with laws and conditions with rights of appeal to the Supreme Court.
Non-domestic banking is regulated by the CBS under the Financial Institutions Act
2004. The Act makes provision for the licensing of offshore banks which operate
with full confidentiality with the exception of criminal investigations. Two banks hold
an Offshore Banking License, Barclays Bank (Seychelles) Ltd and BMI Offshore
Bank (BMIO).
Fisheries
The Maritime Zone Act (1999) establishes and defines the Seychelles EEZ, the
baselines, continental shelf, territorial waters, and historic waters.
Fisheries Act 1942 and Fisheries (Amendment) Act (1987) provides for the
regulation of local and foreigners fishing activities. It established the major fisheries
management measures, the fishing licensing procedures and fines for breaches of
the licence regulations.
The Licences (Fisheries) Regulations (1987) sets out various categories of
fisheries licence, the conditions of the licence and the fees for both local and
foreign licences.
SFA
The Seychelles Fishing Authority (SFA) (Establishment) Act (1984) sets out the
main functions of SFA as:
 promote, organise and develop fishing industries and fisheries resources in
Seychelles.
 assist in the formulation of policy with respect to fishing development and
fisheries resources.
 conduct negotiations, engage in meetings, seminars or discussions with regard
to fishing or fisheries and the establishment or operations of fishing industries,
whether at a national or international level, on behalf of the Republic.
 identify the human resources training requirements of Seychelles with regard to
fishing and fishing industries.
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SFA has a mandate to perform management, planning, development, scientific and
training functions, as well regulatory functions including conducting surveillance in
collaboration with the Coast Guard in relation to fishing operations in the
Seychelles EEZ, monitoring the catch of all fishing vessels, and carrying out
scientific and development research.
Utilities
Public Utilities Corporation (PUC) was created in 1986, with the merger of the
Seychelles Water Authority and the Seychelles Electricity Corporation Ltd under
the PUC Act 1985. PUC is obliged to provide and ensure the continued supply of
electricity, potable water and sewerage services to the population of Seychelles.
The principal activities of the Corporation are the generation and distribution of
electricity; the storage, treatment and distribution of potable water; and the
collection, treatment disposal of sewerage.
Land Transport
The Land Transport Division of Home Affairs and Transport in collaboration of
Seychelles Licensing Authority is responsible for planning, developing,
implementing and managing public and private transport in Seychelles. Land
Transport is regulated under the Road Act and the Road Transport Act. The Land
Transport Division, is in fact responsible for regulating the number of vehicles, their
usage, and road worthiness standards to ensure road safety, with the collaboration
of the Traffic Section of the Department of Internal Affairs and they also help
Ministry of Home Affairs and Transport to control vehicular pollution.
Seychelles Public Transport Corporation (SPTC) is the sole company currently
providing a public transport service on Mahe. Another company Praslin Transport
Corporation (PTC) operates public transport on Praslin. SPTC has 40% shares in
PTC, whilst the rest of the shares are owned by the Praslin Development Fund
(PDF) a quasi-government agency. The Government is in the process of
formulating laws and regulations with a view of liberalising public transport. The
process is still in its inception stage.
3.3
Gainful Occupation
Permit
Foreign Employment & Residence
An employer is required to notify the Employment Division whenever a vacancy
occurs. The employer then advertises the vacancy in a local newspaper to bring
the vacancy to the notice of persons seeking employment or seek the services of a
private employment agency. All Seychellois being considered for employment by
the employer should have a valid job card issued by the ESB. Upon recruitment,
the job card must be submitted to the ESB within a period of 15 days. If after the
vacant post has been advertised and there is no response from a suitable qualified
Seychellois, then the employing organisation may submit a request to the Ministry
responsible for employment for the post to be filled by a non-Seychellois. Once
approval is granted, the organisation concerned is issued with a certificate to be
produced at the Immigration Authorities to obtain a Gainful Occupational Permit
(GOP).
A person who wishes to be self-employed may register with the ESB.
A GOP issued by the Department of Internal Affairs allows the holder to be
gainfully occupied in Seychelles. Applications for GOP should be submitted at least
ten weeks before the non-citizen employee is due to start work, and the employee
must not enter Seychelles for the purpose of taking up employment prior to
obtaining the GOP. The application form is to be completed by the person seeking
the permit in the case of a self employed or by the prospective employer.
Foreigners must meet the following conditions:
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Employer must have a GOP and or a valid licence to work in Seychelles, have
legally entered Seychelles, have a valid passport, pass a medical test as
determined by the Ministry of Health.
A GOP is valid for one year and may be extended for a period not exceeding two
years.
Criteria for GOP
In considering an application for a GOP, the following are taken into account:
(a). character, reputation and health of the prospective employee and where
relevant, any member of his / her household to be endorsed on the permit;
(b).
professional or technical qualification of the person to be employed;
(c).
availability of the services of persons already exist in Seychelles;
(d).
protection of local interest;
(e). economic and social benefit which the applicant / prospective employee may
bring to Seychelles or enhance by his presence.
Residence Permit
A Residence Permit is issued to a person who (a) is not a prohibited immigrant; (b)
has a family or domestic connection with Seychelles; (c) has made or will make
special contribution to the economic, social or cultural life of Seychelles. The holder
of a Residence permit is not permitted to be gainfully occupied in Seychelles.
AfDB Comment on
Work Permit
African Development Bank (2009) Seychelles 2009-2010 Interim Strategy Note
Feb 2009 states that “The work permit policy appears to be based on the potential
to earn foreign exchange and not on development goals. Companies with the
potential to attract foreign exchange are given a quota. The employer does not
have to show whether local employees are available for the position and there are
no skill requirements. As a result, cheap labour is often contracted by those
industries with quotas such as hotels. Outside the quota it is very difficult and
expensive to obtain a work permit for a foreign employee, no matter how skilled or
necessary the person is. This makes the employment of foreigners for non-foreign
exchange earners and medium sized companies prohibitive (e.g. food
processing).”
Budget 2010 &
Employment
Legislation
The Budget 2010 Address by the Minister for Finance Danny Faure November 30,
2009 stated that new employment legislation is to be introduced in 2010.
3.4
Foreign Investor Access to Land
and Property Rights
Land Availability
Land is scarce given the topography, environmental constraints and increased
developments. The government of Seychelles therefore invested in the
reclaimation of artificial islands which have now begaun to open for development.
Process for
Foreigner to
Purchase Land
Foreign and domestic investors may own and hold land for their investment
projects subject to the provisions of the Immovable Property (Transfer Restriction)
Act 1963.
Before commencing the purchase of a plot for the development of an economic
activity or to lease land from the Government, the foreign investor is required to
submit a project proposal to SIB approval. Foreign nationals or companies with
foreign participation that wish to acquire property are required to obtain permission
from the Ministry of National Development, Department of Land Use. An
application fee equivalent to 1.5% of the purchase price of the property is charged
for the processing of the application. A notice published in the national daily
newspaper The Nation will first make an offer of the property to Seychellois
citizens. If no Seychellois is interested, the application goes forward and investors
will receive a decision on the request to purchase the immovable property.
Following approval, where the Government is selling the land or building, the
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Lands Division will make arrangements for the transfer with the Attorney General’s
Office, which is responsible for transferring all State properties. The cost of the
stamp duty and registration is borne by the buyer. When the seller is a private
individual or private owned company, the investor will engage a notary or attorney
to manage the transfer of ownership which will be registered at the Registration
Office. Registration fees and duties are payable. In the case of purchase of shares
in a company owning an interest in immovable property, a processing fee is
payable.
Lease of Land
In practice the Government does not sell land for commercial or industrial activities
but enters a lease for 60 - 99 years depending on the type and scale of the
development. There is usually an initial grace period for payment of rent of 18 – 24
months, depending on the scale of the development. There is an initial premium to
be paid upon the signing of the lease, which is usually the equivalent of rent for
one year. Once the grace period has elapsed the annual ground rent is payable
half yearly in advance to the Ministry of National Development. Typically the rent is
reviewed upwards every five years by not more than 25% and not less than 10% of
the current rent.
Providence Industrial Estate is managed by the Ministry of National Development
and plots may be leased for up to 99 years.
Construction
Approvals
All construction projects must be submitted to the Planning Authority for approval
under the Town and Country Planning Act. SLA grants licenses to providers of
construction services on a project basis. There are market access and National
Treatment restrictions in setting up a construction firm. Buildings of class 3 and
lower are restricted to Seychellois investors only. Class 1 and 2 licences for
general construction do not include electrical and plumbing services. These
services are required to be to be subcontracted with 15% preference margin on
price for Seychellois providers.
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FOREIGN INVESTMENT
OPERATIONS
4.1
Employment
Employment Act 1995 and see above Foreign Employment
4.2
Business Taxation
Trades Act, Business Tax Act
4.3
SBS
Environment, Physical Planning,
Health & Safety, Consumer
Protection
The Seychelles Bureau of Standards (SBS) was established as a government
regulatory agency with the enactment of the SBS Act 1987. The core activities of
SBS are: Standardisation, Quality Assurance, Metrology and Testing. In Dec 1996,
the SBS attained certification status to ISO 9002 quality management system
which helped to put the organisation on the forefront of quality in the Seychelles.
This certification status was changed to ISO 9001:2000 in October 2002 when the
standard was revised. The functions of SBS are laid out in the SBS Act 1987, SBS
(Amendment) Act 1995, SBS (Amendment) Act 1997, Weights and Measures Act /
Regulations, SBS Standard Mark Regulations and SBS (National Quality System
Certification Scheme) Regulations.
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Environmental
Protection
Seychelles is regarded as having a strong history of conservation and environment
protection activities, which has been heightened over the last 15 years through the
development and implementation of environment management plans. The country
is party to a number of international conventions. In spite of its small size,
Seychelles has been participating in the various negotiations under these
conventions such as the Convention on Bio-Diversity (CBD), the United Nations
Framework Convention on Climate Change (UNFCCC), the Montreal Protocol and
the Stockholm Convention on Persistent Organic Pollutants (POPs) and the
Convention on International Trade in Endangered Species (CITES). Local
legislation incorporates these conventions. For instance, the Trades Tax Act (1992)
Amendment 2005, provides for a Prohibited list which lists the products which are
prohibited imports. Majority of the products listed are species listed under CITES.
The prohibited list also includes products which are banned under the Montreal
Protocol, which prohibits the trade of Chlorofluorocarbon (CFCs) products. The
importation of waste and waste products are also controlled because of Seychelles'
signature to the Basel Convention on the Control of Trans-boundary Movements of
Hazardous Wastes and their Disposal. The Plant Protection Act (1996) provides for
legal measures to control the movement of diseases, insects and pests of
economic importance, these include plant and plant products, edible fruits and
vegetables, growing media and compost.
4.4
Competition Policy & Law
Fair Trading Commission (FTC) Act 2009 established FTC to regulate domestic
competition and ensure a level playing field for all economic operators.
Fair Competition Act 2010 contains provisions on prohibition of abuse of dominant
position (section 7) modelled on Article 82 EC Treaty (Art 102 TFEU), prohibition of
agreements, trade practices, decisions or concerted practices which have the
object or effect of preventing, restricting or distorting competition (section 11)
modelled on Article EC Treaty (Art 101 TFEU). The Act prohibits resale price
maintenance (section 16), price fixing (section 25), action to restrain competition
(section 26), bid-rigging (section 27).
As Seychelles needs to build capacity in regulation of competition, the FTC has
sought the help of the SADC to boost its effort in order to promote a competitive
setting.
4.5
Monetary Policy, Foreign Exchange
and Foreign Investors
The Central Bank of Seychelles Act 2004 makes the CBS responsible for the
formulation and implementation of monetary and exchange rate policies. Major
advances in monetary policy have formed part of the overall reforms and the CBS
has moved from administrative controls towards the use of indirect or marketbased instruments.
All companies operating in Seychelles can raise capital from commercial banks in
the country. Foreign and local companies may hold foreign exchange accounts to
facilitate business.
Transfers and
Remitting Funds
The Investment Code provides that investors shall have the right to convert
payments in Seychelles rupees (SCR), received through an investment, converted
to another currency in accordance with Seychelles law and shall have the right to
remit funds abroad including capital relating to the investment and various forms of
earnings and fees related to the investment. In practice, prior to the reforms of
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recent years, because of shortages of convertible currency, foreign investors faced
difficulties in repatriating accumulated foreign exchange earnings.
The foreign exchange market was liberalised in November 2008 with elimination of
restrictions on payments and transfers and a floating exchange rate policy. Foreign
companies operating in Seychelles, may remit dividends, transfer management
fees, royalties and proceeds from the sale of assets. Payments for loan principal
and interest can be remitted through banks. Investment outside Seychelles by
permanent residents and by companies and other organisations operating in
Seychelles is not subject to any limitation.
4.6
Public Procurement
Public Procurement Act (2008) establishes clear parameters within which
government procurement will take place. The Act regulates and controls practices
relating to public procurement in order to promote integrity, fairness and public
confidence in the procurement process. The Act incorporates as a statutory body
the then existing National Tender Board and specifies its composition. It provides
for a Procurement Oversight Unit under the Ministry of Finance primarily to oversee
the policy making in this area. Provision has also been made for the setting up of
Procurement Committees to deal with procurement for individual Ministries or for a
group of Ministries. The rules regulating committees are to be established by
Regulation upon the advice of the Procurement Policy Unit. The Act makes
provision for a Review Panel to hear complaints by bidders and suppliers who have
been aggrieved during the procurement process.
4.7
Intellectual Property
Seychelles is a member of the World Intellectual Property Organisation since 2000.
Seychelles is a contracting party to the Paris Convention for the Protection of
Industrial Property and the Patent Cooperation Treaty (PCT) and a member of the
African Regional Intellectual Property Organisation (ARIPO). In 2013, an
Intellectual Property Office was established to enable the registration of patents,
trademarks and copyrights
IP Legislation
Intellectual property legislation includes the Copyrights Act 1984, the Trade Marks
Decree 1977 and the Patents Act 1901. The Government acknowledges that there
are weaknesses in the IP regime in Seychelles. The principal weakness is lack of
human resource capacity. Seychelles is aware that it will become party to the WTO
TRIPS Agreement without any transition period accorded upon accession. WIPO is
reviewing IP legislation in Seychelles. As Seychelles is in the WTO accession
process, the Government has requested that it is placed in the fast track mode
within WIPO's Intellectual Property Development Plan (IPDP) that it provides to
member states.
Ministry of Finance and Trade in conjunction with the Office of the Registrar
General is responsible for formulating and implementing policy in relation to trade
marks in goods and services, and patents. The Ministry of Community
Development, Youth, Sports and Culture is responsible for registering copyrights
associated with literary works, musical works, artistic works, performances of
literary or musical works, films, sound recordings and broadcasts. A joint task force
is expected to be formed between the Police, Customs and the IP Office to provide
for more effective enforcement. However, current IP assets need to be audited and
human resources development is required.
In IP protection, foreign nationals are treated no less favourably than nationals.
Any advantage, favour, privilege or immunity granted by Seychelles to the
nationals of one country is accorded unconditionally to the nationals of other
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countries. Legislation that will be enacted will not discriminate between nationals
and foreigners in keeping with WTO principles of MFN and National Treatment.
4.8
Investment Protection and Dispute
Settlement
Constitution
Article 26 Right to property
(1)
Every person has a right to property and for the purpose of this article this
right includes the right to acquire, own, peacefully enjoy and dispose of property
either individually or in association with others.
(2)
The exercise of the right under clause (1) may be subject to such
limitations as may be prescribed by law and necessary in a democratic society (a). in the public interest;
(b). for the enforcement of an order or judgment of a court in civil or criminal
proceedings;
(c). in satisfaction of any penalty, tax, rate, duty or due;
(d). in the case of property reasonably suspected of being acquired by the
proceeds of drug trafficking or serious crime;
(e). in respect of animals found trespassing or straying;
(f). in consequence of a law with respect to limitation of actions or acquisitive
prescription;
(g). with respect to property of citizens of a country at war with Seychelles;
(h). with regard to the administration of the property of persons adjudged
bankrupt or of persons who have died or of persons under legal incapacity;
or
(i). for vesting in the Republic of the ownership of underground water or
unextracted oil or minerals of any kind or description.
(3)
A law shall not provide for the compulsory acquisition or taking of
possession of any property by the state unless (a). reasonable notice of the intention to compulsorily acquire or take
possession of the property and of the purpose of the intended acquisition
or taking of possession are given to persons having an interest or right
over the property;
(b). the compulsory acquisition or taking of possession is necessary in the
public interest for the development or utilisation of the property to promote
public welfare or benefit or for public defence, safety, order, morality or
health or for town and country planning;
(c). there is reasonable justification for causing any hardship that may result to
any person who has an interest in or over the property;
(d). the state pays prompt and full compensation for the property;
(e). any person who has an interest or right over the property has a right of
access to the Supreme Court whether direct or on appeal from any other
authority for the determination of the interest or right, the legality of the
acquisition or taking of possession of the property, the amount of
compensation payable to the person and for the purpose of obtaining
prompt payment of compensation.
(4)
Where the property acquired by the state under this article is not used,
within a reasonable time, for the purpose for which it was acquired, the state shall
give, to the person who owned it immediately before the acquisition of the property,
an option to buy the property.
(5)
A law imposing any restriction on the acquisition or disposal of property by
a person who is not a citizen of Seychelles shall not be held to be inconsistent with
clause (1).
National Treatment
The Investment Code provides that foreign investors shall enjoy the same rights
and shall be subject to the same duties and obligations as domestic investors.
Subject to the Constitution, the Code and international obligations, the Government
shall not discriminate between investors or against foreign investors on any ground
15
including, but not limited to, citizenship, residence, religion or the State of origin of
the investment.
Investor Protection
The Code provides that investors are guaranteed protection against any measure
of nationalisation or expropriation of their property except for reasons of public
interest, in accordance with a law, on a non-discriminatory basis and subject to the
grant of prompt and full compensation. An investor aggrieved by any
nationalisation or expropriation may seek constitutional remedies, or other
remedies under the written law or resort to other methods of resolution of disputes
provided for in any agreement between the investor and the Republic. (See Article
26 of Constitution above).
In 2012, the Investment Appeal Panel was set up under the Seychelles Investment
Act, 2010. The Act allows an aggrieved investor to apply to the panel for (i) a
review of a decision taken by a public sector agency with regard to that investor’s
investment or proposed investment where the investor is not satisified with the
decision of the public sector agency, or (ii) for an order where the public sector
agency does not issue a decision within the required time limit. The panel may then
recommend the annulement of an unauthorised act or decision or remedy an
omission of the public sector agency or may even recommend the re-evaluation of
an application.
A commercial court was also established to deal with commercial disputes.
4.9
Seychelles &
COMESA
International Agreements and
Obligations – Trade and other
Agreements, BITs, DTTs
Seychelles is a member of the COMESA FTA. In signing the FTA the Government
anticipates that the country would benefit from a wider, harmonised and more
competitive market, greater market access and food security and a greater
investment in infrastructure.
Government of Seychelles Letter of Intent to IMF June 2010 states “We remain on
track for the implementation of the COMESA common external tariff by 2013. As a
preliminary step, we have introduced in the 2010 budget a common excise tax on
petroleum, motor vehicles, alcohol and cigarettes that applies equally to imports
and locally-produced items. A roadmap has been established and a chief
negotiator has been appointed to prepare for the negotiations to accede to the
World Trade Organisation.”
WTO, Seychelles
and COMESA
WTO Accession of Seychelles Memorandum on the Foreign Trade Regime:
Updated Version 2009 states “Seychelles' trade policy is orientating towards
regional integration with the Common Market for Eastern and Southern Africa
(COMESA). The Government of Seychelles firmly believes that regional integration
will provide the economic sectors of the country with more scope for development
in terms of acquiring an increased market for the exports of goods and services”.
IOC
Seychelles is a member of IOC along with Union of Comoros, Madagascar,
Mauritius, and Reunion (France). IOC is a sub-regional grouping which promotes
intra-regional cooperation amongst its member states taking into account their
insular nature, small and vulnerable economies, and the protection of their fragile
natural environment.
EPA
Seychelles is currently negotiating the EPA with the EU in the Eastern and
Southern Africa (ESA) configuration.
Other International
Bodies
Seychelles is a member of the International Monetary Fund (IMF), the Work Bank,
the International Finance Corporation (IFC), the International Centre for the
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Settlement of Investment Disputes (ICSID) and the Multilateral Investment
Guarantee Agency (MIGA).
Status of Forces
Agreements
During the last half of 2009, Seychelles signed Status of Forces Agreements
(SOFAs) with the US, France and the EU’s Atalanta naval mission, legalising their
presence in the country. This arose out of the need to counter increased piracy
activity in the Indian Ocean, including within Seychelles 320-km exclusive
economic zone (EEZ), which has a negative impact on fishing activity.
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5
SADC RELATED ISSUES
Seychelles joined SADC in September 1997. Due to human and financial
constraints, the Government decided to withdraw its membership from the
organisation and ceased to be a member in 2004. In 2006, the Government felt
that that the time was right to re-join SADC and it initiated the process in that same
year. Seychelles was re-admitted to SADC in August 2008.
AfDB on Seychelles
and Regional
Integration
African Development Bank (2009) states “The prospects for enhancing regional
integration are, however, constrained by the prohibitive ICT costs in Seychelles
emanating from the lack of availability of international telecommunications
bandwidth capacity. Lack of foreign exchange has been a major constraint for local
operators’ investment into submarine cable initiatives. Seychelles is currently
looking seriously at various submarine cable options such as the East African
Submarine System (EASSy), South East Africa Communication Project
(SEACOM), and the East African Marine System (TEAMS) is timely. Fast and
higher-capacity ICT broadband capability would greatly facilitate the development
of offshore financial and business services, as well as the movement towards
higher-value business tourism.”
WTO, Seychelles
and Regional
Integration
WTO (2009) “Being geographically isolated, it is essential for Seychelles to strive
towards economic integration with its neighbours and regional partners. The
government also considers that there are many gains from regional integration,
which include trade gains, increased returns and competition and investment.
Although there are also challenges that the country faces when joining the regional
groupings. They mostly include overlapping membership issues, institutional issues
and policy design issues as well as increased competition to the domestic
industries.”
Budget 2010,
Seychelles and
Regional Integration
Budget 2010 Address by the Minister for Finance Danny Faure Nov 30th 2009
states “Regional Integration: Seychelles is taking great strides in terms of aligning
itself with international best practice. We are working intensively with our regional
partners so as to strengthen regional integration. In 2009, Seychelles became a
member of the COMESA FTA and 2010 will see us become a party to the SADC
Trade Protocol. As part of our efforts to widen our trading avenues in both our
imports and exports, we are exploring a number of Free Trade Agreements. Only
this month, Seychelles had a first round of negotiations towards a bilateral FTA
with Turkey, which is a world leader in manufacturing. It is hoped that this FTA will
lead to cheaper imports such as intermediate goods and finished products.”
Bilateral Investment
Treaties
Bilateral Investment Treaties with Seychelles as at 1 June 2010
Seychelles
Partner Country Date of
Date of Entry into
Signature
force
1.
China
10 Feb 2007
2.
Cyprus
28 May 1998
19 March 1999
3.
Egypt
22 Jan 2002
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Double Taxation
Agreements
Double Taxation Agreements concluded with Seychelles as at 1 June 2010
Partner
Type of Agreement
Date of Signing
1.
Belgium
27 April 2006
2.
Botswana
Income & Capital 26 August 2004
20 June 2005
Gains
3.
China
Income and Capital
26 Aug 1999
17 Jan 2000
4.
Cyprus
Income and Capital
28 June 2006
2 Nov 2006
5.
Indonesia
Income and Capital
27 Sept 1999
16 May 2000
6.
Japan
Income and Capital
25 Sept 1970
7.
Malaysia
Not Specified
2 Dec 2003
10 July 2006
8.
Mauritius
Not Specified
11 Mar 2005
22 June 2005
9.
Norway
Income and Capital
18 May 1955
10. Oman
Not Specified
13 Sept 2003
20 Jan 2004
11. South Africa
Income and Capital
26 Aug 1998
3 July 2002
12. Switzerland
Income and Capital
26 Aug 1963
13. Thailand
Not Specified
26 April 2001
14 April 2006
14. UAE
Income and Capital
19 Sept 2006
23 April 2007
15. Vietnam
Not Specified
4 Oct 2005
7 July 2006
16. Zimbabwe
6 Aug 2002
Sources included
African Development Bank (2009) Seychelles 2009-2010 Interim Strategy Note
Feb 2009
http://www.afdb.org/fileadmin/uploads/afdb/Documents/PolicyDocuments/SEYCHELLES_INTERIM%20STRATEGY%20NOTE%2020092010.pdf
Government of Seychelles (2009) Debt Management Strategy for 2010 –2012
http://www.finance.gov.sc/Downloads/DebtManagement/Debt%20Management%2
0Strategy.pdf
IMF (2010) Seychelles: First Review under the Extended Arrangement, Request
for Modification of Performance Criteria, and Financing Assurances Review—Staff
Report;
Staff
Supplement;
and
Press
Release
http://www.imf.org/external/pubs/cat/longres.cfm?sk=24029.0
Seychelles
(2007)
Seychelles
http://www.egov.sc/documents/strategy2017.pdf
Strategy
2017
Seychelles (2009) Budget 2010 Address by the Minister for Finance Danny Faure
Nov 30th 2009
http://www.sib.gov.sc/Resources/Others/Budget%202010%20English.pdf
Seychelles
Investment
Bureau
(2007)
Tourism
http://www.sib.gov.sc/Resources/Tourism_Strategy_2017.pdf
Seychelles
Investment
Bureau
(2010)
Double
http://www.sib.gov.sc/pages/general/Download.aspx
Strategy
Tax
2017
Agreements
UNCTAD (2010) Bilateral Investment Treaties and Double Tax Agreements
http://www.unctad.org/Templates/Page.asp?intItemID=2339&lang=1
WTO (2009) Accession of Seychelles Memorandum on the Foreign Trade Regime:
Updated Version WT/ACC/SYC/9 26 May 2009
http://www.finance.gov.sc/images/DivisionsUnits/Trade/PoliciesLegislation/SYC9.p
df
19