The government of Seychelles will reveal a series of tax reforms by the end of April aimed at broadening the business tax base and realigning the tax rates, a government official said.
The Organization for Economic Cooperation and Development published a report that provides an in-depth, comparative analysis of Seychelles' tax system and makes recommendations for tax reform.
Despite significant tax reforms in recent years, Seychelles' tax system needs to be fairer and more sustainable, in particular through a rebalancing of its business tax, according to the report.
[The] government aims to level the playing field, reduce the tax burden on investors where it is present, and encourage entrepreneurship to flourish"
Currently, business tax rates on profits vary between 15% for the tourism, agriculture and fisheries sector; 25%-30% for small- to medium-sized businesses; and 33% for the largest businesses. The result is that the tax burden is heavily concentrated on a small number of companies, with 30 companies accounting for almost 80% of total business tax payments, says the OECD, which recommends "realigning business tax rates across sectors."
The 30% higher rate is likely to be reduced to 15% or 25%, depending on the size of the company, according to Seychelles Principal Secretary for Finance Damien Thesee.
OECD's representative, Bert Brys, said, "This would entail lowering statutory tax rates on many operators while increasing tax levels on those that currently contribute little to the collection of revenues."
The OECD acknowledges that the government has made significant tax reforms in recent years, notably in reforming its preferential tax system for international companies in 2017. However, it wants the country to discourage "aggressive corporate tax avoidance" by introducing measures in line with the OECD's base erosion and profit shifting (BEPS) project.
Seychelles sought the assistance of the OECD in March 2019, to review its tax system and come up with a Business Tax Regime that was simple and did not discriminate against certain sectors.
"The start of this assessment has been with the review of the Business Tax, as Government aims to level the playing field, reduce the tax burden on investors where it is present, and encourage entrepreneurship to flourish," said Loustau-Lalanne, Seychelles News Agency reported.
The report was launched at the Savoy Hotel Resort and Spa via Skype from France as the experts could not travel to Seychelles due to the coronavirus outbreak.