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SEYCHELLES
GEOGRAPHY
- SEYCHELLES
POPULATION LANGUAGE AND CULTURE
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SEYCHELLES
GOVERNMENT
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SEYCHELLES
ECONOMY AND CURRENCY
- SEYCHELLES
ENTRY AND RESIDENCE
- SEYCHELLES
BUSINESS ENVIRONMENT
- SEYCHELLES
IMPORT OF FOREIGN CAPITAL
- SEYCHELLES
FOREIGN INVESTMENT REGIME
- SEYCHELLES
INTERNATIONAL TRADE ZONE
Seychelles Geography
The
Seychelles are a group of 115 islands in the centre
of the Indian Ocean, about 2,000 km east of Africa
and to the north of Madagascar, lying mostly between
4 and 5 degrees south of the equator. The archipelago
lies outside the cyclone belt so the weather is
stable all year round, with an average maximum
daily temperature of 29 degrees. Rain falls most
heavily in December and January.
There
are two groups of islands: the 32 quite closely
grouped Granitic islands include Mahe, the principal
island, while the 83 Coraline islands are spread
out over a wide area between the Granitic group
and Madagascar. Mahe itself is 27km in length
and 12 kms wide with a total area of 154 sq kms;
it is mountainous, rising to a peak of 905 metres.
The
Seychelles environment is one of the most unspoiled
in the world with many species of birds, fish
and rich flora, some of which are unique.
Victoria,
the capital, on Mahe has the deepest port in the
Indian ocean. The international airport on Mahe
has direct flights to many cities in Africa, Europe,
the Middle East, Australia and the Far East.
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Seychelles Population, Language
and Culture
The population of the Seychelles is approximately
82,000, of whom about 70,000 live on Mahe. The
indigenous population is a well-fused mixture
of African, Malagasy and French strains; the official
languages are a French-based Creole, English and
French, with Creole being the most widely used.
Business is conducted in French and English.
The
islands were known to the Arabs from the 9th century,
and after visits by the Portuguese, French and
English, the French controlled them until 1814,
when British ownership was confirmed. The islands
became a British colony in 1903.
The abolition of slavery in 1835 was economically
disastrous, but there was gradual progress over
the next 100 years, with the population growing
from 4,000 in 1840 to 44,000 in 1962. Independence
was granted only in 1976, and the islands have
developed rapidly since then under a stable government.
46% of the land area is demarcated as National
Park or Nature Reserve.
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Seychelles
Government
The Seychelles is an independent republic and
a member of the Commonwealth. Under the constitution
of 1979, a unicameral People's Assembly, comprising
34 seats (25
elected by popular vote, nine allocated on a proportional
basis to parties winning at least 10% of the vote)
is elected for a
term of five years. Reforms to the constitution
implemented in 1993 made way for a multiparty
system after a long period of one-party rule.
Currently the Assembly is dominated by the Progressive
Front with 23 seats, while the National Party
has 11.
The
Executive President is elected for a five year
term and may be re-elected three times. In 1996
the position of Vice President was created. In
May, 2004, James Michel (previously Vice-President)
became President, replacing France Albert Renee,
who had been in office since 1977, and was last
re-elected in 1998 with 59.5% of the vote. The
Cabinet of 13 Ministers is appointed by the President.
The
legal system originated from French civil law,
but most modern criminal and business legislation
is closer to Anglo-Saxon common law practice.
There are magistrates' courts, a Supreme Court,
and a Court of Appeal.
Seychelles
is a member of the Commonwealth, the UN, the OAU,
and the Non-Aligned Movement, as well as a large
number of other international bodies.
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Seychelles Economy and Currency
Originally based on cotton-growing, the Seychelles'
economy switched to coconut plantations after
the abolition of slavery. In modern times, tourism
and fishing have become economic mainstays. Services
account for 72% of the economy, while tourism
contributes over 70% of foreign exchange earnings.
The international airport, opened in 1971, handles
250,000 passengers annually.
The
islands lie on many international shipping routes,
so that cruise liners are a growing source of
tourist business; the Government has also opened
the Seychelles Industrial Trade Zone (SITZ) which
is successfully targetting trans-shipment and
re-processing trade.
The
official unit of currency is the Seychelles Rupee,
divided into 100 cents. Recently the official
exchange rate against the dollar has been pegged
at USD1 = SR7.99. However, in recent times the
black market has been much higher, with the result
that local prices have been very high.
After
a reverse during the Gulf War, the economy rebounded,
with growth averaging 4-5%. However, the artificially
high exchange rate has held back tourism, and
growth in 2002-2004 averaged only 1.5%. Growth
turned negative again in 2005-06, but according
to the Seychelles Central Bank, growth in excess
of 5% is predicted for 2007 to 2008. Inflation
was 5.7% in 2007. The public finances are not
strong, and a budget surplus of 7% in 2003/2004
had turned into a small deficit by 2006. Unemployment,
which was recently recorded at levels of 10%,
moderated to 2% in 2006. GDP per head is USD16,600
(2007 est).
Tourism
was damaged by 9/11, and just as the islands were
recovering in 2004, with economic reforms under
the new president beginning to have an effect,
the Asian tsunami dealt a very heavy blow to the
Seychelles, severely damaging tourism, infrastructure
and the fishing industry. GDP fell by 3% in 2005.
The longer term economic effects are not yet clear.
In
the last 20 years the Government has made a sustained
effort to attract 'offshore' financial services,
particularly in banking and insurance.
Most
of the country's debt with sovereign partners
has been frozen as a result of a one-year moratorium
announced by the Paris Club for countries affected
by 2004 tsunami.
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Seychelles
Entry and Residence
Short-stay visas are issued freely on arrival,
although evidence of financial support may be
required; the Seychelles does not encourage low-budget
tourism. The permit can be extended for a maximum
of three months from the date of issue and further
successive three-month periods up to a maximum
of 12 months.
For
longer stays, it will be necessary to demonstrate
adequate financial resources, or to acquire a
Gainful Occupation Permit, normally costing SR18,000
per annum, plus a processing fee of SR 600 (at
the time of writing).
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Seychelles Business Environment
The Seychelles is politically stable, with good
air and sea transport links and modern telecommunications.
The Government has been consistently business-friendly
over a long period, and has actively supported
the development of the offshore sector. Inevitably,
in a country this small, professional services
do not have the breadth available in a larger
jurisdiction, but there are adequate banking and
legal facilities.
There
is no discrimination against foreigners with a
serious business purpose, except that they need
official approval to own land. There are licensing
regimes for financial institutions and trust managers.
There is an adequate level of secrecy in professional
transactions, but the Court can order disclosure
under a number of international agreements. The
Anti-Money Laundering Act 1996 allows the Central
Bank to overturn suspect transactions.
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Seychelles Import of Foreign
Capital
In
2001 the government amended exchange control and
money and trade taxation laws to tackle the problem
of growing black market activity. The amendments
closed loopholes in laws such as the Exchange
Control Act. Individuals who possess any foreign
currency must show evidence that it is obtained
from a registered dealer and the rules prohibit
the buying and selling foreign currency by authorised
dealers at rates above the maximum rate or below
the minimum rate determined by the Central Bank
as well as prohibiting the export and import of
Seychelles currency notes and coins in excess
of R2,000.
President
Michel's 2005 budget speech included measures
to lead to a more market-driven economy and reduce
domestic costs with the purpose of improving the
investment climate in the Seychelles: a series
of incentives for the tourism industry; assistance
to farmers and fishermen by reducing business
tax on their activities and facilitating their
access to vital equipment and resources; small
businesses to be given better access to foreign
exchange and an “open permit” system; everyone
has the possibility of opening foreign exchange
accounts locally; removal of the requirement for
an import permit for most items, with the exception
of a list of restricted items and items for resale;
customs procedures at the ports to be streamlined
and made more efficient and user-friendly; and
reductions in the 'trades tax'.
In
April, 2006, the Central Bank of Seychelles said
it expected most of the existing controls on foreign
exchange to have been removed by the end of 2006,
in order to help quell black market activity and
pull money into legal channels.
In
his 2007 State of the Nation address, President
Michel said that that liberalisation of foreign
exchange remains "a fundamental element"
of the government's economic reform agenda. "This
reform will facilitate economic growth as businesses
get more access to financial resources,"
he said. "Our economy has benefited considerably
in the last two years with the implementation
of these liberalisation policies. There is a rise
of local investments and FDI and there has been
increasing growth in tourism and fishing."
The
Seychelles rupee is currently fixed to the US
dollar at a rate of SR7.99.
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Seychelles Foreign Investment
Regime
The Seychelles government is keen to create a
suitable environment for foreign investment. The
Investment Promotion Act 1994 legislates inward
investment Incentives are granted to approved
projects in the domestic and export sectors, including
tourism, agriculture, manufacturing and the service
industries. Procedures for approval have been
streamlined and the incentives include the following:
-
Following the issue of a Certificate of Approval,
subsequent tax changes cannot be to the detriment
of the investor;
- Exemption
from import duties on primary and intermediate
inputs;
- Entitlement
to employ 50% of foreign staff (first 25%
at special rate of SR 500 per month; next
25% at the standard rate of SR 1,500 per month);
-
Accelerated depreciation up to 150% for certain
asset classes;
- Concessionary
business tax rates of 15% (usually 40%) plus
credits giving an effective rate of 9%.
For
substantial investments, further incentives can
be obtained from the Government on a negotiated
basis.
The
International Corporate Service Providers Act,
2003, substantially improved and simplify the
regime for incoming investment. Previously, the
Seychelles International Business Authority (SIBA)
had power to issue a licence to offshore businesses,
but entitlement to fiscal concessions depended
on obtaining a certificate from the Ministry of
Finance under the Investment Promotion Act.
The
new Act streamlined the procedure for establishing
an offshore business, avoiding the need for a
separate IPA application to the Finance Ministry.
See
Offshore Legal and Tax
Regimes for further details of the new legislation.
In
June, 2004, the creation of the Seychelles Investment
Bureau (SIB) brought the country’s promotion and
facilitation of investments under one umbrella,
offering a focal point of contact for all matters
relating to investment in Seychelles. SIB has
been mandated to coordinate the development of
the Investment Code, an instrument that will allow
a more transparent and stable investment environment.
In
September, 2005, SIB launched a new website, which
is intended to act as the main marketing tool
and the first point of contact for domestic and
foreign investors who are considering doing business
in the country.
The
SIB, established in 2004, is a semi-autonomous
executive arm of the President's Office. Besides
promoting the Seychelles as an investment and
business centre, the SIB's other functions include:
- acting
as the central agency of the Government dealing
with matters relating to business and investment
in Seychelles;
- facilitating
investment projects and business activities;
- coordinating
investment promotion policies, planning and
marketing strategies to attract investments;
- facilitating
and coordinating incentive schemes established
by law to encourage investments;
- and
advising the Government on investment policies
and elimination of administrative and other
barriers to the flow of investments.
In
July, 2005, the Investment Bureau celebrated its
first year of existence. During that period, the
institution has approved more than 100 development
projects valued at around R1 billion (US$192,600).
There
are three major categories of investments: (i)
tourism; (ii) residential and commercial projects,
(iii) industrial projects. The tourism projects
total some R800 million and these represent foreign
direct investment (FDI), projects by Seychellois-foreign
partnerships, or projects by Seychellois alone.
In the other sectors of investment, the majority
of promoters are Seychellois.
The
website can be found at www.sib.sc.
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Seychelles International Trade
Zone
The International Trade Zone Act 1995 and the
International Trade Zone Regulations 1995 provide
for the establishment of free trade zones, which
are delimited by a declaration of the Finance
and Communications Minister, and can be for one
company or many. The existing International Trade
Zone (SITZ) on Mahe is established under the Act.
Activities within the Zone are governed by the
Seychelles International Business Authority (SIBA),
which issues licenses to incoming companies. See
Law of Offshore for
details of the licensing process and requirements.
The
concessions available to licence holders in SITZ
include:
- Exemption
from customs duties on capital equipment to
be used in SITZ;
- Exemption
from Business Tax, Trades Tax and Withholding
Tax;
- Exemption
from social security contributions;
- Exemption
from fees in respect of 'gainful occupation
permits' (work permits);
- Entitlement
to employ 100% foreign labour;
- A
licence holder can apply for permission to
sell within the domestic sector.
Companies
established in the Free Zone are largely free
of taxes - see Offshore
Legal and Tax Regimes for details of fees
and taxes payable.
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