On
this Page:
-
SEYCHELLES
GEOGRAPHY
- SEYCHELLES
POPULATION LANGUAGE AND CULTUREo
-
SEYCHELLES
GOVERNMENT
-
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.
BACK
TO TOP
Seychelles Population, Language
and Culture
The population of the Seychelles is approximately
87,000, 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.
BACK TO TOP
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.
BACK
TO TOP
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. GDP
per head is USD18,00 (2008 est).
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. In the last 20 years the
Government has made a sustained effort to attract
'offshore' financial services, particularly in
banking and insurance.
The
official unit of currency is the Seychelles Rupee,
divided into 100 cents. Prior to November 2008,
the currency was pegged to the US dollar at a
rate of USD1 -SYR5.5. The peg was removed as part
of a package of economic reforms which included
a loan from the International Monetary Fund to
help pay the country's debt. After a sharp fall,
by the spring of 2009 the Seychelles rupee had
stabilized at a rate about 50% lower than 6 months
previously.
After
a reverse during the Gulf War, the economy rebounded,
with growth averaging 4-5%. However, the artificially
high exchange rate held back tourism, and growth
in 2002-2004 averaged only 1.5%. 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.
While
the Seychelles Central Bank was optimistic on
growth prospects for 2007 and 2008, the commodity
price spike caused inflation to shoot up, and
in combination with a shortage of currency reserves,
the country defaulted on much of its debt and
the economy faced crisis. In mid-2008 the government
was forced to turn to the IMF for assistance.
Discussions in July and September that year culminated
in the abolition of all exchange restrictions
and led to a tightening of fiscal policy, a broadening
of the tax base and the introduction of a monetary
policy.
Most
of the country's debt with sovereign partners
had been frozen as a result of a one-year moratorium
announced by the Paris Club for countries affected
by 2004 tsunami.
Seychelles
President James Michel recently remarked: ”We
requested support from the IMF to help solve these
imbalances and safeguard the development goals
we had achieved. This support was quickly granted.
The Stand-By Arrangement is for us an example
of how the instruments that govern the global
economy can be adapted to meet the needs of a
smaller partner.”
The
authorities launched a public external debt restructuring
initiative in late 2008 to put public debt on
a sustainable path, by significantly reducing
debt service obligations over the long term to
levels consistent with the country’s limited
payment capacity. A two-year SCR17.6 million (about
US$27.3 million) Stand-By Arrangement for the
Seychelles was approved on November 14, 2008.
In
mid-April 2009, Paris Club creditors granted exceptional
debt treatment to Seychelles under the 2003 Evian
approach to debt relief, reducing the debt stock
by 45 percent in nominal terms in two tranches,
with the remainder rescheduled over 18 years with
5 years’ grace. Comparable treatment from
other creditors is needed to close financing gaps
over the medium term and secure public debt sustainability.
BACK
TO TOP
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 SR24,000
per annum, plus a processing fee of SR1,000 (at
the time of writing).
BACK
TO TOP
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.
BACK
TO TOP
Seychelles Import of Foreign
Capital
N.B.
All restrictions on the trading of the Seychelles
rupee were removed in November 2008 under an IMF-sponsored
economic stabilization programme.
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."
As
a result of the global financial crisis in 2007/8,
all restrictions on the trading of the Seychelles
rupee were removed and the currency was allowed
to float freely.
In
September 2009, the Central Bank of the Seychelles
announced the introduction of a new foreign exchange
regime under the Foreign Exchange Act 2009.
According
to an explanatory note accompanying the new legislation,
the 2009 Act repeals and replaces the Exchange
Control Act (Cap 76) which enforced a highly regulated
and restrictive foreign exchange regime. The Act,
unlike its predecessor is more regulatory as opposed
to restricting activities of persons. The presence
of provisions that may be perceived as impeding
on the right of individuals to deal with their
moneys is actually an effort to regulate the market
and prevent illegal activities which flourished
in the past under the Exchange Control Act.
The
primary focus of the Act is that the local currency,
the Seychelles rupee, is never refused when offered
as means of payment. Payments may however be made
in foreign currency where stipulated in a written
law, or in instances where there is a contractual
(written or oral) agreement. In the case of an
oral agreement, this would include a payment made
in a restaurant, hotel, etc. Where payment is
offered in a foreign currency, the person accepting
payment may return the money remaining after the
transaction in foreign or local currency. Persons
who accumulate foreign currency through the receipt
of foreign currency payments may choose to retain
or sell the foreign currency amounts. In the instance
where they wish to sell, they can only do so to
an authorised dealer. If this person were to sell
to a party other than an authorised dealer then
he or she shall be committing an offence by acting
as an authorised dealer without a licence.
Section
7 of the Foreign Exchange Act 2009 requires that
providers of goods and services who were previously
advertising in a foreign currency now advertise
their prices in Seychelles Rupees. Traders had
until September 30, 2009, to comply with the new
law. The Act, however, allows traders targetting
markets outside of the Seychelles to advertise
their goods and services in both local and foreign
currencies.
Other
provisions of the Foreign Exchange Act 2009 were
already in force when the Central Bank made its
announcement, notably section 8, which provides
that all payments are to be made in Seychelles
in rupees unless payment in foreign currency is
stipulated in (a) a written law or (b) is agreed
to by the parties either by contract or otherwise.
As such all persons have the right to make payment
in rupees except in cases as stipulated in (a)
and (b). The exchange rates to be utilized by
the persons other than banks and bureaux de change
who are accepting payment in foreign currency
shall be the average traded exchange rate as published
by the Central Bank in the Nation on a daily basis
as well as on the Central Bank website.
The
Central Banks stresses, however, that only banks
and bureaux de change are empowered to set exchange
rates and any other person who does so acts in
contravention of the law and may be liable upon
conviction to a fine not exceeding SCR400,000
or to imprisonment not exceeding one year.
The
law does not criminalise the occasional exchange
of foreign currency between relatives or friends
for a sum of Rupees, but it does cover instances
where the individual is exchanging foreign currency
on a sustained basis and for a profit as this
person will be unlawfully acting as an authorised
dealer without a licence and be subject to the
penalties as provided for in the Act.
Authorised
dealers may act as facilitators for payments,
receipts or transfers in respect of international
transactions which are defined as payments between
a resident and nonresident, and targets rather
the cross border movement of funds e.g. foreign
currency in a bank account in Seychelles being
transferred to a foreign bank account overseas,
this should only occur via authorised dealers.
According to the Central Bank, his provision by
consequence is not intended to restrict a resident
from making use of his account overseas to make
payment or transfer to a non-resident party. The
resident is free to use his account in Seychelles
and any account outside Seychelles, but where
the money is originating from Seychelles then
it is a requirement that the medium through which
it leaves the Seychelles is an authorised dealer.
BACK
TO TOP
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.
BACK
TO TOP
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.
BACK
TO TOP
|