The Seychelles CSL (Special License Company) is a special type of low tax offshore company formation available in Seychelles which is fully tax resident, but pays a low 1.5% business tax rate. Fully tax exempt offshore companies are under increasing scrutiny from global governments and bodies such as the OECD. Some popular jurisdictions such as Hong Kong and Singapore have also made changes which bring a certain degree of tax risk to those operating from those countries. Thus for those setting up global trading or services companies such as e-commerce businesses, a tax resident entity that pays only 1.5% business tax is an increasingly interesting option. A Seychelles CSL may also have access to the growing list of Double Taxation Avoidance Agreements ("DTAAs") entered into between the Government of Seychelles and various treaty partner countries such as China, Indonesia and South Africa among others. With the allowance of foreign tax credits and expenses for certain items, the effective tax rate may actually be 0% in such structures.
Seychelles Double Tax Avoidance Agreements
- The Republic of Seychelles has signed and ratified several significant Double Taxation Avoidance Agreements and is in the process of negotiating with several more countries.
- Those ratified and in force include China, UAE, Oman, Cyprus, Malaysia, Indonesia, South Africa, Mauritius, Vietnam, Thailand, Botswana, Qatar, Barbados and Belgium.
- Negotiations concluded with Russia, Egypt, Kuwait, Czech Republic, Tunisia, Namibia, and Bahrain.
- Negotiations in progress include Philippines, Malta, Burundi, Ivory Coast, Lesotho, Morocco and Uganda.
- These DTAAs specify lower negotiated withholding rates on interest, dividends and royalties allowing the Seychelles CSL to invest and conduct business in the treaty countries with the benefit of these lower negotiated rates.
Seychelles CSL Uses
- The Seychelles CSL may be used for the specific provisions indicated in the Seychelles Company (Special Licenses) Act 2003 unless otherwise given express permission to engage in some other business by the Seychelles International Business Authority. These include the following:
- Undertaking the business of investment management and advice (Including "Introducing Broker")
- Offshore banking (a separate banking license is required)
- Offshore insurance and re-insurance (a separate insurance license is required)
- Investment services
- Intellectual property holding
- Human resources
- It may also operate as a headquarters or holding company.
- The CSL is also the prescribed entity to operate under the Seychelles International Trade Zone License.
Management and Control
A key provision of most Double Taxation Avoidance Treaties lies in the management and control of the company. We recommend before setting up a Seychelles CSL that clients consult with a qualified tax advisor in the treaty country in order to ensure that there are no issues which could jeopardize the ability to access the treaty benefits when it comes time to pay taxes.
Sterling Offshore is able to provide varying levels of management and control for the company. Our services include:
- Provision of virtual office solutions (telephone, fax and mail)
- Local natural person directors
- Local corporate secretary (through our locally licensed Sterling Management and Secretarial Services Ltd. which is separately licensed to carry out such activities)
- Accounting (bookkeeping, invoicing, etc.)
- Account signatory services/bank account management
The client should carefully consider the details of the relevant tax treaties and potential tax liability when choosing amongst the management options relating to a Seychelles CSL. While it generally meets minimum requirements to have 2 local directors, a local secretary, local meetings and the filing of audited returns, some may wish to have a more significant presence in Seychelles depending on the nature of the company and potential tax liability. We will discuss individual circumstances and provide a more involved management role designed to meet the needs of the client if necessary.
Capital Gains Treatment
A key feature of a Seychelles CSL is that Seychelles does not impose taxes on capital gains. Most of the Double Taxation Avoidance treaties also specify that capital gains taxes will not be withheld at source except for the standard exclusions such as gains from immovable property. Gains from investments in public securities are generally not taxed.
Privacy and Confidentiality
The application for a Seychelles CSL involves more disclosure of information to the relevant authorities than for a Seychelles IBC for instance. Directors are a matter of public record, but shareholders and beneficial owners are not.
Seychelles CSL Summary
|Political Stability||Very Good|
|Legal System||Common Law/Civil Law Hybrid|
|Disclosure of Beneficial Owner to Registrar||Yes|
|Disclosure of Beneficial Owner to Registered Agent||Yes|
|Migration of Domicile Permitted||Yes (Incoming and Outgoing)|
|Non-English Language Names Allowed||Yes|
|Operational Objects||Specific to intended business|
|Tax on Worldwide (gross) Profits||1.5%|
|Access to Double Taxation Avoidance Treaties||Yes|
|Bearer Shares Allowed||No|
|Corporate Directors Allowed||No|
|Company Secretary Required||Yes|
|Standard Authorized Share Capital||USD 1,000 (up to USD 100,000)|
|Minimum Paid Up Capital||10% of authorized share capital|
|Government Registry of Directors||Yes, not public|
|Government Registry of Shareholders||Yes, not public|
|Annual Filing of Returns||Yes|
|Meeting Location||Anywhere, proxy also allowed|
|Incorporation Time||2-4 weeks depending on the time it takes for the client to return the application and supporting docs|