Seychelles Considers Tax Law Reforms

by Amanda Banks, Tax-news.com, London

18 May 2001

The Seychelles National Assembly will soon consider several amendments to the current exchange control and money and trade taxation laws to tackle the growing problem of the black market which, said President France Albert Rene in his 'State of the Nation' address earlier this year, is the 'evil ... which is damaging our economy.'

According to reports from the Seychelles Nation news, the amendments proposed will close loopholes that exist in laws such as the Foreign Earnings Act, Exchange Control Act, Central Bank of Seychelles Act and the Trades Tax Act.

With regard to the Foreign Earnings Act, the term 'non-resident' ignores tourists and holiday operators which allows for a huge amount of foreign earnings to slip through the economy because it is unregulated. The amendment would see to it that foreign exchange earners are obligated to use the country's banking system and the Seychelles Nation reports that a new definition of 'non-resident' will enlarge on the term to include 'any person in or resident in Seychelles who engages in a trade, business or activity with another such person for or on behalf of or for the benefit or purpose of any person not resident in Seychelles.'

Proposed amendments to the Trades Tax Act will strengthen price controls and enable the authorities to put a 'true' value on imported goods. And amendments to the Exchange Control Act will require individuals who possess any foreign currency to show evidence that it is obtained from a registered dealer. Further changes to the Exchange Control Act, states the Seychelles Nation, will include a prohibition against 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.' The Exchange Controller will also be give the remit to issue directives to authorised dealers and failure to comply could end in a fine between R250,000 and R500,000 or imprisonment for up to five years.

But first an Exchange Controller will be appointed and this will be the aim of the amendment to the Central Bank Act. Once appointed, the Exchange Controller will in turn see to it that the Foreign Earnings (Regulation) Act and the Exchange Control Act are implemented.

The Attorney General is scheduled to present the proposed amendments before the National Assembly during the second term of 2001. Currently in recess, the Assembly is due to reconvene next week.

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