Key Takeaways
- Business tax in Seychelles can apply to companies based on territorial source rules and residence, which determine how foreign-owned firms are liable.
- Computing the tax base involves allowable deductions, depreciation allowances and loss relief, with sector concessions available for certain activities.
- Companies must meet self-assessment obligations, including provisional payments and timely filing, since late filing and payment carry penalties.
- Foreign-owned companies, IBCs and multinational groups should also weigh the OECD global minimum tax outlook when assessing future obligations.
Understanding Business Tax in Seychelles: Corporate Tax Explained
Corporate tax in Seychelles, known locally as business tax, is levied on the taxable income generated by a business activity. This is not a zero-tax jurisdiction for companies operating onshore: tax is actively assessed and collected by the Seychelles Revenue Commission, and a Seychelles International Business Company (IBC) only reaches a 0% position where it earns exclusively foreign-sourced income and falls outside the rules introduced in 2020.
The governing statute is the Business Tax Act, 2009, supported by amendments that brought the regime into line with international standards. Since 2010, the country has run a self-assessment system, placing the duty to declare and calculate liability on the taxpayer.
This article explains the rates, the source rules, the tax base, deductions, the treatment of foreign-owned entities and groups, filing duties, penalties, and the outlook on the global minimum tax. It is written for foreign business owners, investors, and their advisers weighing incorporation in the jurisdiction or maintaining a company already established there.
Legal Basis: The Business Tax Act 2009 and Its Amendments
The primary law is the Business Tax Act, 2009 (Cap 20), which enables the levy, assessment, and payment of business tax on the income of a business. It has been reshaped more than once since enactment, most significantly by the Business Tax (Amendment) Act, 2020.
That amendment received presidential assent on 28 December 2020 but came into operation on 15 September 2021. Its purpose was to align the regime with the OECD's BEPS initiative, particularly the treatment of foreign-sourced income earned by companies within multinational groups.
Rate reductions followed shortly after. The National Budget 2022, delivered on 12 November 2021, cut business tax rates from January 2022.
Several statutory instruments sit alongside the Act, including exemption orders for individual fishers and farmers issued in 2019 and 2021. More recent changes cited in S.I. 108 of 2024 apply retrospectively to the 2024 tax year and concern small, medium, and large businesses that are not part of a group and have not entered into a controlled arrangement.
Guidance from the revenue authority addresses the conditions for "covered companies" and the substance test for foreign passive income set out in Schedule 11. Foreign owners should read the law together with that guidance, since the practical sourcing position depends on both.
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Business Tax Rates and Brackets for Companies
The standard regime is progressive. The first tranche of taxable income is taxed at a lower rate, with a higher rate applied to income above the threshold.
| Taxable income | Rate |
|---|---|
| First SCR 1,000,000 | 15% |
| Above SCR 1,000,000 | 25% |
| Telecommunications, banking, insurance | 33% |
These brackets reflect the Budget 2022 changes, which lowered the top rate on profits above SCR 1 million from 30% to 25% and reduced the rate below that threshold from 25% to 15%. The elevated 33% rate continues to apply to companies in telecommunications, banking, and insurance.
That same budget ended preferential rates that had applied to international corporate service providers, businesses listed on the Seychelles Securities Exchange, and businesses connected to medical services. A separate 1.5% concession once available to certain licensed entities was abolished from 30 June 2021, a point covered further below.
Dividends paid by resident companies to shareholders generally attract withholding tax at 15%. Where a double taxation treaty applies, that rate may be reduced.
Territorial Source Rules and Residence-Based Liability of Companies
The jurisdiction historically taxed only income sourced within its borders. Income that a locally incorporated company earned from activities conducted abroad fell outside the charge, and this territorial principle still governs companies that are not part of any multinational group.
The 2020 reforms moved the system toward a hybrid model. Certain income is now "deemed" to be sourced locally, and therefore taxable, unless the company satisfies defined criteria.
Any company incorporated in the country is treated as tax resident under domestic law. Treaty provisions can override this where a company's place of effective management lies in a treaty partner state that asserts taxing rights on a managed-and-controlled basis.
Dividends received from foreign sources are generally not taxed locally, a feature that follows from the territorial roots of the system. Group structures change this analysis, so the deemed-source rules must be checked.
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Determining the Tax Base: How Taxable Business Profits Are Computed
A company pays business tax on its net profit. The return is a self-assessment document: the taxpayer reports income and permitted deductions, then determines what portion of income is locally sourced.
Reporting is on a cash basis. The tax year runs from 1 January to 31 December, although a taxpayer may apply to the Commissioner General for a substituted year-end.
Records must be retained for seven years and kept in English, French, or Creole. These include books, sales and expense ledgers, asset registers, receipts, purchase records, and banking documentation.
The tax base also captures returns from intangible assets. Patents, designs, secret formulas or processes, trademarks, copyrights, and similar rights are within scope as defined under the Act.
Allowable Deductions, Depreciation Allowances, and Loss Relief
Deductions reduce assessable income before the rates apply, and the range available is wide. They cover losses and outgoings, repairs, bad debts, depreciation, payments to shareholders, directors and associated persons, subscriptions to associations, contributions to the Seychelles Pension Scheme, and gifts.
Some deductions are enhanced to encourage particular spending:
- Employee training costs are deductible at 200% of the expense.
- Salaries of employees who graduated from professional centres qualify for a 125% deduction.
- Approved gifts to public funds, charities, or NGOs are 150% deductible, with effect from 21 April 2021.
Capital investment is recovered through depreciation. The Budget 2022 lowered the accelerated depreciation rate from 145% to 100%, and specific rates apply to farming, fisheries, and tourism operators such as hotels, restaurants, transport providers, tour operators, and travel agents.
On loss relief, unrelieved trading losses are generally available to carry forward against future profits. The Act does not, in the public sources, fix a defined number of carry-forward years, so confirm the position with the revenue authority for your facts.
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Tax Treatment of Foreign-Owned Companies, IBCs, and Multinational Groups
This is where the 2020 reforms matter most to foreign owners. The amendment expanded the definition of income deemed to arise locally and introduced the concept of a "covered company": a company that is part of an international group made up of two or more resident companies in different tax jurisdictions.
For an IBC, the practical question is whether income is genuinely foreign-sourced and, where relevant, whether substance exists. Profits earned through overseas permanent establishments are not taxable here. Foreign-sourced passive income such as dividends, interest, rent, and capital gains is exempt provided the IBC has adequate economic substance.
Foreign passive income is treated as locally sourced unless the entity qualifies under the Eleventh Schedule, which requires physical presence, local management, and operational activity in the country. Where income is brought into charge because substance is lacking, a credit is allowed for foreign taxes already paid on that income.
Intellectual property is treated more strictly. Foreign-sourced passive income from IP is generally taxable, with limited exceptions for qualifying income from patents or equivalents.
From 30 June 2021, Companies Special License entities lost the 1.5% business tax concession and the exemption from withholding tax on payments to non-residents. Structures built on that concession need to be reassessed.
The reforms had an external dimension. On 16 September 2021, the country finalised refinements to address EU and OECD concerns, leading to its removal from the EU list on 5 October 2021; the OECD review sets out the background to those changes.
An IBC earning exclusively foreign-sourced revenue is generally not required to file a business tax return. An IBC that forms part of a multinational group cannot assume that position and should assess its status carefully, because the expanded source definition may bring its income into charge.
Sector Concessions and Business Tax Incentives
A number of sector-specific regimes remain in place, though several historic ones have been withdrawn. Qualifying small businesses may access benefits under the Small Business Incentive Act, tourism investments under the Tourism Incentive Act, and manufacturing companies may qualify for reduced rates; entities in designated special economic zones may also receive preferential treatment.
Primary production carries targeted relief. Statutory instruments issued in 2021 exempt individual fishers, individual farmers, and farming partnerships and entities from business tax.
Not every prior concession survived. In 2017, eight preferential regimes were assessed as harmful because they were ring-fenced from the domestic economy and lacked substance, and most were subsequently abolished or restructured. Telecommunications, banking, and insurance remain outside the standard progressive scale, sitting instead at the 33% rate.
Filing, Provisional Payments, and Self-Assessment Obligations
Returns are due by 31 March following the end of the tax year, giving three months to prepare and submit, unless the Commissioner General approves otherwise. A return is required regardless of whether tax is owed, and a company that did not trade must still lodge a NIL return before the deadline.
New businesses register with the revenue authority within 28 days of starting to trade. Companies then pay tax in advance through the Pay As You Go instalment system, typically monthly.
- Register with the SRC within 28 days of trading
- Submit the Business Activity Statement by the 21st of the following month, with payment
- Pay PAYG instalments by the 21st (in person) or 23rd (online or bank transfer)
- File the annual business tax return by 31 March
- Complete a Related Party Dealings Schedule if you enter a controlled arrangement under Section 54(1)
Common failures are predictable and avoidable. They include missing the 28-day registration window, keeping records that do not meet IFRS standards, missing instalment deadlines, and misjudging the source of income under the territorial rules.
Penalties for Late Filing and Late Payment of Business Tax
Filing late triggers financial penalties, and the revenue authority may raise an estimated assessment from the information available where no return arrives. Interest runs on any unpaid tax from the due date until the liability is cleared.
Late payment attracts a penalty of 15% plus daily interest on the outstanding sum. Persistent late or incorrect filing can lead to fines, daily penalties, or prosecution.
Where a company owes more than SCR 1 million, the debt may be settled by instalment over a 12-month period once approved, under the Revenue Administration Act 2009. Breaches of record-keeping duties carry fines, with penalties for IBCs and similar entities expressed as amounts not exceeding USD 5,000 or USD 10,000 per breach.
The OECD Global Minimum Tax (Pillar Two) Outlook for Seychelles
Pillar Two, the GloBE rules, aims to ensure that large internationally operating groups pay a minimum effective rate of tax. As a member of the Inclusive Framework on BEPS, the jurisdiction has committed to the four minimum standards, including the removal of harmful tax practices, treaty anti-abuse measures, country-by-country reporting, and improved dispute resolution.
Country-by-country reporting reaches groups with consolidated revenue of EUR 750 million or more in the preceding fiscal year, the same threshold used across the Inclusive Framework. The logic of the 2020 amendment, ensuring an IBC's income is taxed in at least one jurisdiction, aligns with the "subject to tax" thinking behind Pillar Two.
A domestic top-up tax has not been enacted. No Qualified Domestic Minimum Top-up Tax or Income Inclusion Rule has been introduced, and no implementation date has been published.
Domestic preparation is underway. A transfer pricing and global minimum tax capacity-building workshop ran with revenue staff and stakeholders from 11 to 15 May 2026, consistent with the pattern of small jurisdictions monitoring developments and acting once enough trading partners adopt the rules.
Conclusion
The real decision driver for a foreign business owner is not the headline rate or the IBC wrapper, but whether the company's actual income source and residence classification place it inside or outside Seychelles taxable scope, because that single determination shapes every obligation that follows. Getting that classification wrong, and then missing provisional payment deadlines on top of it, is where exposure accumulates quietly.
With the OECD global minimum tax outlook adding a layer of future uncertainty for multinational groups, the immediate next step is a clear source-and-residence analysis specific to how the business generates and books its income, before entity structure is finalised.
How Expanship Can Help Your Business in Seychelles
Expanship supports foreign owners with business tax registration, return preparation, and the self-assessment obligations that come with operating a company in the jurisdiction, and we extend that support across the full life of a foreign-owned entity. Our work covers the practical steps that keep a company in good standing while its tax position is managed correctly.
- Company formation and structuring for IBCs and resident companies
- Registered agent and registered office services
- Business tax registration and annual return filing
- Ongoing compliance and deadline management
- Accounting and bookkeeping aligned with record-keeping rules
- Introductions to banking partners
To discuss your situation, contact Expanship Seychelles.
Frequently Asked Questions
No. Business tax is levied and collected on company profits at 15% on the first SCR 1,000,000 and 25% above that, with a 33% rate for telecommunications, banking, and insurance. A 0% outcome arises only for an IBC that earns exclusively foreign-sourced income and is not a covered company under the 2020 amendment.
An IBC earning exclusively foreign-sourced revenue is generally not required to submit a business tax return. An IBC that forms part of a multinational group must assess its position carefully, because the 2020 amendments expanded the definition of locally sourced income for covered companies.
The annual return is due by 31 March following the end of the tax year, which runs from 1 January to 31 December. Companies also make provisional PAYG instalments, with the monthly payment due by the 21st (in person) or the 23rd (online or bank transfer).
Late payment carries a penalty of 15% plus daily interest on the outstanding amount until it is settled. The revenue authority may also raise an estimated assessment where no return is filed, and persistent default can lead to fines or prosecution.
Foreign-sourced passive income such as dividends, interest, rent, and capital gains is exempt where the IBC has adequate economic substance and qualifies under the Eleventh Schedule. Where substance is lacking, that income is treated as locally sourced and taxed, with a credit allowed for foreign taxes already paid; income from non-patent intellectual property is generally taxable.
Not yet. The country participates in the Inclusive Framework and applies country-by-country reporting for groups above EUR 750 million in consolidated revenue, but it has not enacted a domestic top-up tax or Income Inclusion Rule, and no implementation date has been published.
Legal Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change, and the application of laws can vary widely based on specific facts and circumstances.
Readers should not act upon this information without seeking professional counsel tailored to their individual situation. Expanship and its authors disclaim any liability for actions taken or not taken based on the content of this article.
For specific advice regarding your business setup, compliance requirements, or any legal matters, please consult with qualified legal and tax professionals in the relevant jurisdiction.
