Dividend Tax in Seychelles: Shareholder Rules Explained

Understanding Dividend Tax in SeychellesCopy link to section

Seychelles does not impose a standalone dividend tax. Dividend taxation runs entirely through the withholding tax mechanism set out in the Business Tax Act 2009, and whether any charge arises turns on two facts: whether the distribution comes from Seychelles-sourced income, and whether the shareholder is resident or non-resident. The jurisdiction taxes on a territorial basis, meaning income generated outside its borders generally falls outside the net, a principle confirmed in the SRC tax overview.

This article explains how dividends are treated at company and shareholder level, the rates that apply to residents and non-residents, the treaty position, and the special treatment of International Business Companies. It will be most useful to foreign owners and investors weighing a Seychelles holding or trading structure, and to advisers assessing the after-tax cost of distributions.

The Legal Basis for Dividend TaxationCopy link to section

The governing statute is the Business Tax Act 2009, as amended. The Business Tax (Amendment) Act 2018, in force 1 January 2019, codified the territorial system and confirmed that companies not deriving assessable income locally owe no tax or duty on income or profits.

Two tests decide the outcome for any dividend. First, source: income is treated as arising in Seychelles where it derives from activities conducted, goods situated, or rights used there, regardless of where the parties reside or where contracts are signed.

Second, the status of the recipient. Distributions to a resident person out of Seychelles-sourced income carry a zero rate, while distributions to a non-resident out of such income are caught by withholding tax.

Withholding tax operates as a final tax. Once a dividend has borne it, the same income is not assessed again to business tax, which removes any risk of a second charge on the same distribution.

Seychelles

Company Incorporation in Seychelles

Set up your company in Seychelles with Expanship handling registration end to end.

Learn more

How Dividends Are Treated at the Shareholder LevelCopy link to section

A company is taxed separately from its members, and a member is liable on dividends received in line with the Act. That separation matters, because it sets up the question of whether a second charge arises when profits move from the entity to its owners.

For corporate shareholders resident in the jurisdiction, the answer is no. Dividends received by a resident entity from a resident corporation, paid out of locally sourced income, are exempt from business tax, so there is no stacking of tax as profits pass between resident companies.

Incoming foreign dividends sit outside the charge as well. Distributions received by a resident company from foreign sources are generally not taxed, a direct consequence of the territorial design.

Where a paying company draws on both local and foreign profits, an apportionment rule applies. The taxable fraction is the Seychelles-sourced income divided by total income, multiplied by the dividend, so only the locally derived portion is exposed to tax.

Taxation of Resident Shareholders on Dividend IncomeCopy link to section

Resident shareholders enjoy the most favourable position. Dividends paid by a resident incorporated entity to another resident incorporated entity, or to a resident unincorporated entity, attract a 0% withholding rate.

There is no separate schedular dividend tax layered on top. The zero-rate mechanism is the whole of the resident shareholder's exposure, and no further income tax applies to the receipt.

Combined with the business-tax exemption on inter-company dividends, the result is that profits flowing from one resident company to another bear no tax at either level. The recipient's tax residency is the operative test; how residency itself is determined sits outside this article.

Seychelles

Ongoing Compliance in Seychelles

Keep your Seychelles entity compliant with filings, returns, and statutory obligations.

Learn more

Taxation of Non-Resident Shareholders on Dividend IncomeCopy link to section

Non-resident shareholders face a different outcome where the distribution comes from locally sourced profits. A dividend paid by a resident entity to a non-resident out of Seychelles-sourced income is subject to withholding tax at 15% on the gross amount.

The paying company carries the compliance burden. It must withhold the tax and remit it to the Seychelles Revenue Commission using a Business Activity Statement, with payment due on or before the 21st day of the following month.

A double tax treaty can lower the headline figure. Where an agreement exists between Seychelles and the shareholder's jurisdiction of residence, the treaty rate governs if it is below 15%; otherwise the domestic rate stands.

The treaty network is wide. The country has concluded 28 double tax treaties, covering partners such as Bahrain, Belgium, China, Cyprus, Indonesia, Kenya, Luxembourg, Malaysia, Mauritius, Monaco, Oman, Qatar, Singapore, South Africa, Sri Lanka, Thailand, the UAE, and Vietnam. It signed the OECD Multilateral Convention on 7 June 2017, which entered into force locally on 1 April 2022, so anti-abuse tests in the MLI can affect access to treaty benefits.

Participation and Exemption Rules for DividendsCopy link to section

There is no formal participation-exemption regime here of the kind found in EU parent-subsidiary rules. The relief that does exist flows from the territorial system rather than from a dedicated holding-company statute.

In practice, two exemptions cover most situations. Dividends received by a resident company from a resident corporation out of local profits are exempt from business tax, functioning as a de facto inter-company relief, while dividends received from foreign sources are generally untaxed as a broad incoming-dividend exemption.

Substance can be a condition for the foreign-income relief. A company with adequate economic substance can claim exemption on passive income sourced abroad, a point that became material after the rule changes effective 16 September 2021 introduced a substance test for passive income received from non-residents by covered companies.

No fixed shareholding percentage or holding period is codified for domestic dividend relief. Eligibility follows the source-and-residence logic of the Act, not a minimum ownership threshold.

Seychelles

Seychelles Incorporation Pricing

See transparent pricing to incorporate and maintain a company in Seychelles.

View pricing

Dividends Distributed by International Business CompaniesCopy link to section

International Business Companies, governed by the International Business Companies Act 2016, sit at the centre of most foreign-owned structures. An IBC that does not derive assessable income locally is exempt from any tax or duty on income or profits, and there is no withholding tax on its outbound dividends and no capital gains tax.

A holding IBC therefore lets foreign dividends flow up tax-free. Distributions of foreign dividends, gains on foreign assets, and interest on foreign deposits pass to stakeholders without a local charge.

The position reverses if an IBC earns Seychelles-sourced income. The firm then enters the business-tax net at 25% on the first SCR 1,000,000 of taxable income and 33% above that, and dividends from local profits engage the withholding rules described earlier.

Economic substance applies in a defined case. An IBC that belongs to a multinational enterprise group and earns passive income, including dividends, from foreign sources becomes a "covered company" and must show adequate substance locally.

• A pure equity holding company, holding only equity participations and earning only dividends and capital gains, faces a reduced requirement: a declaration rather than full headcount and premises testing.
• A Company Special Licence is exempt from withholding tax on dividends, interest, and royalties, and pays business tax at 1.5% on worldwide taxable income.

Narrow Charges and Exceptions Within Dividend Tax ScopeCopy link to section

The principal carve-out is the source rule itself. Dividends paid by a resident entity, or by the permanent establishment of a non-resident, out of income not sourced in Seychelles are not subject to withholding tax.

Mixed-source distributions are split. Where a payer draws on both local and foreign profits, the apportionment formula isolates the locally sourced fraction, and only that part is taxed.

Permanent establishment income follows a separate track. Where a non-resident earns local income through a permanent establishment, that income is taxed as ordinary business income rather than through dividend withholding.

Two further points narrow or police the field. Businesses in the Seychelles International Trade Zone are not taxed on business profits or dividends, while the Act's general anti-avoidance provisions let the Revenue Commissioner disregard or recharacterise arrangements whose dominant purpose is a tax benefit.

What the Dividend Tax Position Means for Companies and InvestorsCopy link to section

For a foreign owner, the headline is straightforward: business conducted outside the territory generally bears no local tax, and there are no general restrictions on repatriating capital or income. An offshore company pays nothing on income generated abroad.

Onshore activity is where the dividend charge bites. A domestic company distributing local profits to non-residents withholds 15%, while inter-company distributions between resident entities are zero-rated, so the structure of ownership directly drives the after-tax result.

Holding structures built on IBCs let foreign dividends consolidate without a local layer of tax. A CSL offers a different route, accessing the treaty network and paying 1.5% on worldwide taxable income, with foreign withholding tax of at least that level creditable to discharge the local liability in full.

Compliance obligations are modest but firm. A company must register with the Seychelles Revenue Commission within 30 days of incorporation or starting activity, and onshore companies file annual returns within four months after the financial year-end. Details of the rate framework and treaty positions are summarised in the GSL tax overview.

Outlook and Possible Changes to Dividend TaxationCopy link to section

The direction of travel is toward closer alignment with international standards. The rule changes effective 16 September 2021 brought in an economic substance test for passive income, including dividends, received from non-residents by covered companies.

Non-compliance carries real cost. Passive income that fails the substance test can be taxed at the prevailing corporate rate, and the Revenue Commission may apply penalties and interest and share information with foreign authorities.

External assessments have moved in the country's favour. On 12 May 2025 it was removed from France's list of non-cooperative jurisdictions following an April 2025 decree, reflecting progress on OECD transparency standards.

The EU position is still under review. The jurisdiction remains on the EU's Annex II grey list as a cooperating state under monitoring, with a review begun in March 2025 set for evaluation in December 2025 and a Council decision on delisting expected by February or March 2026.

Larger groups should watch developments beyond the local rules. A domestic Pillar Two top-up tax has not been enacted, but multinational groups with constituent entities here should monitor Income Inclusion Rule and UTPR exposure in their parent jurisdictions.

ConclusionCopy link to section

For a foreign owner deciding where to hold a dividend-paying structure, the treatment of International Business Company distributions is the single variable that most directly affects how much of a return actually leaves Seychelles intact. Everything else in the framework, the residency distinctions, the exemption conditions, the narrow charges, feeds into that one calculation.

Because the framework is subject to change, the productive next step is not to assume today's position holds indefinitely, but to confirm current IBC dividend treatment against the specific ownership chain in place and build in a trigger to revisit that assessment when the outlook shifts.

How Expanship Can Help Your Business in SeychellesCopy link to section

Expanship advises foreign owners on the dividend withholding position, including whether a distribution is taxable at source, how the 15% rate applies to non-resident shareholders, and when a treaty reduces it, then handles the wider set of tasks that keep a foreign-owned entity in good standing.

• Company formation, including IBC and onshore structures
• Registered agent and registered office services
• Tax registration and withholding tax filing with the Revenue Commission
• Ongoing compliance and economic substance management
• Accounting and bookkeeping
• Introductions to banking partners

To discuss how the dividend rules apply to your structure, contact Expanship Seychelles.

Frequently Asked QuestionsCopy link to section