If you’re like most people, you think about a beach-front property to retire at and not starting a business in Seychelles. What if you were told Seychelles is actually a great location to launch your business? This article explores how to start a business in Seychelles and why this could be the next big thing.
Seychelles is a pristine archipelago of 115 islands and a population of roughly 100,000 people. Although it has the smallest population of any African country, it has a diverse population of English, French, and Seychellois Creole speakers.
Another special thing about the country is that it is home to two UNESCO World Heritage Sites: the Vallée de Mai Nature Reserve and Aldabra Atoll.
Let’s explore the process of starting a business in Seychelles.
Select business structure
The first step before starting any business anywhere is determining the business structure. For many entrepreneurs, this can seem like a daunting task.
However, the decision will be easier if you consider the purpose or reason behind starting your business, the tax ramification of each structure, and the proposed size. Here are some business structures to consider:
Sole proprietorship
This is a business structure in which one person is solely responsible for the operations of the business. Consequently, from a legal standpoint, this person and their business are one.
The business owner bears the full responsibility concerning the business, i.e., rewards and liabilities. A sole proprietorship is one of the most affordable and easy business structures to open in Seychelles.
All told, the registration fee for the structure is roughly SCR 150, although there might be additional fees to pay for a business license and tax depending on the type of business. Generally, most non-citizens are attracted to this structure due to the low cost and ease of the process.
Partnership
A partnership business is run and managed by two or more business partners. These people share both profits and losses in the business equally.
This can be a successful venture, especially if partners have mutual respect and understanding.
Limited liability company
This business structure is similar to a partnership, except in this case, owners’ liability is limited to the amount of capital invested in the business. This structure protects the owner’s personal assets in the event of losses or liquidation.
Limited liability companies enjoy significant tax preferences as outlined by the offshore legal and tax regime. It emphasizes that no income outside the Republic of Seychelles is subjected to taxation. This basically means profits distributed to foreign partners are not taxed.
To incorporate a limited company in Seychelles, the following requirements must be met:
- The general partner must be recognized as a tax resident of the jurisdiction.
- At least two signatories.
- At least one director or beneficial owner.
- A legally recognized office within the jurisdiction.
Although Seychelles incorporation requirements are quite straightforward, there are a few other stipulations that need to be followed:
- Submission of the annual certificate to confirm compliance with requirements from current legislation.
- Presentation of annual accounts on behalf of the General Partner.
- Storage of key reporting documents in the Seychelles office.
- Submission of registration documents to the Register and they must be kept as publicly available.
Cost of setting up a limited liability Company
Once registered, a limited liability company that has declared its capital dividend into shares pays $150 USD if the nominal capital does not go above $2000. However, supposing the capital goes above $2000, it’s $200 plus $15 for every increase of $2000.
Procedure
The process is initiated by the submission of an application form completed and signed by the General Partner to the FSA register. The form should contain all the following:
- Name of the limited company.
- Business activity to be undertaken.
- Name and address of the General Partner of the limited partner.
- In instances where the General Partner is a legal entity- Certificate of Incorporation and Good Standing Certificate.
Other key points
Limited partnerships are exempt from certain taxes within the jurisdiction; for instance, corporate income, property transactions, and revenue from import/export may not be taxed.
If you plan to register a limited partnership in Seychelles, take note of the following:
- Any alterations made to the partnership structure must be registered by the General Partner within 60 days.
- If the General Partner is changed, it should be communicated to the Registrar in 15 days. Failure to this would make the agreement null and void.
- The limited partnership must submit its annual declaration before January 31 every year following the reporting year, and pay the fee.
- In an instance where the terms of the company’s active status renewal are breached, a fine of roughly $25 will be imposed for each day of delay.
International Business Company
An IBC is unique to Seychelles and is a legal entity formed to conduct business internationally.
This business structure carries the benefit of privacy, flexibility, low government fees, and a friendly legal framework. Entrepreneurs and investors use this structure as a purpose vehicle, holding, trading, or investment company.
how to open an IBC in Seychelles
The International Business Company is the most preferred business structure for offshore companies because of the many numerous advantages foreign businesses enjoy under this structure.
The IBC in Seychelles is flexible and ideal for even businesses conducting activities over the internet. The requirements for setting up an offshore company in Seychelles include the following:
- Memorandum and Articles of Association submitted to Registrar Companies in Seychelles.
- Appoint directors for the IBC in Seychelles.
- Select the business address.
- Open a bank account in Seychelles.
Legal and Tax
The primary law governing the setting up and running of offshore companies in Seychelles is the International Business Company Law. Another law that governs the formation of IBCs in Seychelles is the Seychelles Commercial Code which specifies the legal forms that can be registered as IBCs.
Seychelles is a well-recognized tax haven. When it comes to offshore companies, the zero-tax regime is guaranteed by legislation. The government enforced the business tax (amendment) Act 2018, which stipulates that IBCs that earn income outside Seychelles are exempt from taxes on interest, dividends, royalties, or other payments made to stakeholders. In addition, there is no capital gains tax in the country.
Indeed, Seychelles IBCs don’t pay stamp duty during the company formation process, property transfer, or any transactions involving shares, debt obligations, or any other securities of a company. The only exception is in the case of transactions that relate directly or indirectly to real estate in Seychelles.
Regulation
IBCs in Seychelles are regulated by Seychelles Financial Services Authority-FSA (formerly known as Seychelles International Business Authority- SIBA). Although Seychelles SIBA was initially the institution responsible for the offshore financial services sector, it merged with the FSA in 2017.
The FSA was established as an independent body under the Seychelles Financial Services Authority Act 2013. Its primary goal was to promote development, equity, efficiency, and transparency in the sector.
Documents required to establish as Seychelles offshore company
Foreign companies that wish to set up operations in Seychelles must submit the following documentation to the Companies Registrar:
- Personal information, including passport copies and pictures.
- Company documentation such as Memorandum and Articles of Association.
- Proof of residential address in Seychelles, e.g., water or electricity bill.
- Proof of good financial standing, such as Bank statements.
Business registration
After selecting a business structure, the next step is to register your business. In order to accomplish this, you must register your business with the Seychelles Registrar of Companies.
Although the registration process may seem complex, it is actually straightforward. Simply do the following:
Reserve a name
The assumption is that by this stage of the process, you already have a desired name in mind. Therefore, you must reserve your preferred business name with the Registrar of Companies.
This part of the process ensures that you do not select a business name that is already in use in the country.
Submit Memorandum and Articles of Association
These are some of the most important legal documents that you must submit. The Memorandum and Articles of Association explain the rules and regulations by which your business is managed and run.
Register with Seychelles Revenue Commission
This part of the process covers the tax and social security requirements your business will have to abide by. The process requires completing a form and providing a copy of your registration certificate.
Thereafter, you will be given a tax number, which you will use when handling all tax and social security-related issues.
Gainful Occupational Permit
The GOP is awarded by the department of employment after the government of Seychelles has approved a project or business.
This permit is a requirement for all foreign nationals who want to work in Seychelles. This is especially important for foreign companies that intend to hire expats.
Pay fees
As specified in the Seventh Schedule of Companies Ordinance Act of 2012, for a company with nominal share capital above SCR 1,000,000, the fees are 0.5% of the nominal capital plus SCR 5000.
For companies with a nominal share capital of less than SCR 1,000,000, this is the fee structure;
- Registration of a company with nominal share capital is SCR 5,000 or less: SCR 1000
- Where nominal company SCR 5000- SCR 25000: fee is SCR 1,500.
- Nominal share capital of SCR 25,000- SCR 250,000: fee is SCR 2,000.
- Where nominal share capital of SCR 250,000- SCR 1,000,000: fee is SCR 3000.
Get necessary permits and licenses
The license or permit you will be awarded depends on the type of business you are starting. Therefore you need to submit your documentation and application to the Seychelles Licensing Authority (SLA).
Your application must include details about the nature of your business, ownership structure, and business finances. Additionally, you will also be required to submit proof of insurance, tax registration details, and business plans.
Occupational Safety and Health Inspection
Supposing your proposed business activity involves things such as food or chemical processing or any activity that can endanger the health of employees and the public, then an occupational safety and health inspection must be carried out.
The Department of Health will typically handle this under the Ministry of Health and Social Development.
Obtain work permit
Finally, for foreign nationals planning to start their business in this region, a work permit is lawfully required. The work permit grants you permission to work and live in Seychelles for a defined period of time.
Therefore, to obtain the work permit, you need to provide proof of business registration, qualifications, and financial capacity.
Frequently Asked Questions
Who can start a business in Seychelles?
Foreign investors and entrepreneurs are welcome to open a business in the country. There are many amazing advantages that they can stand to enjoy over other locations in the region.
Are there any visa requirements to work in Seychelles?
Seychelles doesn’t impose strict visa requirements. However, entrepreneurs wishing to live and stay in the country are required to apply for residence and work permits.
Can I open a company in Seychelles?
The most common type of company opened by foreigners in Seychelles is the IBC or offshore company. Yes, you can easily open one in Seychelles.
What confidentiality is granted to an IBC?
Although the Information of the Beneficial Owner of the IBC is disclosed to the Registrar of Companies, it is never made public.
If I use a nominee director, how can I maintain control of the bank account in Seychelles?
The standard Terms and Conditions of business legally regulate the relationship between the beneficial owner and hired director. Unless otherwise stated, this agreement outlines the directors’ roles, responsibilities, and limits and is followed as such.
How long does it take to incorporate an IBC?
In the event that all required documentation has been submitted, the incorporation process is typically only 1-2 days.
Conclusion
Seychelles is one of the most attractive environments for entrepreneurs and investors to set up businesses. In addition to its breathtaking beaches and metropolitan lifestyle, the country has favourable tax laws, great infrastructure, and government policies that support business activity.
In order to start a business in the country, entrepreneurs must follow certain steps, including selecting a business structure, registering the business, and getting licenses and permits from relevant authorities. If this process seems daunting, there are professional consultants that can help you navigate the process of starting a business in Seychelles.
