- Seychelles Seeks Input On Corporate Tax Regime Overhaul 16th July 2019
The Government of Seychelles has launched a consultation to seek views on an overhaul to the territory’s business tax regime, with a new regime proposed to be implemented from 2020.
Officials from the OECD are due to visit Seychelles from July 22-26, 2019, to support the review.
According to the Government, the review is intended to support the development of a new business tax system that is comparable to those in place in competing jurisdictions. It said the review will seek to ensure the business tax regime is simple, competitive, and aligned with international standards.
The Government will consider, among other things, whether there should be a single or several rates of corporate tax, for instance on different sectors or based on turnover; whether the Government should introduce special schemes for specific industries; appropriate investment incentives; and how to support micro businesses through the presumptive tax regime or a reform of such.
The review will look at Seychelles’ international competitiveness, the Government said, looking at the effective corporate tax burden on foreign direct investment and passive income outflows.
The Government will also discuss with stakeholders interest deduction limitation rules, the rules on the carry-forward of losses, and anti-avoidance provisions.
Finally, the review will consider broader tax reform options to finance any corporate tax revenue shortfall, it said.
- Seychelles Signs US FATCA Agreement 5th July 2019
On July 3, 2019, the Seychelles Government announced that it has signed an intergovernmental agreement (IGA) with the United States to implement the requirements of the US Foreign Account Tax Compliance Act (FATCA).
FATCA, which was enacted by the US Congress in 2010 and took effect on July 1, 2014, is intended to ensure that the IRS obtains information on financial accounts held at foreign financial institutions (FFIs) by US persons. Failure by an FFI to disclose information on their US clients will result in a requirement to withhold 30 percent tax on payments of US-sourced income.
Under the Model 1 IGA signed by the Seychelles and the US, FFIs in the foreign jurisdiction are required to report tax information about US account holders directly to the government, which will in turn relay that information to the US Internal Revenue Service.
The Seychelles and the US previously had a FATCA agreement in substance, which was treated as having entered into effect on June 30, 2014.
- OECD Fleshes Out Int'l Tax Reform Plans During BEPS Webcast 13th June 2019
During a webcast on June 11, the OECD provided a technical update on its work to develop new, modernized international tax rules for the digitalized economy. Under a mandate from countries that have agreed to implement the BEPS minimum standards – the BEPS Inclusive Framework – the OECD is developing new digital tax rules that would be presented for adoption internationally at the end of 2020. At its January 23-24, 2019, meeting, the BEPS Inclusive Framework agreed that the OECD’s work should focus on two central pillars. First, the OECD will review existing rules that divide up among jurisdictions the right to tax the income of multinational enterprises, including traditional transfer pricing rules and the arm’s length principle. It will look at how these can be modified to take into account the changes that digitalization has brought to the world economy. This will require a re-examination of the so-called “nexus” rules – namely how to determine the connection a business has with a given jurisdiction – and the rules that govern how much profit should be allocated to the business conducted there. It was explained during the webcast that this will involve looking holistically at the tax affairs and economic activities of a multinational group globally. It will involve tying tax liability more to activities in a market economy, while looking also at a group’s marketing activities and digital engagement activities elsewhere, among other things, the OECD said. The OECD webcast looked at the infrastructure that would need to underpin these new nexus rules, including information exchange advancements and what new reporting requirements might need to be introduced on MNE groups. Under the second pillar, the Inclusive Framework will seek to resolve remaining BEPS issues and will explore two sets of interlocking rules, designed to give jurisdictions a remedy in cases where income is subject to no or only very low taxation. This work looks to minimize tax base erosion and profit shifting by ensuring that income is not inappropriately shifted to territories that levy no or low tax rates, by ensuring that income is subject to at least a minimum level of tax, wherever that may be. This would involve the introduction of a new effective tax rate test, which would also enable stakeholders to better determine in a harmonized way how much tax multinationals pay internationally. The OECD discussed a potential carve-out for income from research and development activities sub …