The Seychelles Tax System operates on a territorial tax regime where only income sourced in Seychelles is liable to tax. The definition of Seychelles sourced income includes income from business activities conducted, goods situated or rights used within Seychelles’ physical territory. Any income earned outside of Seychelles is considered non-Seychelles sourced income, also known as non-taxable business income. This includes income earned by a Seychelles business in an overseas jurisdiction or passive income, such as dividends, interest, royalties, rents, and other forms of income received by a Seychelles resident from a non-resident.
However, effective September 16, 2021, the Seychelles Tax System has undergone changes to its law. A revised approach has been adopted for covered companies, including the introduction of an economic substance test for passive income received from a non-resident.
Additionally, the Self-Assessment regime was introduced in 2010 to encourage voluntary compliance. The regime places the responsibility of tax on the taxpayer operating in Seychelles. Taxpayers must determine if they have Seychelles sourced income in a tax year, declare and report their taxable income for the relevant tax period, including permitted deductions and exemptions, in line with applicable laws.
In summary, the Seychelles Tax System is a territorial tax regime where only Seychelles sourced income is liable to tax. However, recent changes in the law have introduced an economic substance test for passive income received from a non-resident. The Self-Assessment regime places the responsibility of tax on the taxpayer operating in Seychelles to declare and report their taxable income in compliance with applicable laws.