General Knowledge About Offshore Companies

Where exactly does the law says that International Business Companies don`t pay tax?

Up to the end of 2018 Seychelles International Business Companies were freed of any tax by definition of law. However, starting from 2019 a new legal system, more flexible and more correspondent to the modern international tax trends, was implemented. By a few significant changes of key legislation pieces the so called "Territorial Tax System" was established in Seychelles. The amended IBC Act prescribes that even Seychelles IBCs are now obliged to pay taxes; but only for the taxable income that originates in Seychelles.

Article 361.(1) of International Business Companies (Amendment) Act, 2018 declares that "Notwithstanding any provision of this Act, where a company incorporated, continued or converted under this Act derives assessable income in Seychelles, it shall -

(a) within one month of deriving the first assessable income, notify the Registrar in writing that it is deriving assessable income and the nature of the activities giving rise to this assessable income; and

(b) within one year of deriving the first assessable income, file with the Registrar an Annual Return accompanied by the documents to be annexed to this Annual Return as required under the Companies Act (Cap 40).

Meanwhile, article 5.(1) of the Seychelles Business Tax (Amendment) Act, 2018, a cornerstone of Seychelles tax legislation, defines "assessable income" as follows:

5.(1) An amount derived by a resident person in carrying on business is derived from sources in Seychelles if derived from activities conducted, goods situated or rights used in Seychelles <…>."

All-in-all, this means that, as long as a company income is obtained abroad of Seychelles, it remains free of income tax. A Seychelles IBC is also exempt from any stamp duties on all transactions relating to its business, in particular, on any transfers of property to or by the company, and on any transactions in respect of the shares, debt obligations or other securities of the IBC.