Offshore Companies

Seychelles DTA Agreement News Update

» Double Tax Avoidance Treaties
» Seychelles CSL
» Who is it for?
» Benefits
» Double Taxation Avoidance Treaties Summary Table
» Procedure to Incorporate

» More on Seychelles CSL company


Double Tax Avoidance Treaties

The Seychelles have ratified several double tax avoidance treaties it signed in the past. Seychelles had 3 treaties already in use, namely the Indonesia – Seychelles, South Africa – Seychelles and China – Seychelles treaty. One more has come into effect as from the 1 st of January 2005 and 4 others are likely to come into effect soon.

Seychelles CSL

A Seychelles Special License Company (CSL) is a domestic company with a special license, authorised to carry out specific business as per the laws and pays tax at a flat rate of 1.5% on its worldwide profits. Such a company can use the treaties signed by the country to reduce and avoid double taxation, subject to the agreements signed by both countries. The annual license fees payable to the authorities amounts to USD 1200. The rough estimate to setup a Seychelles CSL is between USD 6000 to USD 8000 for the first year.

Who is it for?

• Investors
• Trading Entities
• Tax planning vehicle for people investing into China, South Africa, Indonesia and Oman.
  

Benefits

• Low tax rate of 1.5% on worldwide profits
• Minimise tax by using the double tax avoidance treaties
• Normally uses International Accounting Standards but the authorities are flexible with other systems such as GAP
• Confidential vehicle

Double Taxation Avoidance Treaties Summary Table

No.		Country		Tax Sparing Clause		Dividends (Max. Rate)		Interests (Max. Rate)		Royalties (Max. Rate)		Permanent Establishment		Capital Gains
												Min Duration Activity (months)
1.		DTA with China Income from immovable property: may be taxed in Country State where property is situated. Business profits: taxed in Country State where enterprise based. Unless enterprise has permanent establishment in other Country State where profits may be taxed. Dividends: may be taxed in Country State where company is resident but if recipient is beneficial owner is resident tax rate not to exceed 5%. Interest: may be taxed in Country State where company is resident but if recipient is beneficial owner tax rate not to exceed 10%. Royalties: may be taxed in Country State where they arise but if recipient is beneficial owner tax rate not to exceed 10%. Capital gains: may be taxed in Country State where immovable property situated. China		Yes		5%		10%		10%		12		Req*
2.		DTA with Indonesia Income from immovable property: may be taxed in Country State where immovable property is situated. Business profits: taxed in Country State where enterprise based. Unless enterprise has permanent establishment in other Country State where profits may be taxed. Dividends: taxed in Country State where recipient is resident. However, may be taxed in Country State where they arise. Tax rate not to exceed 10%. Interest: if interest is taxed in Country State where it arises, tax rate not to exceed 10%. Royalties: tax rate not to exceed 10% if taxed in Country State where they arise and beneficially owned by resident of the other Country State. Capital Gains: may be taxed where immovable property is situated. Indonesia		Yes		10%		10%		10%		6		Req*
3.		DTA with South Africa Income from immovable property: may be taxed in Country State where immovable property situated. Business profits: taxed in Country State where enterprise based. Unless enterprise has permanent establishment in other Country State where profits may be taxed. Dividends: shall be taxable only in Country State where beneficial owner is resident, provided recipient is beneficial owner of dividend. Interest: shall be taxable only in Country State where recipient is resident, as long as recipient is beneficial owner of interest. Royalties: shall be taxable only in Country State where recipient is resident, as long as recipient is beneficial owner of interest. Capital gains: may be taxed in Country State where immovable property situated. South Africa		Yes		Req*		Req*		Req*		6		Req*
4.		DTA with Oman Income from immovable property: may be taxed in Country State where property situated. Business profits: taxed in Country State where enterprise based. Unless enterprise has permanent establishment in other Country State where profits may be taxed. Dividends: may be taxed in Country State where company is resident but if beneficial owner is resident of other Country State tax rate not to exceed 5%. Interest: may be taxed in Country State where company is resident but if beneficial owner is resident of other Country State tax rate not to exceed 5%. Royalties: may be taxed in Country State where they arise but if beneficial owner is resident of other Country State tax rate not to exceed 10%. Capital gains: may be taxed in Country State where property is situated. Oman		Yes		5%		5%		10%		3		Req*
5.		DTA with Botswana Income from immovable property: may be taxed where the immovable property is situated. Business Profits: of an enterprise of a contracting state (Country State) shall be taxed only that Country State. Unless that enterprise has a permanent establishment in that other state where business profits may be taxed. Dividends: taxed in the Country State where the recipient is residing. However, it may also be taxed in Country State where the company paying the dividends is resident. The tax shall not exceed: 5% if beneficial owner is a company which holds at least 25% of capital of the company paying the dividend. 10% in other cases. Interest: taxed in the Country State where the recipient is resident. However, it may be taxed in Country State where interest arises at a rate of not more than 7.5%. Royalties: not to exceed 10% in the Country State where it arises. Capital Gains: derived from alienation of immovable property or shares are taxed Country State where the immovable property or shares are situated. Botswana		Yes		10%		7.5%		10%		6		Req*
6.		DTA with Mauritius Income from immovable property: taxable in Country State where property is situated. Business profits: taxed in Country State where enterprise based. Unless enterprise has permanent establishment in other Country State where profits may be taxed. Dividends: taxable in Country State where recipient being the beneficial owner is a resident. Interest: taxable in Country State where recipient being the beneficial owner is a resident. Royalties: taxable in Country State where recipient being the beneficial owner is a resident. Capital gains: may be taxed where immovable property is situated. Mauritius		Yes		Req*		Req*		Req*		12		Req*
7.		DTA with Thailand Income from immovable property: may be taxed in Country State where property is situated. Business profits: taxed in Country State where enterprise based. Unless enterprise has permanent establishment in other Country State where profits may be taxed. Dividends: may be taxed in Country State where company is resident but if beneficial owner is resident of other Country State tax rate not to exceed 10%. Interest: may be taxed in Country State where company is resident but if beneficial owner is resident of other Country State tax rate: - Not to exceed 10% on interest received by a financial institution - Not to exceed 15% in other cases. Royalties: may be taxed in Country State where they arise but if recipient is resident of other Country State tax rate not to exceed 15%. Capital gains: may be taxed in Country State where property situated. Thailand		Yes		10%		15%		15%		6		Req*
8.		DTA with Malaysia Income from Immovable Property: taxed in Country State where immovable property is situated. Business profits: taxed in Country State where enterprise is based. Unless enterprise has permanent establishment in other Country State where profits may be taxed. Dividends: may be taxed in Country State where company paying the dividend is resident. Tax rate not to exceed 10%. Interest: may be taxed in Country State where interest arises. Tax rate not to exceed 10%. Royalties: may be taxed in Country State where they arise. Tax rate not to exceed 10%. Malaysia		Yes		10%		10%		10%		6		Req*
9.		DTA with Vietnam Income from immovable property: may be taxed in Country State where immovable property situated. Business profits: taxed in Country State where enterprise based. Unless enterprise has permanent establishment in other Country State where profits may be taxed. Dividends: may be taxed in Country State where company is resident but if beneficial owner is resident of other Country State tax rate not to exceed 10%. Interest: may be taxed in Country State where company is resident but if beneficial owner is resident of other Country State tax rate not to exceed 10%. Royalties: may be taxed in Country State where they arise but if recipient is resident of other Country State tax rate not to exceed 10%. Capital gains: may be taxed in Country State where property situated. Vietnam		Yes		10%		10%		10%		6		Req*
10.		DTA with Cyprus Income from immovable property: may be taxed in Country State where property is situated. Business profits: taxed in Country State where enterprise based. Unless enterprise has permanent establishment in other Country State where profits may be taxed. Dividends: only taxable in Country State where recipient is resident. Interest: taxable only in Country State where recipient is resident. Royalties: may be taxed in Country State where they arise but if recipient is resident of other Country State tax rate not to exceed 5%. Capital gains: may be taxed in Country State where property situated. Capital: represented by immovable property may be taxed where immovable property situated. Cyprus		Yes		Req*		Req*		5%		12		Req*
11.		DTA with UAE Income from immovable property: may be taxed where property situated. But tax shall be reduced to such concessionary rate of that Country State so as to promote economic development. Business profits: taxed in Country State where enterprise based. Unless enterprise has permanent establishment in other Country State where profits may be taxed. Dividends: taxable only in Country State where recipient is resident. Interest: taxable only in Country State where recipient is resident. Royalties: may be taxed in Country State where recipient is resident. However, may be taxed in Country State where they arise. Tax rate not to exceed 5%. Capital gains: taxed in Country State where immovable property is located. UAE		Yes		Req*		Req*		5%		15		Req*

Req* - Request
	General Notes Dividends, interests and royalties derived from Seychelles by offshore entities are tax exempt. No capital gains. Double taxation is eliminated by the credit method, i.e the taxpayer's country of residence will grant a credit for taxes paid in the source country. When a resident of Seychelles is recipient of dividends from a company which is resident of the treaty country, the recipient is entitled to a tax credit which shall take into account the tax paid in the treaty country by the company paying the dividend in respect of the profits out of which the dividend is paid. Awaiting Ratification Zimbabwe Belgium Qatar Negotiations Concluded Russia Egypt Negotiations in Progress Tunisia Burundi Czech Republic Agreement to Negotiate Malta India Philippines Namibia Ivory Coast Germany Back to top

Procedure to incorporate

Contact Dharmesh Naik by email dnaik@ocra-mauritius.com

Disclaimer

Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. OCRA Worldwide does not accept any responsibility, legal or otherwise, for any errors or omission.

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