Tax Guide for US Expats Living and Working in Seychelles
Who Is Liable For Income Taxes in Seychelles
Individuals employed by a resident of Seychelles or deriving income from sources in Seychelles are taxable on their employment income at a rate of 15%.
Income subject to tax
Employment income. Individuals resident in Seychelles are subject to tax at a rate of 15% on their local employment income. Nonmonetary benefits, such as accommodation, utilities and in-house benefits, provided by employers to employees in the course of an employment contract are subject to tax at a rate of 20% of the value of the nonmonetary benefits. Employers bear this tax.
Self-employment and business income. Self-employed individuals carrying on a trade, business or profession are subject to business tax on their business profits. Expenses are deductible to the extent they are exclusively incurred to produce gross income. All income derived from business is taxed at the rates.
Investment income. Withholding tax is imposed on dividends paid to nonresidents at a rate of 15%. The withholding tax is considered a final tax. Dividends paid to residents are not subject to withholding tax and are exempt from tax at the level of the recipient.
A withholding tax applies to interest paid to residents and non-residents other than banks, finance companies and other enterprises that are principally engaged in the business of lending money. The withholding tax is considered to be a final tax for nonresidents. The withholding tax rate ranges from 5% to 33%. The tax rate of 33% applies only to interest paid on bearer bonds.
No withholding tax is imposed on royalties paid to residents. The rate is 15% with respect to royalties paid to nonresidents for the following:
- The use of, or right to use, copyrights, patents, designs, models or trademarks
- The use of secret formulas, processes or know-how
- Scientific, industrial or commercial knowledge, information or services to the extent social security contributions (see Section C) have not been made on the payments
Social security contributions are payable on royalties for services performed in Seychelles at the rates stated in Section C. Social security contributions are payable on all services performed in Seychelles.
Directors’ fees. Directors’ fees paid to residents or nonresidents are exempt from all taxes.
Capital gains. Seychelles does not impose a capital gains tax.
Rates. Business tax is imposed at a rate of 25% on the first SR 1 million of taxable income and 33% on the balance.
B. Estate and gift taxes
No estate or gift tax is imposed in Seychelles. However, transfers of immovable property or shares are generally subject to stamp duty at a rate of 5%, but transfers as a result of a divorce settlement or by a parent to a child are exempt from tax.
C. Social Security Fund and Seychelles Pension Fund
Employees in Seychelles must contribute monthly to the Social Security Fund and Seychelles Pension Fund, which provide for employees’ welfare and retirement. The contributions are imposed on all emoluments provided by employers to employees during a month. The social contribution rates are at 1% for both employees and employers.
E. Double tax relief and tax treaties
Seychelles has entered into double tax treaties with the following countries.
Botswana
Malaysia
Thailand
China
Mauritius
Vietnam
Cyprus
Oman
Zambia
Indonesia
South Africa
The agreements are based on the model treaties of the Organization for Economic Cooperation and Development (OECD) and the United Nations (UN).
To learn more about the history, culture, economy and other information about Seychelles
We have been preparing US income tax returns for US Citizens and permanent residents living in Seychelles for over 15 years. As a US Citizen or permanent resident (green card holder) you are required to file a US return each year regardless of the fact that you file and pay taxes in your residence country. The expatriate earned income exemption ($100,800 for 2015) can only be claimed if you file a timely tax return. It is not automatic if you fail to file.
We have scores of clients located in Seychelles and know how to integrate your US taxes into the local income taxes you pay. Any income tax you pay there can be claimed as a dollar for dollar credit against the tax on your US return on the same income.
As an expat living abroad you get an automatic extension to file until June 15th following the calendar year end. (You cannot file using the tax fiscal year for US tax purposes). You must pay any tax that may be due by April 15th in order to avoid penalties and interest. You can get an extension to file (if you request it) until October 15th.
There are other forms which must be filed if you have foreign bank or financial accounts; foreign investment company; or own 10% or more of a foreign corporation or foreign partnership. If you do not file these forms or file them late, the IRS can impose penalties of $10,000 or more per form. These penalties are due regardless of whether you owe income taxes or not.
There are certain times you may wish to make elections with respect to your Corporation or Investment Company which will give you US tax benefits. There are other situations where forming a US corporation to receive your business income may be more advantageous than using a corporation in your resident country. We can help you with these decisions.
If you are self-employed, you will have to pay US self-employment taxes (social security). If you are a bona-fide employee you do not have to worry about paying US social security on your wages earned in Seychelles.
We have helped hundreds of expats around the world catch up because they have failed to file US returns for many years. Unfortunately, unlike India, Canada, UK, etc. you must also file so long as you are a US citizen or resident. You can if you follow proper IRS and State Department procedures surrender your US Citizenship and therefore cut off your obligation to pay US taxes in the future. You must surrender that Citizenship for non-tax avoidance reasons and then can usually not return to the US for more than 30 days per year for the subsequent ten years.
Let us help you with your US tax returns, US tax planning and other US tax and legal concerns. Download our expat tax questionnaire or request a consultation by phone, skype or email