Seychelles will soon send to the National Assembly for approval amended laws governing the financial sector with the aim to have the island nation removed from the European Union (EU) taxation blacklist, said a top government official.
The Secretary of State for Finance, Patrick Payet, told a press conference on Friday that Seychelles anticipated being removed from the taxation blacklist by February.
“However, a report from the Organisation for Economic Co-operation and Development (OECD) was released in April and it downgraded Seychelles from being largely compliant to partially compliant on four subjects,” said Payet.
He said that the authorities “have spoken to OECD and we made them aware that we have been told by EU that as long as we are a partially compliant country, Seychelles will not be removed on its taxation blacklist as the two organisations are working together.”
Seychelles has asked OECD to conduct a supplementary review on the reform done in its financial sector before the end of the year to get a new placement.
The archipelago in the western Indian Ocean was included on the EU list of non-cooperative jurisdictions among 12 nations because of concern that its policy environment supports tax fraud or evasion, tax avoidance and money laundering. The list was first established in December 2017 and offers guidance on European investment and funding in other countries.
Payet said that Seychelles has already corrected some of the existing deficiencies following the enactment of the new Anti-Money Laundering and Countering the Financing of Terrorism Act, 2020 and Beneficial Ownership (BO) Act, 2020 in March.
“There were still two issues that remained to be addressed and this had to do with the cooperativeness to share our tax and accounting information to other tax offices requesting it,” he added.
The island nation did not have a unit set up specifically within the Seychelles Revenue Commission (SRC) to share the information in a timely manner and since 2016, requests for information by other tax institutions have increased.
Subsequently, the Seychelles’ government decided to amend the laws governing the financial sector, which include the Limited Partnership Act, the Foundations Act, the International Business Companies Act and a new Trust Bill.
“Under the new amendments, the tax information should be kept in Seychelles and should be readily available when requested. Secondly, we have added a provision that will allow the financial service authority to monitor and prevent companies which have been removed or dissolved to operate under the name Seychelles,” said Payet.
The EU decision follows that of France, which recently added Seychelles to its own list for not providing adequate information on some French offshore entities operating in the island nation’s jurisdiction. That provoked alarm among financial authorities in the island. The inclusion of Seychelles registered companies on the US sanctions list due to links with Iran has also raised alarms.
“We see the new amendments as a positive step in addressing the issues raised by our colleagues and as an instrument that will allow us to take a comprehensive and unified approach to positively address our deficiencies,” Payet said.
The new regulations will be presented before the Seychelles National Assembly for approval when it resumes after the legislative election in October.