Harmful Tax Practices – 2017 Peer Review Reports on the Exchange of Information on Tax Rulings

Seychelles

Seychelles has met all aspects of the terms of reference (ToR) for the calendar year 2017 (year in review) and no recommendations are made.

Seychelles can legally issue five types of rulings within the scope of the transparency framework.

In practice, Seychelles issued no rulings within the scope of the transparency framework.

As no rulings were issued, no exchange of information was required. No peer input was received in respect of the exchanges of information on rulings received from Seychelles.

Introduction

1135.  This peer review covers Seychelles’ implementation of the BEPS Action 5 transparency framework for the year 2017. The report has four parts, each relating to a key part of the ToR. Each part is discussed in turn. A summary of recommendations is included at the end of this report.

A. The information gathering process

1136.  Seychelles can legally issue the five following types of rulings within the scope of the transparency framework: (i) rulings related to preferential regimes;1 (ii) cross-border unilateral APAs and any other unilateral tax ruling (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles; (iii) cross-border rulings giving a unilateral downward adjustment to the taxpayer’s taxable profits in the country giving the ruling; (iv) permanent establishment rulings; and (v) related party conduit rulings. Private rulings are issued by the legal unit of the Seychelles Revenue Commission (“SRC”). Seychelles can legally publish taxpayer specific rulings in redacted form subject to the consent of the taxpayer. Seychelles can legally publish taxpayer specific rulings in redacted form subject to the consent of the taxpayer.

Past rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1, I.4.2.2)

1137.  For Seychelles, past rulings are any tax rulings within scope that are issued either: (i) on or after 1 January 2015 but before 1 April 2017; or (ii) on or after 1 January 2012 but before 1 January 2015, provided they were still in effect as at 1 January 2015.

1138.  Tax payers requesting a private ruling in the Seychelles have to submit a form available on the SRC website to the Revenue Commissioner, which is forwarded to the legal unit of the SRC for processing and issuing the ruling. The legal unit records the taxpayer details, date of request of the ruling, the type of ruling requested, the period it refers to and the date of issuance of the ruling in a central database in the form of a spreadsheet. In order to identify rulings in scope of Action 5 for the “past ruling” period, the legal unit of the SRC searched through the database and then manually reviewed the taxpayer files to ensure whether any rulings in scope of Action 5 had been issued in the relevant period.

1139.  As there were no rulings issued, it was not relevant to identify any potential exchange jurisdictions.

Future rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1)

1140.  For Seychelles, future rulings are any tax rulings within scope that are issued on or after 1 September 2017.

1141.  Seychelles used the same filtering process and manual review for identifying future rulings as for past rulings and found no future ruling issued in the relevant period. In the event that Seychelles may issue private rulings in the future, the SRC is in the process of amending the rulings application form to capture more specific information to determine whether there are cross-border elements such that the ruling is possibly in the scope of Action 5.

1142.  In order to identify potential exchange jurisdictions in the future, the SRC also intends to request information on the new form of any related parties in or outside Seychelles, and the jurisdiction of residence of the (i) related parties, (ii) ultimate parent company and (iii) immediate parent company, as applicable. Seychelles expects the new form to be finalised by 1 September 2018.

1143.  If any future rulings are issued before the new form is finalised, Seychelles indicates that it will use its gathering power to obtain information that is missing under the Revenue Administration Act. Although these new processes were not in place as from 1 April 2017, as no rulings were issued for the year in review, this had no impact in practice.

Review and supervision mechanism (ToR I.4.3)

1144.  Seychelles notes that the legal unit of the SRC is responsible for issuing tax rulings and obtaining all necessary information from the taxpayer to ensure that the ruling issued is within scope of Action 5.The legal officer is supervised by the director of the legal unit. In addition, formal training will be provided to the legal officers within the SRC on the requirements to collect the information under the transparency framework.

Conclusion on section A

1145.  Seychelles has met all of the ToR for the information gathering process and no recommendations are made.

B. The exchange of information

Legal basis for spontaneous exchange of information (ToR II.5.1, II.5.2)

1146.  Seychelles has the necessary domestic legal basis to exchange information spontaneously. Seychelles notes that there are no legal or practical impediments that prevent the spontaneous exchange of information on rulings as contemplated in the Action 5 minimum standard.

1147.  Seychelles is a party to international agreements permitting spontaneous exchange of information, including (i) the Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol (OECD/Council of Europe, 2011) (“the Convention”)and (ii) double tax agreements in force with 28 jurisdictions and one tax information exchange agreement.2

Completion and exchange of templates (ToR II.5.3, II.5.4, II.5.5, II.5.6, II.5.7)

1148.  Seychelles notes that the same legal officer in the SRC in charge of issuing the ruling and identifying whether the ruling is in scope of Action 5 will also complete the template under Annex C of the 2015 Action 5 Report (OECD, 2015) based on the different steps listed in the FHTP’s internal suggested guide as these are in accordance with the legal and administrative practices in place in Seychelles. The template would then be reviewed by the director of the legal department who would ensure accuracy by verifying that the information in the template is line with the information contained in the excel database and the taxpayer file. The SRC explained also that it is in consultation with the IT department to discuss the feasibility of a validation tool similar to that used for the Common Reporting Standard.

1149.  To ensure the timely exchange of future rulings within scope, a reminder email will be sent to the director of legal department within 15 days of a ruling being issued, who will send the template along with the ruling to the Commissioner General for approval and exchange of the template. Seychelles indicates it also intends to issue an internal manual to ensure that officers in charge will know the procedures and the timelines within which they have to operate to ensure the rulings are complete and sent on time.

1150.  As Seychelles did not issue any past or future rulings in scope of Action 5 in the relevant periods, Seychelles did not exchange any information on rulings in the year in review and no data on the timeliness of exchanges can be reported.

Conclusion on section B

1151.  Seychelles has the necessary legal basis for spontaneous exchange of information. Seychelles has met all of the ToR for the exchange of information process and no recommendations are made.

C. Statistics (ToR IV)

1152.  As there were no rulings required to be exchanged by Seychelles for the year in review, no statistics can be reported.

D. Matters related to intellectual property regimes (ToR I.4.1.3)

1153.  Seychelles offers three preferential regimes, which also offer benefits to income from intellectual property (“IP regime”).3 However for the year in review no transparency requirements were relevant, as follows:

• New entrants benefitting from the grandfathered IP regime: Seychelles is currently in the process of amending all three regimes and it indicates that it will not allow grandfathering for any new entrants into the regimes as of 16 October 2017, the date of publication of 2017 Progress Report (OECD, 2017b). As such, the transparency requirements will not apply.

• Third category of IP assets: not applicable to this regimes, which in 2017 was in the process of being amended.

• Taxpayers making the use of the option to treat the nexus ratio as a rebuttable presumption: not applicable to this regimes, which in 2017 was in the process of being amended.

Summary of recommendations on implementation of the transparency framework

 

Aspect of implementation of the transparency framework that should be improved	Recommendation for improvement
	No recommendations are made.

References

OECD (2017a), BEPS Action 5 on Harmful Tax Practices – Terms of Reference and Methodology for the Conduct of the Peer Reviews of the Action 5 Transparency Framework, OECD/G20 Base Erosion and Profit Shifting Project, OECD, Paris. www.oecd.org/tax/beps/beps-action-5-harmful-tax-practices-peer-review-transparencyframework.pdf.

OECD (2017b), Harmful Tax Practices - 2017 Progress Report on Preferential Regimes: Inclusive Framework on BEPS: Action 5, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264283954-en.

Notes

← 1.  With respect to the following preferential regimes: 1) International business companies, 2) Companies special license, 3)International trade zone licensees, 4) Offshore banking, 5) Non‑domestic insurance business, 6) Fund administration business, 7) Securities business under the securities act and 8) Reinsurance business.

← 2.  Parties to the Convention are available here: www.oecd.org/tax/exchange-of-tax-information/convention-on-mutual-administrative-assistance-in-tax-matters.htm. Seychelles also has bilateral agreements in force with Bahrain, Barbados, Belgium, Bermuda, Botswana, China (People’s Republic of), Cyprus, Ethiopia, Guernsey, Indonesia, Isle of Man, Jersey, Kenya, Luxembourg, Malaysia, Mauritius, Monaco, Oman, Qatar, San Marino, Singapore, South Africa, Sri Lanka, Swaziland, Thailand, United Arab Emirates, Viet Nam and Zambia.

Note by Turkey: The information in this document with reference to “Cyprus” relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Turkey shall preserve its position concerning the “Cyprus issue”.

Note by all the European Union Member States of the OECD and the European Union. The Republic of Cyprus is recognised by all members of the United Nations with the exception of Turkey. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.

← 3.  These regimes are: 1) International business companies, 2) Companies special license and 3) International trade zone licensees.