But it is not just as a resident for Chinese companies that Seychelles is attractive, the government is also looking at attractive foreign direct investment (FDI) from China.The country has already attracted millionsin government money from China, but it isnow looking for individual investment too.
Tax rates
Seychelles have already begun to receive a great deal of attention form Chinese residents looking to invest abroad. The Investment Promotion Act 1994 provides legislation for inward investment incentives that are granted to approved projects in the domestic and export sectors, including tourism, agriculture, manufacturing and the service industries. Procedures for approval have been streamlined and there are multiple incentives available, which include concessionary business tax rates of 15% (usually 40%) plus credits giving an effective rate of 9%. and entitlement to employ 50% of foreign staff (first 25%at special rate of SR500 per month; next 25% at the standard rate of SR 1,500 per month). For substantial investments, further incentives can be obtained from the government on a negotiated basis. In terms of routing FDI through Seychelles to China, companies will often use a Seychelles Special Licence Company (CSL). The CSL is similar to the Mauritius GBC1. Befitting of its name, it is a Seychelles domestic company which is granted a special licence.
Broad appeal
Like the GBC1, the CSL is tax resident in the Seychelles, and may access Seychelles DTAs. The CSL, when combined with the Seychelles/China DTA, offers significant scope to reduce Chinese withholding tax exposure. The Seychelles/China DTA caps Chinese withholding tax on dividends at 5% and 10% on interest and royalties, provided that the CSL the CSL is not tax resident in China, and it has a permanent establishment and its effective management in Seychelles. The CSL is particularly appealing to international groups as a tax-efficient vehicle for permitted uses which can include acting as an investment holding, management or consultancy company or to hold and license out intellectual property. For Seychelles, China is viewed as a huge opportunity. The rapidly expanding financial sector, linked to the establishment of the SIBA and a suite of progressive laws facilitating the establishment of offshore structures and encouraging inward investment, is now a significant element of the economy. Foreign direct investment entering China from Seychelles totalled a whopping US$42 million in 2008, up from US$2.46 million in 2003. It is clear that Seychelles, as well as neighboring Mauritius, are preeminent Indian Ocean financial centers; each have significant DTAs, stable political and regulatory environments in which to carry on business, and are strategically well placed to be leaders in the next phase of the new world global economy.
