Seychelles

The Republic of Seychelles, an island nation in the Indian Ocean, has developed into a notable jurisdiction for the formation of offshore companies. Its International Business Companies (IBCs), governed by the International Business Companies Act, 2016 (as amended), are widely utilized by international clients for a variety of non-resident business purposes, including investment holding, cross-border trading, asset protection, and estate planning.

This overview provides an in-depth examination of the legal structure, governance, taxation, and compliance obligations applicable to Seychelles IBCs.

Seychelles IBCs are companies limited by shares, established for the purpose of conducting activities outside of Seychelles. 

There is no minimum capital requirement, aside from the issuance of at least one share at the time of incorporation. The share capital can be expressed in any currency, depending on the needs of the founders or investors.

IBC shares can be issued with or without par value:

• Par value shares, which defines the minimum issuance price.
• No-par value shares, which lack of minimum issuance price.

Shares may also be classified into different classes with distinct rights, including:

• Rights to dividends
• Voting rights at shareholder meetings
• Entitlements upon liquidation
• Other preferences as set out in the company’s Memorandum and Articles of Association

The internal governance of a Seychelles IBC is determined by its Memorandum and Articles of Association, which serve as its constitutional documents. These set out the rules for company operation, shareholding, and decision-making.

Key governance features include:

• Shareholders: An IBC may be incorporated with a minimum of one shareholder, who may be an individual or a corporate entity. There are no residency requirements.
• Directors: At least one director must be appointed, and this individual or entity may also be non-resident. Directors hold the authority to manage and represent the company, including the ability to enter into binding legal agreements. Their powers may be delegated by resolution or power of attorney.

There is no requirement to appoint resident directors or officers in Seychelles, which supports flexibility in international corporate structuring.

Seychelles operates a territorial tax system, under which income derived from sources outside Seychelles is not subject to local tax. This framework offers specific benefits for IBCs, depending on whether they are considered part of a multinational group.

1. IBC Not Part of a Multinational Group

IBCs that are not classified as part of a multinational group are:

• Exempt from income tax on all foreign-sourced income
• Not required to file tax returns, provided no Seychelles-source income is generated

2. IBC Part of a Multinational Group

A multinational group is defined as a group involving:

• Two or more enterprises tax-resident in different jurisdictions, or
• An enterprise operating through a permanent establishment in another jurisdiction

IBCs falling within this definition must meet economic substance or source-based conditions to benefit from tax exemptions. Key requirements include:

• Active foreign income (e.g., from trade or services) is exempt only if derived through a registered permanent establishment overseas, and taxed in that jurisdiction.
• Intellectual property income, regardless of origin, is generally taxable in Seychelles unless it stems from qualifying research and development (R&D) activities conducted locally.
• Passive income (such as interest, dividends, royalties, and capital gains) may remain exempt, provided the IBC demonstrates adequate economic substance in Seychelles.

While Seychelles IBCs enjoy minimal reporting obligations, they are subject to specific bookkeeping and documentation standards.

All IBCs, regardless of size or tax status, must maintain accounting records sufficient to show the financial position of the company and support all transactions. 

Copies of ccounting records must be kept at the registered office in Seychelles, and be retained for a minimum of seven years.

The timeline for maintaining these records is as follows:

• Records for January–June must be in Seychelles by July of the same year
• Records for July–December must be in Seychelles by January of the following year

In addition to bookkeeping, certain IBCs are required to prepare and retain a financial summary within six months of the end of the financial year. This requirement applies to all companies, except Non-large holding companies, defined as:

• Companies holding assets or interests in other entities but conducting no direct trading activities, and
• Companies with annual turnover below SCR 50 million (approx. USD 3.5 million)

The financial summary must also be retained at the registered office.

Provided that Seychelles IBCs do not derive income from within Seychelles, they are:

• Not required to submit annual returns
• Not required to file financial statements with local authorities
• Not subject to annual audit requirements

These relaxed requirements contribute to Seychelles’ continued popularity as a jurisdiction for international business structuring.

While Seychelles IBCs are primarily designed for offshore operations, they are widely used in practice for:

• Asset holding and wealth management
• International trade and e-commerce
• International services
• Cryptocurrency and fintech structures
• Private investment and estate planning vehicles

Due to their adaptability, IBCs may function effectively as holding companies, project-specific entities, or intermediary investment vehicles in multinational structures.

Seychelles IBCs offer a blend of legal simplicity, operational flexibility, and favorable tax treatment for non-resident activities. Their core features—such as no minimum capital, allowance for non-resident directors and shareholders, and limited filing obligations—make them suitable for a range of international business purposes.