Seychelles Offshore Banking

Seychelles offshore banking is governed by the Financial Institutions Act 2004, which was enacted to repeal and replace the Financial Institutions Act 1984. The Act is consolidated and regulates both domestic and offshore banking in Seychelles as well as other financial institutions.

Seychelles offshore banking laws provide favorable tax treatment for offshore banking institutions such as exemption from withholding tax, stamp duty, corporation tax, customs duties and exchange control. Clauses within the Financial Institutions Act allow for a framework that is flexible so that offshore banks can carry out many functions and provide competitive services.

Seychelles offshore banks are legally protected confidentiality provisions for offshore banking service providers and their clients. Except in the case where required by court order, any disclosure of a Seychelles offshore banking client’s information will be considered a breach of privacy against which legal action will be taken in accordance with the relevant law in Seychelles.

Any institution that wishes to function as a Seychelles offshore bank must be an Overseas Company which has been registered under the Companies Act for local companies or a company limited by shares which is incorporated in Seychelles.

It is illegal for any institution to operate as a bank, offshore or domestic, without being issued or granted a license to conduct domestic or offshore banking business. There is no definite period of time for which offshore banking licenses are issued in Seychelles, and irrespective of this, all Seychelles offshore banks are required to comply with the laws governing offshore banking business.

Under the Financial Institutions Act, Seychelles offshore banks are able to offer financial leasing services, asset management, money transfer services, forfeiting, money broking, financing for commercial trade, credit facilities for consumers and mortgages, credit card facilities and safe keeping. Offshore banks also sell and buy foreign currencies and receive money deposits including time and demand deposits. These services and other capabilities of an offshore bank incorporated in Seychelles are stated in the terms and conditions under which a licence is granted by the Central Bank of Seychelles.

An annual licence fee is required from all Seychelles offshore banks and is based on the class of financial institution in which they fall.

The capital requirements for banks in Seychelles are straightforward. Offshore banks are required to maintain a minimum unimpaired assigned or paid-up capital of 10 million rupees. In the case of a bank which is licensed to offer only offshore services, a minimum assigned or paid-up capital of 2 million rupees or an equivalent amount in another easily convertible currency must be kept in Seychelles. The Central Bank’s approval must be obtained before an offshore bank in Seychelles reduces its paid-up or assigned capital. No less than 12% of a bank’s capital funds are required to be kept in Seychelles. The total capital funds of a bank are calculated on a risk-adjusted basis, whereby the core capital must include more than half of the capital funds. The different types of risk assets and the definition for capital and core capital are given in the relevant provisions of the act.

Before an offshore bank declares any dividends or transfers profits to its main office or elsewhere, at least 20% of profits made must be placed in a reserve fund which is required to be equivalent to the assigned capital or paid-up capital. The reserve fund of a Seychelles offshore bank must be kept every year and taken out of the net profits of all other financial institutions regulated by the Financial Institutions Act in addition to offshore banks. Along with offshore banking and registration services, information on second citizenship can be requested. Dominica citizenship by-Investment provides a safe avenue for acquiring a second nationality. This is a program that enables citizens of other countries to become Dominican citizens after they have qualified and invested in real estate or the economy. Dominica citizenship is given for life to successful applicants. To learn more on how to apply the requirements for second citizenship applications, questions can be submitted via the contact us page.

On the final working day of the year, all offshore banks incorporated in Seychelles are required to prepare a cash flow statement, a balance sheet and a profit and loss account showing all transactions of that financial year. All accounts must be prepares in compliance with the International Accounting Standards. The same is required for local Seychelles financial institutions for both domestic and overseas transactions done throughout the year.

In the instances where any financial institution or offshore bank incorporated in Seychelles is affected by a Double Tax treaty signed by Seychelles, it is possible for that institution to opt for a corporate tax at a rate that is favorable both to the Commissioner of Taxes and the bank, financial or offshore company.