SeychellesSeychelles

Legal ReferenceSection 54(1) of Business Tax Act, 2009 Section 4 of the Business Tax Act, 2009

Seychelles’ Transfer Pricing provisions endorse the arm’s length principle, as per sections 4 and 54(1) of the Business Tax Act, 2009 as amended.

The OECD Transfer Pricing Guidelines are not explicitly included in Seychelles’ legislation. The Guidelines will be considered as useful literature for advisory purposes on TP and shall be consulted in conducting TP-related work. Thus, the OECD Transfer Pricing Guidelines alongside the UN Practical Manual on Transfer Pricing for Developing Countries are guides that could be used for referencing and interpretation when the Seychelles Revenue Commission (SRC) auditors deal with TP cases.

Legal ReferenceSection 3 of Business Tax Act, 2009

A specific definition of related parties is not provided by Seychelles’ legislation. However, reference is made to the definition of associates, which is regarded as being in accordance with the definition of related parties, based on section 3 of the Business Tax Act, 2009, as follows: Business Tax Act, 2009 - section 3: (1) Subject to subsection (2), two persons are associates if the relationship between them is such that one may reasonably be expected to act in accordance with the intentions of the other, or both persons may reasonably be expected to act in accordance with the intentions of a third person. (2) Two persons are not associates solely by reason of the fact that one person is an employee of the other or both persons are employees of a third person. (3) Without limiting the generality of subsection (1), the following are treated as associates – (a) an individual and a relative of the individual, except if the Commissioner General is satisfied that neither person may reasonably be expected to act in accordance with the intentions of the other; (b) a partner in a partnership and the partnership, if the partner, either alone or together with an associate or associates under another application of this Seychelles Updated August 2018 section controls fifty per cent or more of the rights to income or capital of the partnership; (c) a trust and a person who benefits or may benefit under the trust whether through the exercise of a power of appointment or otherwise; (d) a member in an entity and the entity, if the member, either alone or together with an associate or associates under another application of this section, controls either directly or through one or more interposed persons – (i) fifty per cent or more of the voting power in the entity; (ii) fifty per cent or more of the rights to a distribution of profits; or (iii) fifty per cent or more of the rights to a return of capital, or (e) two entities, if a person, either alone or together with an associate or associates under another application of this section, controls either directly or through one or more interposed persons – (i) fifty per cent or more of the voting power in both entities; (ii) fifty per cent or more of the rights to a distribution of profits in both entities; or (iii) fifty per cent or more of the rights to a return of capital in both entities. (4) In applying subsection (3)(d) or (e) holdings that are attributable to a person from an associate are not reattributed to another associate. (5) In this section, “relative” in relation to an individual, means related by blood, marriage, or adoption.

Seychelles’ legislation does not provide for transfer pricing methods. However, Seychelles relies on the OECD Transfer Pricing Guidelines and the UN Practical Manual on Transfer Pricing for Developing Countries and, therefore, all the methods above are applicable.

• CUP (not provided)
• Resale Price (not provided)
• Cost Plus (not provided)
• TNMM (not provided)
• Profit Split (not provided)
• Other (not provided)

Legal ReferenceSeychelles Public Rulings

The approaches provided by the OECD Transfer Pricing Guidelines and the UN Practical Manual on Transfer Pricing for Developing Countries are sought in the application of the transfer pricing methods. Moreover, Seychelles has a Public Ruling 2015-3 in place, which reflects the possibility for Seychelles to use the Most Appropriate Method.

• Hierarchy of methods (not selected)
• Most appropriate method (selected)
• Other (not selected)

Seychelles has not had any TP cases on commodity transactions yet. Seychelles relies on the OECD Transfer Pricing Guidelines and therefore the approach in paragraphs 2.18 -2.22 of the TPG may be followed.

• For controlled transactions involving commodities, the guidance contained in paragraphs 2.18-2.22 of the TPG is followed. (selected)
• Domestic legislation mandates the use of a specific method for controlled transactions involving commodities (not selected)
• Other (not selected)

There is no explicit provision on comparability under domestic law. However, Seychelles shall follow the OECD Transfer Pricing Guidelines and the UN Practical Manual on Transfer Pricing for Developing Countries in this respect.

There is no specific requirement to use domestic comparables or foreign comparables in the domestic law.

Legal ReferenceSection 54 of the Business Tax Act, 2009

Based on section 54(1) and 54(2) of the Business Tax Act, 2009, Seychelles’ legislation allows the use of the arm’s length measure for determining arm’s length remuneration. Seychelles shall follow the OECD Transfer Pricing Guidelines and the UN Practical Manual on Transfer Pricing for Developing Countries in this respect.

Legal ReferenceSection 4 of the Business Tax Act, 2009

The Business Tax Act, 2009, section 4, provides for comparability adjustments. Accordingly, it is provided that: “If it is not possible to determine the fair market value of an asset, property, service, or benefit at a particular time under subsection (1), the fair market value is the consideration of a similar asset, property, service, or benefit would ordinarily fetch in the open market at that time, adjusted to take account of the differences between the similar asset, property, service, or benefit.” Furthermore, Seychelles would rely on the guidance on comparability adjustments in the OECD Transfer Pricing Guidelines and in the UN Practical Manual on Transfer Pricing for Developing Countries.

Legal ReferenceSection 2 of the Business Tax Act, 2009

Seychelles’ legislation or regulations do not contain any specific guidance on the pricing of controlled transactions involving intangibles. Seychelles relies on the OECD Transfer Pricing Guidelines and the UN Practical Manual on Transfer Pricing for Developing Countries on intangibles. In addition to that, section 2 of the Business Tax Act, 2009, provides for the definition of intangibles as follows: Business Tax Act, 2009 - section 2: “Intangible” means – (a) Any patent, invention, design or model, secret formula or process, trademark, copyright, or other like property or right; (b) Contractual rights with a benefit for a period of more than one year; or (c) Any expenditure that provides an advantage or benefit for a period of more than one year, other than expenditure incurred to acquire any intangible movable or immovable property.

Seychelles’ domestic laws or regulations do not provide for transfer pricing rules or special measures regarding HTVI. However, Seychelles may follow the OECD Transfer Pricing Guidelines and the UN Practical Manual on Transfer Pricing for Developing Countries.

Seychelles would follow the OECD Transfer Pricing Guidelines and the UN Practical Manual on Transfer Pricing for Developing Countries.

While there is no simplified approach fow low value-adding intra-group services in Seychelles domestic law or regulation, Seychelles follows the approach in the OECD Transfer Pricing Guidelines in this respect.

Legal ReferenceSection 2(a) of the Business Tax (Amendment) Act, 2012 Section 8 and 66 of the Business Tax Act

Seychelles has withholding tax for technical service fees, which is defined in section 2(a) of the Business Tax (Amendment) Act, 2012, as follows: Section 2(a) of the Business Tax (Amendment) Act, 2012 – “technical service fee” means an amount whether periodical or lump sum as consideration for – (i) Rendering any managerial, technical or consultancy services including the services of technical or other personnel; (ii) The supply of any technical, industrial, commercial or scientific knowledge, experience or skill; (iii) The supply of services which are ancillary and subsidiary for which royalties are received. Based on items 3(c) of the First Schedule of the Business Tax Act, 2009, the rate of withholding tax under Section 8 and Section 66 respectively, of the same Act, is 15%, in terms of a technical service fee.

Seychelles do not have any domestic legislation or regulation on transfer pricing of financial transactions. However, the guidance on the OECD TPG may be followed.

Seychelles does not have any legislation or regulation on cost contribution agreements. However, Seychelles relies on the OECD Transfer Pricing Guidelines and the UN Practical Manual on Transfer Pricing for Developing Countries in this respect.

Transfer pricing documentation upon request

• Master file consistent with Annex I to Chapter V of the TPG (not selected)
• Local file consistent with Annex II to Chapter V of the TPG (not selected)
• Country-by-country report consistent with Annex III to Chapter V of the TPG (not selected)
• Specific transfer pricing returns (separate or annexed to the tax return) (not selected)
• Other (specify): Transfer pricing documentation upon request (selected)

Legal ReferenceSection 54(1) of Business Tax Act, 2009 Public Ruling 2015-3

Public Ruling 2015-3 states that documentation must be prepared prior to the due date for filing of the business tax return and submitted to the tax authority within five days upon written request. There is no specific or exact structure of documentation or submission and no prescription on the language of submission. The Revenue Commissioner expects a person to record, in writing, sufficient information and analysis to verify their transactions which are applicable to Section 54 of the Business Tax Act.

Legal ReferenceSection 41 & 44(1) of the Revenue Administration Act, 2009 Section 44A of the Revenue Administration (Amendment) Act, 2009 Public Ruling 2015-3 on Transfer Pricing

No specific transfer pricing penalties or compliance incentives regarding transfer pricing documentation are provided by Seychelles’ legislation. In the absence of transfer pricing documentation, and in cases of a transfer pricing adjustment, a penalty would apply based on the additional tax and interest for late payment of the new revenue liability. In addition to this, there are also culpability penalties that take into account the taxpayer behaviour in imposing an additional tax. Where there has been a public ruling issued, and the taxpayer has voluntarily ignored the position of the tax office on a matter, the tax office will consider that the failure of compliance is caused by recklessness and therefore the additional tax applicable would be 50% of the revenue shortfall rather than 25% of the revenue shortfall for failure to take reasonable care. Therefore, where a taxpayer does not abide by the directives under the Public Ruling 2015-3 on Transfer Pricing, and an adjustment is made, the person will suffer additional tax of 10% on revenue shortfall, interest for late payment and an additional tax of either 25%, 50% or 75% if the taxpayer has attempted to purposefully deceive the Tax office by failing to take reasonable care, or was reckless as to the operation of the tax law or lastlty intended to disregard the tax law. Section 41 of the Revenue Administration Act, 2009 provides guidance on the interest applicable, as follows: “(1) a taxpayer who fails to pay revenue by the due date is liable for interest on the amount unpaid computed for the period commencing on the due date for payment and ending on the date that the revenue was paid. (2) The rate of interest for the purposes of subsection (1) is the quarterly average prime lending rate on the first day of the period specified in subsection (1) as published by the Central Bank of Seychelles increased by three percentage points.

Legal ReferenceSeychelles’ MAP Profile Section 62 of the Revenue Administration Act Section 70 of the Revenue Administration Act

Seychelles is allowed by law to issue public rulings that would set the position of the tax office on a matter that causes difficulties of interpretation. Seychelles also has a DTAA network that provides for MAP. While there is no procedure for APAs at the moment, there is also nothing in Seychelles’ law which prevents Seychelles from issuing an advance pricing agreement. When a taxpayer is dissatisfied with any revenue decisions, he can object to the unit in charge of dealing with objection at the tax office and, if still dissatisfied, he can appeal to the Revenue Tribunal. The Revenue Tribunal is a body created under the revenue law and is specialised in dealing with tax disputes.

• Rulings (selected)
• Enhanced engagement programs (not selected)
• Advance Pricing Agreements (APA) (not selected)
• Mutual Agreement Procedures (selected)
• Other (please specify): Domestic administrative dispute resolution (selected)

Seychelles does not have any rules on safe harbours.

Seychelles does not have any specific laws or regulations for year-end adjustments. However, Seychelles follows the guidance on the OECD TPG in this respect.

Currently, no secondary adjustments are available in the Seychelles legislation.

Legal ReferenceTax information exchange agreements (TIEAs) and Double taxation agreements (DTAs)

Article 7 of all the 28 tax treaties in force for Seychelles covers the Attribution of Profits to Permanent Establishment.

Seychelles is in the process of developing a Transfer Pricing regulation to supplement Section 54 of the Business Tax Act to provide additional provisions and set out in law the Seychelles approach to transfer pricing.