Global Forum on Transparency and Exchange of Information for Tax Purposes |07 April 2020

Seychelles rated ‘partially compliant’

The Global Forum on Transparency and Exchange of Information for Tax Purposes has rated Seychelles overall partially compliant with the international standard on transparency and exchange of information upon request.

The result was released yesterday, April 6, 2020 by the Global Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum) when it published new peer review report assessing compliance with the international standard on transparency and exchange of information on request (EOIR) and revealed the compliance rating for Seychelles and seven other jurisdictions.

These reports evaluate jurisdictions against the updated standard which requires beneficial ownership information of all relevant legal entities and arrangements, in line with the definition used by the Financial Action Task Force Recommendations.

According to the report, Seychelles had first been rated non-compliant with the exchange of information on request (EOIR) standard in 2013 because of serious gaps in the enforcement of provisions on the availability of ownership and accounting information in the offshore sector. Some Global Forum members had also reported difficulties entering exchange of information agreements with Seychelles. Seychelles later secured an overall rating of largely compliant in 2015 thanks to new obligations introduced for the actors in this sector, a strengthened supervision and the resolution of difficulties in entering EOI agreements.

The present report notes that out of 162 requests received over the three-year review period, Seychelles has not been able to reply to 88% of the requests for accounting information and 62% of the requests for beneficial ownership information.

Still according to Global Forum, the main concerns identified in the report refers to the overall effectiveness of supervision and enforcement activities to ensure the availability and access to information in practice, especially in its offshore sector. Of particular concern is the fact that while more than half of the approximately 200,000 international business companies are currently struck off, the effectiveness of this procedure remains uncertain, since struck off companies maintain their legal personality and can be restored for a period of up to 12 years.

The report also contains a number of recommendation to improve the legal framework and its practical implementation.

A peer review assessment of a jurisdiction’s legal and regulatory framework and its implementation in practice results in one of four distinct overall ratings (a rating is allocated to a jurisdiction once it has undergone a full peer review):

Compliant: The EOIR practice is effective. This rating can be granted even if recommendations were issued, but there should be no material deficiencies identified.

Largely compliant: The standard is implemented to a large extent but improvements are needed. Deficiencies are material but have limited impact on EOIR.

Partially compliant: The standard is only partly implemented. At least one material deficiency which has had, or is likely to have, a significant effect on EOIR in practice has been identified.

Non-compliant: Fundamental deficiencies in the implementation of the standard have been revealed.

Three jurisdictions – Brunei Darussalam, Macau (China) and Switzerland – received an overall rating of ‘largely compliant’ for this second round of peer reviews.

Barbados and Seychelles were downgraded from ‘largely compliant’ to ‘partially compliant’ since their last reviews, highlighting some significant deficiencies.

Three jurisdictions – Liberia, Peru and Tunisia – were undergoing their first full peer reviews as only their legal framework had been reviewed so far. The resulting reports rated Liberia as ‘partially compliant’ while Peru and Tunisia both obtained a ‘largely compliant rating.

The Global Forum is the leading multilateral body mandated to ensure that jurisdictions around the world adhere to and effectively implement both the standard of transparency and exchange of information on request and the standard of automatic exchange of information. These objectives are achieved through a robust monitoring and peer review process. The Global Forum also runs an extensive technical assistance programme to support its members in implementing the standards and help tax authorities make the best use of cross-border information sharing channels.

Press release from the Global Forum on Transparency and Exchange of Information for Tax Purposes