Seychelles urges EU to consider the island’s progress towards tax compliance |20 October 2023

SS Payet

Highlights negative impact of being blacklisted

It is sad to see Seychelles’ present predicament considering the progress made to date with regard to tax compliance but despite this we need to work harder, said secretary of state for Finance, Patrick Payet, following Seychelles’ recent blacklisting by the European Union.

Mr Payet made the comment at a press briefing at the ministry’s headquarters at Liberty House yesterday, a day after the EU added Seychelles to a list of 16 nations and territories deemed “non-cooperative” on taxes.

This was in view of Seychelles’ rating of Partially Compliant by the Global Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum) for Exchange of Information on Request.

Seychelles has urged the European Union to review its stance and look at the island nation from another perspective. It should be noted that Seychelles has reviewed several tax-related legislation since 2018 to comply with EU requirements.

Mr Payet said Seychelles has been penalised twice for something it had tried its best to rectify since 2020. This relates to the law-firm Mossack Fonseca, linked to Panama paper case, which left the country in 2018, without providing any information about their firm as it was not a requirement in Seychelles’ law at the time.

Seychelles was penalised in 2020, and had to amend the law to ensure this would not be an issue in the future.

“It is regrettable that the European Union has used a weakness dating back to 2018, to continuously penalise Seychelles, despite having put in place all the necessary structures to ensure we are in conformity with transparency and exchange of information on taxes.”

Mr Payet said this recent announcement by the Council of the European Union will firstly have a negative impact on Seychelles’ reputation, which would now be perceived as being engaged in bad practices, “which we know is not the case”, he stated.

“We would have expected the EU to recognise at least some of the progress the country has done so far and recognise that this rating of being partially compliant relates to one exception,” he added.

He also referred to the economic impact this may have on Seychelles, especially to “foreign-direct investment that may come from EU countries or other companies wanting to do their investment in Seychelles”.

Thirdly, Mr Payet said the country’s financial system namely its banking sector may feel the negative impact of such an announcement considering the majority of local banks do their foreign exchange transactions internationally and must have a corresponding banking relationship with another foreign bank.

“When this happened in 2020, we saw there was greater scrutiny and more questions of all transactions emanating from Seychelles or on revenues coming to Seychelles from overseas. So you see there could be delays on transactions just because perception on Seychelles’ reputation,” explained Mr Payet.

He noted that even the EU grants could be affected and already discussions were under way to address the matter.

The Ministry of Finance, National Planning and Trade issued a press release on Wednesday denouncing EU’s stance stating it had a complete disregard for the specifics relating to Seychelles’ rating, despite extensive engagement with them, illustrating the progress made and evidencing the reforms undertaken and their effectiveness in practice. 

The statement read that “their automatic listing of the country despite this evidence of political commitment to the standards on tax transparency illustrate a careless approach to the harm such listing entails. It is inexcusable that historic deficiencies which have been fully remedied should continue to have such significant impact on the jurisdiction”.

“We call on the EU to review their listing procedures to provide greater transparency, consistency and equitable treatment, such that any country, small, big or well-connected is justly considered.  The fact that the list consists predominantly of small island developing states highlights the injustice of the application of their listing criteria,” the statement added.

Compiled by Patsy Canaya