2021 Investment Climate Statements: Seychelles

Policies Towards Foreign Direct Investment

Seychelles has a favorable attitude toward most foreign direct investment, though the government reserves certain types of business activities for domestic investors only. The Reserved Economic Activity Policy April 2020 provides a detailed list of the types of business in which only Seychellois may invest and is available here:  https://www.investinseychelles.com/component/edocman/reserved-economic-activities-policy,-april-2020/download . The Seychelles Investment (Economic Activities) Regulations also provide details on the limitations on foreign equity for certain types of businesses and a list of economic activities in which need-based investment may be allowed by a foreigner: https://www.wto.org/english/thewto_e/acc_e/syc_e/WTACCSYC61_LEG_4.pdf . In June 2015, Seychelles implemented a moratorium on the construction of large hotels of 25 rooms and above on the country’s inner islands, which includes the three most-populated islands of Mahé, Praslin, and La Digue.

The Seychelles Investment Board (SIB) is the national single gateway agency for the promotion and facilitation of investment in Seychelles. The government’s objective is to promote economic and commercial relationships to diversify the economy, as well as to sustain its tourism and fishing industries, which are currently the main drivers of economic growth. The SIB organizes sector specific meetings with investors periodically and hosts a National Business Forum every two years to engage with the private sector.

Limits on Foreign Control and Right to Private Ownership and Establishment

The Seychelles Investment Act of 2010 and Seychelles Investment (Economic Activities) Regulations 2014 govern foreign direct investment (FDI) in Seychelles and are available at:   https://www.investinseychelles.com/investors-guide/investor-resources/policies-guidelines-acts . Since the financial crisis of 2008 and the implementation of subsequent IMF reforms, Seychelles has successfully attracted FDI. According to the Central Bank of Seychelles, gross FDI inflows in 2020 amounted to $149 million, representing a decrease of $105 million compared to 2019. This decrease is principally due to investments that were put on hold because of the pandemic. The SIB advises foreign investors on the laws, regulations, and procedures for their activities in Seychelles.

The Seychelles Investment (Economic Activities) Regulations of 2014 and the Reserved Economic Activity Policy of 2020 lists the economic activities in which only Seychellois can invest. This regulation is currently being reviewed to convert the list into a list of foreign activities in which foreigners can invest to allow for increased transparency and better governance. In the 2021 budget speech, the Minister of Finance highlighted that the current government aims to protect Seychellois business persons and plans to review the business categories in which Seychellois only can invest. Seychelles also places financial limits on foreign equity in certain types of resident companies – these limits are detailed in the Seychelles Investment (Economic Activities) Regulations 2014. The Regulations also provide a list of economic activities in which need-based foreign investment may be allowed. While the SIB and the government encourage foreign investors to collaborate with a local partner, there is no formal requirement.

The SIB also assists in screening potential investment projects in cooperation with other government agencies. For a business to operate, investors must apply for a license from the Seychelles Licensing Authority. The government established an Investment Appeal Panel in 2012 to provide an appeal mechanism for investors to challenge the government’s decisions regarding investments or proposed investments in Seychelles. More information is available in the Seychelles Investment Act 2010:  https://www.investinseychelles.com/component/edocman/seychelles-investment-act-2010/download?Itemid=0 .

Other Investment Policy Reviews

To date, Seychelles has not conducted an investment policy review through the Organization for Economic Cooperation and Development (OECD) or the World Trade Organization (WTO). Seychelles became the 161st WTO member in April 2015. The investment policy review of Seychelles by UNCTAD was published in November 2020: https://investmentpolicy.unctad.org/publications/1238/investment-policy-review-of-seychelles .

Business Facilitation

The Seychellois government committed to improving the business environment through measures such as using public-private partnerships (PPP) to upgrade the country’s infrastructure. The government announced a draft PPP law in 2018. As of March 2021, the National Assembly had not yet voted on the measure. In March 2021, the Cabinet of Ministers approved the migration from the 2017 version Harmonized System of classification to the 2022 version. It is anticipated that this change will come into effect in February 2022. The government is also currently reviewing the Companies Act of 1972.

Seychelles is ranked 100th in the World Bank’s 2020 Ease of Doing Business Report. On average, it takes eight days to obtain a certificate of incorporation and 14 days to obtain a business license. Details on starting a business in Seychelles are available on the World Bank website: https://www.doingbusiness.org/en/data/exploreeconomies/seychelles# .

Information on registering a business in Seychelles can be obtained on the SIB website: https://www.investinseychelles.com/investors-guide/start-your-business . Companies, including those foreign-owned, can register business names online through the business registration portal:  http://www.sqa.sc/BizRegistration/WebBusinessRegsitration.aspx . However, part of the registration process, such as payment of fees, still must be completed in-person.

The Enterprise Seychelles Agency (ESA) is responsible for providing business development services to improve the performance of micro, small, and medium enterprises in Seychelles. Services provided by ESA include business planning, training, marketing expertise, and identification of business opportunities for SMEs.

Outward Investment

The GOS does not promote or incentivize outward investment. However, it does not restrict local investors from investing abroad.

Currently, the United States and Seychelles do not have a bilateral investment agreement. However, the United States signed a Trade and Investment Framework Agreement (TIFA) with the Common Market for Eastern and Southern Africa (COMESA) in 2001, and Seychelles is a COMESA member. Seychelles has Bilateral Investment Treaties (BITs) with China, Cyprus, Egypt, and France, though only the two with Cyprus and France are currently in force: https://investmentpolicy.unctad.org/international-investment-agreements/countries/188/seychelles .

https://investmentpolicy.unctad.org/international-investment-agreements/countries/188/seychelles .

Seychelles became the 161st WTO member in April 2015. Seychelles is a member of the following trade blocs: COMESA, the European Union-Eastern and Southern Africa States Interim Economic Partnership Agreement (iEPA), the Indian Ocean Commission (IOC), the Southern African Development Community (SADC), and the African Continental Free Trade Area, the last of which entered into force in May 2019. In January 2019, Seychelles was one of four Eastern and Southern African (ESA) countries to sign the UK-ESA Economic Partnership Agreement, which preserves trade preferences currently enjoyed under the iEPA after Brexit. As of March 2021, there is no bilateral taxation treaty between the United States and Seychelles.

Seychelles has signed Tax Information Exchange Agreements (TIEAs) with the following countries: Denmark, Faroe Islands, Finland, Greenland, Guernsey, Iceland, India, Netherlands, Norway, Sweden, and the Swiss Confederation. In July 2019, Seychelles signed an inter-governmental agreement to implement the Foreign Account Tax Compliance Act (FATCA). The agreement has not yet been ratified by the Seychelles government and the Regulations have not yet been approved by the Cabinet of Ministers or the National Assembly.

Seychelles has signed a total of 28 Double Taxation Avoidance Agreements (DTAAs) with the following countries: Bahrain, Barbados, Belgium, Bermuda, Botswana, China, Cyprus, Ethiopia, Guernsey, Indonesia, Isle of Man, Jersey, Kenya, Luxembourg, Malaysia, Mauritius, Monaco, Oman, Qatar, San Marino, Singapore, South Africa, Sri Lanka, Swaziland, Thailand, United Arab Emirates, Vietnam, and Zambia. Updated information on TIEAs and DTAAs can be accessed here:  https://www.src.gov.sc/pages/resources/dtas.aspx  . In his 2020 budget speech, the President announced his intent to start the process of renegotiating DTAAs that insufficiently prevent base erosion.

Transparency of the Regulatory System

Although the government has made considerable efforts to liberalize the economy, Seychelles continues to suffer from overregulation. Concerns over government corruption have focused on the lack of transparency in the privatization and allocation of government-owned land and businesses. In an attempt to promote transparency in the public procurement system, Seychelles’ National Tender Board publishes all tenders both on its website ( http://www.ntb.sc ) and in local newspapers. It publicizes contracts that have been awarded and includes the name of successful bidders and bid amounts. The government has also set up a Procurement Oversight Unit, which serves as a public procurement policy and monitoring body ( http://www.pou.gov.sc/ ).

During the September 2016 parliamentary elections, then opposition coalition party Linyon Demokratik Seselwa (LDS) won a majority in the National Assembly for the first time in 40 years, resulting in significant procedural changes. The government also took a number of measures to combat corruption and nepotism, including establishing the Anti-Corruption Commission, more frequently publishing special audits by the Auditor General’s Office of questionable government transactions, and appointing opposition supporters to various boards of national organizations and important positions. Since 2017, the government has held budget preparation focus group discussions, including key stakeholders such as the business community and civil society organizations. Additionally, there has been considerably more legislative debate on the annual government budget. Increased budget debate and scrutiny has continued following the October 2020 presidential and legislative elections in which LDS won the presidency for the first time in the country’s history, and again won a majority in the National Assembly. Every government agency is called to the National Assembly to answer questions on their proposed budgets, as well as general questions related to their organization.

Proposed laws and regulations, as well as final laws, are published in the Official Gazette on a monthly basis and are available online at https://www.gazette.sc/ . Regulatory transparency improved with the 2016 balance of power between the opposition-controlled National Assembly and ruling party-controlled presidency, including several new laws, such as the Freedom of Information Act. In 2018, the access to information law came into force. In 2019, the government appointed a chief executive officer for the Seychelles Information Commission, and appointed information officers in all ministries and departments. The law makes provisions for how citizens may access government information that is not classified sensitive for security and defense reasons, how agencies should respond to requests, mandates proactive disclosure and a duty to assist requestors, and defines information that is deemed classified for security and defense. In 2020, the government published a manual to guide citizens on how to use the Freedom of Information Act and access information. Additionally, ministries are now required to submit white papers and consult with stakeholders before legislation is adopted.

Seychelles’ budget is easily accessible to the general public:   http://www.finance.gov.sc/national-budget/43 . Budget documents, including the executive budget proposal and the enacted budget, provide a substantially full picture of Seychelles’ planned expenditures and revenue streams. Publicly available budgets included expenditures broken down by ministry and revenues broken down by source and type. Information on debt obligations is also readily available. In 2019, for the first time, the government included a fiscal risk statement, which identified substantial fiscal risks emanating from public enterprises in Seychelles. Details on explicit and contingent liabilities are available in the fiscal risk statement, which is available on the following link:   http://www.finance.gov.sc/uploads/national_budget/Fiscal%20Risk%20Statement%202019.pdf .

International Regulatory Considerations

Seychelles has signed trade agreements with regional blocs such as COMESA, SADC, and the EU. Seychelles has also signed the Tripartite Free Trade Agreement (TFTA) and the African Continental Free Trade Agreement (AfCFTA) but has not yet ratified these agreements. In January 2019, four Eastern and Southern African (ESA) countries including Seychelles signed the UK-ESA Economic Partnership Agreement, which safeguards trade preferences currently enjoyed under iEPA after Brexit.

Seychelles joined the WTO in 2015, becoming the 161st member. Seychelles does notify draft technical regulations to the WTO Committee on Technical Barriers to Trade. In 2016, Seychelles ratified the Trade Facilitation Agreement (TFA). Further details on Seychelles’ TFA notifications to the WTO can be found here:   https://tfadatabase.org/members/seychelles .

Legal System and Judicial Independence

Seychelles’ legal system is a blend of English common law, the Napoleonic Code, and customary law. Civil matters, such as contracts and torts, are governed by the Civil Code of Seychelles, which is derived from the French Napoleonic Code. However, the company law and criminal laws are based on British law. In both civil and criminal matters, the procedural rules derive from British law. Seychelles does not maintain a specialized commercial court. Judgments of foreign courts are governed by Section 3 of the Foreign Judgments (Reciprocal Enforcement) Act of 1961. The World Bank ranked Seychelles 128th out of 190 countries in enforcing contracts in its 2020 Ease of Doing Business Report. Under the current government, the perception among Seychellois is that the judiciary is no longer influenced by the executive.

Laws and Regulations on Foreign Direct Investment

The Seychellois government established the SIB ( https://www.investinseychelles.com/  ) as a one-stop shop for all matters relating to business and investment in Seychelles. The SIB’s main functions are to promote investment and facilitate the investment process within the country’s administrative and legal framework. The SIB also assists in screening potential investment projects in cooperation with other government agencies. The government is keen to ensure that business activities are not conducted at the expense of Seychelles’ natural environment. For a business to operate, investors must apply for a license from the Seychelles Licensing Authority ( http://www.sla.gov.sc/ ). The government established an Investment Appeal Panel in 2012 to provide an appeal mechanism for investors to challenge the government’s decisions regarding investments or proposed investments in Seychelles.

Competition and Antitrust Laws

The SIB only reviews competition cases initiated by other government authorities, private sector entities, or investors. Current legislation does not empower SIB to sua sponte review all transactions for competition-related concerns. The Fair Trading Commission ( http://ftc.sc/ ) is responsible for investigating competition-related concerns. Such investigations may be initiated by the Commission or may be carried out following a complaint.

Expropriation and Compensation

The Lands Acquisition Act 1978, last amended in 1990, states that when the government takes possession of property, it must pay prompt and full compensation for the property. The government may expropriate property in cases of public interest or for public safety. Following the 1977 socialist takeover, the government engaged in expropriation of land for redistribution or for use by the state. With the return of a multi-party political system in 1993, the government compensated some of those who had lost land to expropriation/redistribution in the late 1970s. In 2017, Seychelles established a Land Compensation Tribunal to investigate cases where compulsory land acquisition was made by the government without adequate compensation. Seychellois whose land was taken by the government from 1977 to 1993 had until June 2020 to make their claims. The Land Compensation Tribunal also works in close collaboration with the Truth Reconciliation and National Unity Commission (TRNUC) which is investigating cases of human rights abuses prior to and after the 1977 takeover. Due to the Covid-19 pandemic, both the Land Compensation Tribunal and the TRNUC have not been able to function as planned. The TRNUC’s work is further hindered by an insufficient budget. Illegal land acquisition by the government also forms part of the TRNUC’s mandate. The embassy does not anticipate major expropriations in the near future, nor is it aware of any pattern of discrimination against U.S. persons.

Dispute Settlement

ICSID Convention and New York Convention

In 1978, Seychelles joined the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). In February 2020, Seychelles deposited its instrument of accession to the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention), which entered into force in May 2020.

Investor-State Dispute Settlement

The embassy is aware of at least one investor-government dispute in the reporting period. The dispute involves the operation of a large hotel resort by a company with U.S. shareholders, in which the Seychellois government also owned a small percentage share. In 2008, the Seychellois government sought to wind up the company on the grounds that it “had disappeared in its ability to operate as a hotel resort,” allowing it to fall into disrepair. The government’s effort was successful and resulted in the cancellation of the hotel’s operating license. The liquidation and subsequent sell-off of the hotel, formerly the country’s second largest hotel, raised suspicions of government corruption among local press outlets and business institutions, including the chamber of commerce. The former owner of the hotel claimed that he was threatened into selling the hotel by a businessman with ties to the government. The purchasers of the hotel were the lowest bidder, a newly formed group allegedly led by the same businessman who threatened the previous owner. In October 2019, the Supreme Court recommended that the Seychellois president establish a Commission of Inquiry to investigate the sale of the hotel, and in June 2020, former President Danny Faure appointed such a Commission. The Commission’s report is expected to be published by the end of May 2021.

Parties involved in investment disputes are encouraged to resolve their disputes through arbitration and negotiation. The Seychelles Investment Act created an Investment Appeal Panel to which aggrieved investors may appeal a decision made by a public sector agency regarding their investments or proposed investments in Seychelles. In addition, investors may appeal to the Court of Appeal in the event they are not satisfied with the decision of the Investment Appeal Panel. Seychelles has acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which entered into force on May 3, 2020. In the World Bank’s 2020 Ease of Doing Business Report, Seychelles ranked 143rd out of 190 countries for protecting minority investors.

International Commercial Arbitration and Foreign Courts

Due to Seychelles’ small size and relatively short recent history with foreign direct investment, there is no precedent for international arbitration in Seychelles, although the legal framework exists through the Seychelles Investment Act.

Bankruptcy Regulations

Bankruptcy in Seychelles is governed under the Insolvency Act of 2013 ( https://www.seylii.org/sc/legislation/act/2013/4  ). According to the Act, an individual may be discharged from bankruptcy three years from the date of its declaration. Bankruptcy is not criminalized in Seychelles. According to the 2020 World Bank Doing Business Report, Seychelles ranks 75th out of 190 countries on the resolving insolvency index. It takes on average two years to complete a bankruptcy.

Investment Incentives

The government enacted legislation which provided incentives for investment in several sectors. Examples include the Agriculture and Fisheries (Incentives) Act 2005, the Tourism Incentives Act, the Seychelles International Trade Zone Act, and fiscal incentives under the Investment Code. Incentives under these laws most often take the form of tax credits, tax holidays, duty-free access for the import of materials required for initial investment, and expedited work permits for foreign employees who move to Seychelles.

The SIB has the mandate to promote investment in Seychelles and assist in screening potential investments. In 2018, the government announced an investment policy guided by the following principles: creation of a conducive and transparent environment to attract investment and operate business; modernization of the legal framework for investment; application of international best practices and standards for investment; and respect for the environment and sociocultural fabric of the country. The investment policy statement is available at the following link:   https://www.investinseychelles.com/downloads/investment-policy/seychelles-investment-policy/download .

According to the SIB, the government does not issue investment guarantees, but Seychelles’ Public Private Partnership framework allows public and private sector entities to jointly finance foreign direct investment projects.

Foreign Trade Zones/Free Ports/Trade Facilitation

The  Seychelles International Trade Zone (SITZ) Act of 1995   provides for the establishment of free trade zones, which aim to combine the benefits of a freeport and an export processing zone. A number of locations have been declared International Trade Zones under this regime. Updated in 2018, the list of concessions available to SITZ license holders includes the following:

• Exemption from customs duties on certain capital equipment to be used in the SITZ;
• Exemption from certain taxes;
• Exemption from fees with respect to work permits;
• Entitlement to full foreign ownership;
• Entitlement to employ 100 percent foreign labor; and
• Exemption from national labor laws.

Activities of the SITZ are regulated by the Seychelles Financial Services Authority, formerly known as the Seychelles International Business Authority. Foreign-owned firms benefit from the same incentives as local firms operating in the SITZ. To meet the requirements of the Base Erosion and Profit Shifting (BEPS) standard of the Organization for Economic Cooperation and Development (OECD), licensable export services activities under the International Trade Zone Act have been amended. Under the revised regime, the export services licensee will not be allowed to provide services other than repair and recondition goods, warehouse and rent storage space, or offer logistical services, provided that these activities relate to goods physically handled in the SITZ.

Export services operators licensed on or before October 16, 2017 still enjoy all concessions and exemptions accorded under the International Trade Zone Act until June 30, 2021, provided that the benefits do not extend to assets or activities introduced on or after October 17, 2017. In his 2020 budget speech, the former president announced that further amendments will be made to the tax regime governing manufacturing activities under the International Trade Zone and a grandfathering period, which will not extend beyond December 31, 2022, will be applied for the new regime. In his 2020 State of the Nation Address, former President Danny Faure announced that foreign workers would pay into the Seychelles Pension Fund and recover only 25 percent of their pension payment when they leave the country.

Performance and Data Localization Requirements

The government of Seychelles does not mandate local employment, nor are there local employment mandates for senior management or directors. Visa, residence, and work permit requirements are not excessively onerous. However, the government has modified the Gainful Occupation Permit (GOP) framework to give local workers greater access to the labor market. Under the new framework, labor market testing is strictly enforced to ensure that foreign workers are only hired when no qualified local workers are available. The new framework also prohibits non-local workers from changing employers in Seychelles when their contract ends.

Investors operating in Seychelles are expected to abide by the following obligations:

• Comply with the provisions of the governing laws on investment procedures and carry out investment activities in accordance with the approvals granted. This includes the responsibility for accuracy and truthfulness in materials submitted in investment proposals and registration;
• Fully discharge their financial obligations, including taxation, in accordance with the law;
• Carry out the provisions of the laws on accounting and auditing;
• Carry out the provisions of the laws on registration of companies and other legal entities; and
• Carry out the provisions of the employment laws and regulations.

Seychelles does not have a single comprehensive law that addresses the collection and use of personal data. The Data Protection Act (DPA) was enacted in 2003 to provide individuals with privacy rights regarding processing of their personal data, but as of March 2021 it has not entered into force. Other sectoral laws that include data protection provisions are: Civil Code of Seychelles (1976), Computer Misuse Act (1998), Electronic Transactions Act (2001), Financial Institutions Act (2004), Central Bank of Seychelles Act (2004), Anti-Money Laundering and Combating the Financing of Terrorism Act (2020), Financial Services Authority Act (2013), Anti-Corruption Act (2016), and International Business Companies Act (2016).

Currently there is no legal requirement obliging foreign IT providers to hand over their source code or provide access to the encryption utilized. Seychelles does not have any legal instrument that prevents or restricts companies from transmitting customer or business-related data outside the country. Consequently, at the moment there are no government agencies involved in enforcing any rules or regulations with regards to local data storage in Seychelles.

The embassy is not aware of any investment performance requirements.

Real Property

Seychellois courts enforce interests in real property. Mortgages and liens are enforced, and the land registrar resolves land disputes. All lands in Seychelles are either publicly or privately held. According to the World Bank’s 2020 Doing Business Report, Seychelles ranked 65th out of 190 countries in the Registering Property index. In 2014, the government discontinued selling state land to non-Seychellois.

The Immovable Property Tax Act, which was enacted in December 2019, introduced an annual tax of 0.25 percent on the assessed market value of residential property owned by all foreigners.

Intellectual Property Rights

The government has measures in place to enforce intellectual property rights (IPR), but awareness of IPR is limited and enforcement is weak. Seychelles joined the World Intellectual Property Organization (WIPO) in March 2000. The country became a contracting party to the Paris Convention for the Protection of Industrial Property and the Patent Cooperation Treaty (PCT) in November 2002. The Cabinet of Ministers approved plans for Seychelles to accede to the Madrid Protocol.  Seychelles also signed the Beijing Treaty on Audiovisual Performances in June 2012 and ratified the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization (ABS) to the Convention on Biological Diversity (CBD) in October 2014.  Additionally, the Cabinet of Ministers approved Seychelles’ membership in the African Regional Intellectual Property Organization (ARIPO) by way of acceding to the Harare Protocol on Patents and Industrial Designs.

The Copyright Act 2014 and the Industrial Property Act 2014 contain provisions that set forth the laws relating to infringement of intellectual property rights. The Customs Management (Border Measures) Regulations 2014 provides enforcement measures at the border with respect to counterfeit goods.  There is currently no legislation for plant variety protection. As required by WTO principles, Seychelles IP law treats foreign nationals and Seychellois citizens equally. Enforcement of IPR protection laws is limited since very few international brands and trademarks have local or even regional representatives.

In 2017, the Cabinet of Ministers established a National Intellectual Property Committee to serve as a coordinating body for consultations with stakeholders on IP matters. The Committee, which falls under the purview of the Trade Division of the Ministry of Finance, Trade, and Economic Planning, comprises representatives from government, non-governmental organizations, and the private sector and meets on a monthly basis. In the 2018 budget speech, the former Minister of Finance announced that that government would develop a modernized Intellectual Property Office that would serve as a “one stop shop” for IP issues. While the Registrar General’s Office services as the one-stop-shop for both copyright and intellectual property, a new facility is expected to be built in the future.

Chapter 13 of the Customs Management (Border Measures) Regulations 2014 provides for enforcement measures at the border with respect to counterfeit and/or pirated goods. Furthermore, the Trade Division has, in consultation with the Customs Division, developed Procedural Guidelines on Border Measures for the Protection of Intellectual Property Rights ( https://www.src.gov.sc/resources/Guides/2018/IPRs.pdf  ) to counter the import and export of counterfeit and pirated goods. While no statistics are available, the Seychelles Revenue Commission’s customs officials monitor incoming shipments for counterfeit goods. However, their focus is on counterfeit products that pose a public health risk, such as medications and electrical appliances. Counterfeit apparel, CDs, and DVDs are widely available in Seychellois markets.

Seychelles is neither listed on the United States Trade Representative (USTR) Special 301 Report nor the Notorious Markets List.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at  http://www.wipo.int/directory/en/ .

Embassy Contact for IPR:

Smita Bheenick
Economic/Commercial Specialist
U.S. Embassy
Port Louis, Mauritius
+230 202 4430
bheenicks@state.gov

Some Law Firms in Seychelles also handling IPR:*

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Capital Markets and Portfolio Investment

Seychelles welcomes foreign portfolio investment. The Seychelles Securities Act ( https://fsaseychelles.sc/component/edocman/securities-act-2007/download?Itemid=0 ) provides the legal framework for the Seychelles stock market. The Seychelles Securities Exchange, now known as MERJ Exchange, has operated since 2012. Listing and trading are available in Euros, Pounds Sterling, Seychelles Rupees, South African Rand, and Australian Dollars. MERJ is an affiliate of the World Federation of Exchanges, a full member of ANNA and a partner exchange of the Sustainable Stock Exchange Initiative. In Q1 2021, there were 47 equity listings with a total market capitalization of $1.244 billion and three debt listings with a market capitalization of $246 million. Portfolio investment in Seychelles is limited by the small size of the economy and banking sector. The buying and selling of sizeable positions may have an outsized impact on the Seychelles Rupee and the economy in general. There are no restrictions on trading by foreigners.

Existing policies facilitate the free flow of financial resources in and out of the economy. The government respects IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions. Foreign investors are able to obtain credit on the local market and through the Seychelles banking system, and a variety of credit instruments are available to both local and foreign investors.

Money and Banking System

Seychelles has a two-tier banking system that separates the central and commercial bank functions and roles. Commercial banks, both domestic and foreign, are regulated and supervised by the Central Bank of Seychelles (CBS). According to the Central Bank of Seychelles Act 2004, the CBS is responsible for the formulation and implementation of Seychelles’ Monetary and Exchange Rate policies. The CBS is the only administrative body responsible for receiving applications for banking licenses, whether domestic or offshore, and issuing the corresponding licenses.

As of March 2021, there were eight commercial banks in operation: Absa Bank, Bank of Baroda, Mauritius Commercial Bank (Seychelles), Nouvobanq, Seychelles Commercial Bank, Al Salam Bank Seychelles Ltd, Bank of Ceylon, and Bank AL Habib Limited. According to a 2016 report by the CBS, 94 percent of Seychellois use banks. Seychelles also has three non-banking financial institutions: the Seychelles Credit Union, a savings and credit cooperative society; the Development Bank of Seychelles, which provides flexible financing for businesses and projects to promote economic growth and employment; and the Housing Finance Corporation, a government-owned company that provides financing to Seychellois for the purchase of land, the construction of homes, and financing home improvements.

Seychelles has a number of laws that govern the financial services sector: Financial Institutions Act 2004, Prevention of Terrorism Act 2004, International Business Companies Act 2016, Anti-Money Laundering and Combating the Financing of Terrorism Act 2020, Beneficial Ownership Act 2020, Data Protection Act, Mutual and Hedge Fund Act 2007, and Central Bank Act 2004. The Seychellois banking sector is generally healthy, though it is limited by small size and reliance on correspondent bank relationships. Due to concerns about money-laundering and illicit finance in the Seychellois financial sector, some local banks have lost their correspondent banking relationship with foreign banks, a phenomenon known as de-risking, making it difficult for local banks to perform international transactions. In 2017, the CBS and the Financial Services Authority visited foreign financial centers to address de-risking. The government is actively working with international experts, including the World Bank and International Monetary Fund, to ensure Seychelles is not perceived as high-risk jurisdiction.

In February 2020, the European Union added Seychelles to the list of non-cooperative jurisdictions for tax purposes as Seychelles had not implemented the tax reforms by the agreed deadline of December 2019 to which it had committed. In December 2019, France added Seychelles to its blacklist of tax havens for not providing adequate information on French offshore entities operating in the island nation’s jurisdiction. On March 5, 2020, the President signed the National Assembly passed the Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) Act 2020 and the Beneficial Ownership (BO) Act 2020. These two pieces of legislation address the deficiencies identified in the 2018 Mutual Evaluation Report of the Eastern and Southern Africa Anti Money Laundering Group (ESAAMLG). In March 2021, the International Trusts (Amendment) Bill 2021 was approved by the National Assembly and the National Anti-Money Laundering and Countering the Financing of Terrorism Committee established that the following laws will be presented to the National Assembly by June to fully comply with the Financial Action Task Force’s (FATF) recommendations:

1. Re-enactment of the Registration of Association Act;
2. New Asset Management Framework;
3. Amendments to the Beneficial Ownership Act, 2020; and
4. Virtual Assets Service Providers Bill, 2021.

According to the CBS in January 2021, non-performing loans to total gross loans in the Seychelles banking sector stood at 2.65 percent, and foreign currency deposits totaled 11,862 million Seychelles Rupees ($561 million).

A wide range of financial services such as checking accounts, savings accounts, loans, transactions in foreign currencies, and foreign currency accounts are available in the banking system. Foreigners and foreign/offshore firms must establish residency or proof of business registration to obtain a bank account.

Foreign Exchange and Remittances

Foreign Exchange

Since the 2008 IMF reform package, the government places no restrictions or limitations on foreign investors converting, transferring, or repatriating funds associated with investment. Funds are freely converted. Seychelles maintains a floating exchange rate for the Seychelles Rupee (SCR), which fluctuated between SCR 12 and SCR 14.5 to $1 from 2015 to 2019. In 2020, the SCR depreciated by 53 percent with the average rate in January 2020 being SCR 14 to $1 compared to SCR 21.5 in December 2020, due to the unprecedented impact of the Covid-19 pandemic on the tourism sector.

Remittance Policies

Foreign exchange controls were removed in 2008 and foreign investors are free to repatriate their profits and other incomes. The embassy is unaware of any planned changes to remittance policies, time limits on remittances, or use of any legal parallel market.

Sovereign Wealth Funds

Seychelles does not maintain any sovereign wealth funds.

Seychelles is one of 15 countries participating in the State-Owned Enterprises (SOE) Network for Southern Africa, which was launched in 2007 to support, in collaboration with the OECD, southern African countries in their efforts to improve the performance of SOEs.

According to the Public Enterprise Monitoring Commission Regulations 2019, there are currently 32 state-owned enterprises, which have either been established using public financial resources, or in which the government has a significant shareholding. These government-owned organizations are responsible for the delivery of both commercial and social objectives. They offer a range of essential services, including electricity, water, roads, seaports, fuel supply, import/export, retail, transport, civil aviation, housing, and tourism. At the end of 2019, total assets of SOEs amounted to $2.3 billion, representing 139 percent of total GDP while the total net income was $61.7 million, equivalent to 4 percent of GDP.

SOEs are generally free to purchase and/or supply goods and services from private sector and foreign firms. However, there is growing concern in the business community that SOEs such as the Seychelles Trading Company (STC) have been allowed to exceed their explicit mandate and compete unfairly. For example, the STC expanded its operations in the retail business with the opening of a hypermarket, a hardware store, and a luxury goods department selling perfumes and designer bags. Most SOEs and parastatal bodies maintain a board of directors and make regular reports to the corresponding ministry. The president and the responsible minister have authority over the size and composition of the boards of SOEs. The Public Enterprise Monitoring Commission (PEMC), set up in 2013 through the PEMC Act, is an independent institution responsible for monitoring financial, governance, and transparency issues related to public enterprises. Governance and operational assessments of six major SOEs were conducted in 2016 with World Bank assistance. On this basis, an implementation plan for governance and operational review of public enterprises for the period 2017-2019 was prepared and approved by the Cabinet of Ministers. In the 2021 State of the Nation address, President Wavel Ramkalawan announced that several public enterprises and/or their boards would be dismantled.

Audited financial statements of SOEs are published annually on the PEMC website ( https://www.pemc.sc/reports  ). The government has published a Code of Governance for Public Entities to provide guidelines to improve the governance, monitoring and control of public entities in Seychelles. The Code, which was developed by the PEMC along with other stakeholders, entered into force in April 2019 and can be accessed on its website: https://www.pemc.sc/resource-centre .

Privatization Program

The government has announced privatization plans several times, but progress has been slow. The embassy is not aware of any other formal legal barriers to foreign investors participating in privatization.

Seychellois society has a high level of awareness of Corporate Social Responsibility (CSR), especially in environmental protection and social programs, but CSR is generally regarded as a function of government. Since 2013, the Seychelles Revenue Commission has collected a CSR tax of 0.5 percent on monthly turnover for businesses with an annual turnover of SCR 1 million or more. In the 2021 budget speech, the Finance Minister announced that CSR tax would be abolished starting in April 2021 to provide businesses with additional liquidity during the pandemic. Officially, there are no waivers available for foreign investors with regard to labor law, employment rights, consumer protection, or environmental standards.

The law prohibits all forms of forced or compulsory labor. While the government’s efforts to combat labor trafficking significantly increased in 2020, it still did not meet the minimum international standards. Migrant workers were the population most vulnerable to forced labor, including nonpayment of wages, physical abuse, fraudulent recruitment schemes, delayed payment of their salaries, and failure to provide them with adequate housing, resulting in substandard living conditions. In past years, there have been reports of passport seizures and confiscations to prevent workers from changing employers prior to the end of their two-year contracts.   NGOs reported that traffickers have exploited migrant workers aboard foreign-flagged fishing vessels in Seychelles’ territorial waters and ports, including through nonpayment of wages and physical abuse. Labor recruitment agents based in Seychelles have exploited migrant workers, often with the assistance of a local Seychellois accomplice. Migrant workers often signed their employment contracts upon arrival in Seychelles and frequently could not read the language, which traffickers exploited in fraudulent recruitment tactics.

Seychelles currently has no production in the extractive sector, but international companies have undertaken petroleum exploration activities offshore. The Extractive Industries Transparency Initiative (EITI) accepted Seychelles as a candidate country in August 2014 and Seychelles’ validation against the standard began in January 2018. The 2017 EITI annual progress report published in July 2018 can be accessed at:   https://eiti.org/document/seychelles-eiti-annual-progress-report-2016 . In September 2020, the EITI Board assessed Seychelles as having achieved “meaningful progress” in implementing the 2019 EITI Standard. Seychelles adopted a  Beneficial Ownership Act in March 2020 , which includes a definition of beneficial owners. The law entered into force in January 2021. Extractive companies are the only sector where beneficial ownership disclosures will be made publicly available. The next validation is scheduled to commence in January 2023.

Additional Resources 

Department of State

• Country Reports on Human Rights Practices;
• Trafficking in Persons Report;
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities and;
• North Korea Sanctions & Enforcement Actions Advisory

Department of Labor

• Findings on the Worst Forms of Child Labor Report;
• List of Goods Produced by Child Labor or Forced Labor.
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World and;
• Comply Chain.

Ruling with transparency and accountability are stated priorities of the current government. In 2016, the government established the Anti-Corruption Commission of Seychelles (ACCS) under the Anti-Corruption Act, which gives it authority to investigate, detect, and prevent corrupt practices. Seychelles Transparency Initiative (TI), a Transparency International chapter in formation, was set up in 2017. TI’s focus is currently on increasing transparency in tourism, fisheries, finance, and construction. There is currently no legislation protecting NGOs involved in investigating corruption.

The Anti-Corruption (Amendment) Bill ( https://seylii.org/sc/legislation/bill/2020/4 ) was voted on by the National Assembly in 2019 giving the ACCS investigative and arresting powers similar to that of the police. The ACCS has received significant criticism for having only achieved one conviction: that of an ACCS employee who was convicted of extortion, corruption, and unlawful disclosure of ACCS information in 2018 when he demanded money in exchange for providing the ACCS’ evidence to an individual under investigation by the ACCS. In the January 2021 State of the Nation address, the president announced that the board which directs the ACCS would be dissolved and the entity would be restructured through legislative amendments. In March 2021, the ACCS signed cooperation agreements with the Seychelles Revenue Authority, the Central Bank of Seychelles, and the Registrar General’s Office to better facilitate the exchange of information and assist the ACCS’ investigations.

Seychelles signed the UN Convention against Corruption in February 2004 and ratified it in March 2006. Seychelles is not party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

In 2003, the government published the Public Service Code of Ethics and Conduct, the stated purpose of which is to provide guidance to public sector employees on the standards of behavior required of them. The Public Officer’s Ethics Act of 2008 prohibits personal enrichment through public office, defines and outlaws bribery, provides guidelines for avoiding conflict of interest, and mandates declaration of financial assets for public officials including members of the National Assembly. In March 2021, Cabinet approved amendments to the Anti-Corruption Act and the Public Officers’ Ethics Act. The government does not require private companies to establish internal codes of conduct.

Resources to Report Corruption

Anti-Corruption Commission
May De Silva
Chief Executive Officer
Victoria House,
State House Avenue
Victoria, Mahe

Office of the Ombudsperson
Nicole Tirant-Gherardi
Ombudsperson
Room 306, Aarti Chambers, Mont Fleuri, Mahe
+248 225147
ombuds@seychelles.net

The constitution provides citizens the right to change their government peacefully, and citizens exercise this right in practice through periodic elections based on universal suffrage. Seychelles has not experienced large-scale political violence since the late 1970s. The United Seychelles party, formerly known as Parti Lepep, governed Seychelles following the 1977 socialist takeover and won every election from the introduction of multi-party democracy in 1993 until 2016, when a coalition of opposition parties won the majority of the National Assembly seats. Shortly afterward, President James Michel resigned in favor of his Vice President, Danny Faure. The October 2020 election was the first time that Seychellois voters elected an opposition party candidate as president since 1976. Former President Danny Faure of the United Seychelles Party immediately accepted the election results, conceded, and supported a peaceful and smooth transfer of power. East Africa Standby Force election observers declared the election to have been peaceful, transparent, and orderly. There are no concerns over political stability at the time of writing of this report.

The national unemployment rate in the fourth quarter of 2020 was 3.3 percent, of which 51.6 percent was female. In Q4 2020, the youth unemployment rate was 12 percent and disaggregation of the data showed that youth unemployment was higher among females. According to the Seychelles Bureau of Statistics, the unemployment rate would have been 4.3 percent if those affected by the Covid-19 pandemic had sought alternative employment, rather than waiting for the amelioration of the Covid-19 pandemic.

The private sector accounted for 64 percent of formal employment in the fourth quarter of 2020. Within the private sector, the largest categories of employment were accommodation and food services activities (26 percent) and construction (18 percent). Major challenges that persist in the labor market include difficultly recruiting Seychellois for certain jobs and reported low productivity level. Seychelles has long been an importer of foreign labor due to its small population and low human resource base. The share of foreign labor to total employment in the private sector was approximately 40 percent pre-COVID-19 pandemic, with the majority working in the fishing and construction sectors.

Since 2014, a quota system has applied to industries for which demand for foreign labor is high. In the 2021 State of the Nation address, the president announced restructuring of the Gainful Occupation Permit (GOP) framework to give local workers greater access to the labor market. Under the new framework, labor market testing is strictly enforced to ensure that foreign workers are only hired when no qualified local workers are available. The new framework also prohibits non-local workers from changing employment in Seychelles when their contract ends.

Seychelles has been a member of the International Labor Organization (ILO) since 1977 and has ratified all fundamental International Labor Organization (ILO) conventions. Under Seychellois law, all workers, with the exception of police, military, prison, and firefighting personnel, have the right to form and organize unions of their own choosing, to participate in collective bargaining, and to conduct legal strikes. However, these rights are limited or restricted by other provisions of law. Although collective bargaining is legal, it rarely happens because the law gives the right to the government to review and approve all collective bargaining agreements in both the private and public sector. Strikes are illegal in Seychelles unless all other arbitration procedures have been exhausted. About 15 percent of the workforce is unionized.

In January 2020, the minimum wage increased to SCR 5,804 ($426) per month. In 2017, the Unemployment Relief Scheme (URS) was re-introduced for Seychellois aged above 18 and who are dependent on welfare. The new government ended this scheme in February 2021 and the Ministry of Employment and Social Affairs has been mandated to conduct training and re-skilling programs to enable Seychellois to seek employment. In the event of layoffs where there is no employee misconduct, the employer must provide the worker with one month’s notice or the equivalent of one month’s salary. Additionally, for workers that have been employed for five years or more, the employer must pay one day’s pay for each month that the employee has worked for the employer. For severance calculation, there is no distinction between layoffs and firing with severance.

The Employment Tribunal handles employment disputes for private-sector employees. The Public Service Appeals Board handles employment disputes for public-sector employees, and the Financial Services Authority deals with employment disputes of workers in the Seychelles International Trade Zone. The law authorizes the Ministry of Employment and Social Affairs to establish and enforce employment terms, conditions, and benefits, and workers frequently obtain recourse against their employers through the Employment Tribunal.

The government introduced the Occupational Safety and Health Decree in 2012 and the Prohibition of Trafficking in Persons Act in 2014. Seychelles Police and Customs personnel have traveled to U.S. Government-led training at the International Law Enforcement Academy in Gaborone, Botswana. However, there are very few health or labor inspectors in Seychelles and they are limited by meager public resources and the vast ocean distances they are expected to cover.

In November 2011, Seychelles and the ILO signed the 2011-2015 Decent Work Country Program, which seeks to address such issues as employment creation, consolidation and protection of workers’ rights, enhancing social protection, and strengthening social dialogue. Compliance with international labor standards has in recent years been sufficient such that business in the country should not pose a reputational risk to investors.  Concerns about trafficking in persons, however, do exist.

Seychelles and the United States signed an OPIC investment agreement in 2012, the text of which is available on OPIC’s website: https://www.dfc.gov/sites/default/files/2019-08/Seychelles-signed-02-03-2012-entered-into-force-10-05-2012.pdf . Due to the small size of the economy, there is limited potential for DFC programs in Seychelles. Nevertheless, Seychellois firms and U.S. investors may seek DFC financing or insurance for joint ventures elsewhere in Africa and Asia.

* Source for Host Country Data: Seychelles in Figures 2020, Seychelles National Bureau of Statistics

Table 4: Sources of Portfolio Investment
Data not available.

Smita Bheenick
Economic and Commercial Specialist
Port Louis, Mauritius
+230 202 4400
BheenickS@state.gov