Disclosure Requirements

Effective 1 January 2024, taxpayers must file a related party dealings schedule as a part of the annual tax return to report the related party transactions for the tax year. The schedule includes information on the reporting entity, the ultimate controlling entity, the associates with which controlled arrangements are entered into, the controlled arrangements, and such other information on the related party transactions. The information relating to the schedule must be maintained for at least 7 years after the end of the period in which the related party transactions took place. Standard Documentation

Effective 1 January 2024, the Seychelles introduced new transfer pricing documentation requirements whereby companies with an annual turnover exceeding SCR 1 million that enter into related party transactions must prepare standard documentation verifying that the related party transactions for the relevant tax year are consistent with the arm's length principle. The documentation requirement is mainly based on the OECD guidelines and includes the following:

A description, including main business activities, historical data of the business, an overview of the market in which the business operates, main competitors, and an organizational chart and structure;
A statement of the corporate organizational structure of the group of entities of which the company is a member, including details of all the group's operational members, their legal forms, and their shareholding percentages;
A statement of the group's operational structure, including a general description of the role that each of the members carries out with respect to the group's activities, as relevant to the related party transactions, including the job title, role, and location of key decision makers;
A written description of the business including:

a description of the global supply chain for the goods or service forming part of the related party transactions;
a list and brief description of important service arrangements between members of the group, other than research and development services, including a description of the capabilities of the principal locations providing important services and transfer pricing policies for allocating services costs and determining prices to be paid for intra-group services;
analysis of functions and risks undertaken and assets employed by the parties involved; and
a description of important business restructuring arrangements, acquisitions, and divestitures occurring during the fiscal year;

A list of key competitors in Seychelles;
A detailed description of the related party transactions;
Conclusion whether the related party transactions are at arm's length;
A summary of the company’s audited or unaudited financial accounts for the tax year;
The name of the author (company name if employed by a company) of the transfer pricing documentation and the date of finalization and approval; and
Any other documentation or information that is necessary for the determination of compliance with the arm's length principle.

Further, additional TP documentation requirements apply if:

The total value of all related party transactions is more than 10% of the company's turnover for a tax year; or
The total value of all related party transactions for a tax year exceeds an amount equivalent to SCR 5 million.

The contents of the additional documentation include:

Copies of all intercompany agreements concluded by the company;
A detailed functional and risk analysis;
A detailed comparability analysis, selection of tested party and the most appropriate method;
A summary of financial information used in applying the transfer pricing method;
Details of any industry analysis, economic analysis, budgets or projections relied on;
Details of any advance pricing agreements or similar arrangements in other countries that are applicable to the related party transactions; and
The name of the author, company name if employed by a company, of the additional documentation and the date of finalization and approval.

The TP documentation must be submitted within 21 days from the date of a request by the Commissioner General.

Until 31 December 2023, detailed rules for TP documentation were not available. However, the tax authorities expected the taxpayers to prepare and maintain contemporaneous transfer pricing documentation to reflect the arm’s length principle. The documentation had to be prepared prior to the due date of the filing of the tax return and submitted to the tax authorities within 5 days of a written request.

Master File

A company that is a member of an MNE group and whose consolidated turnover is greater than EUR 100 million must also prepare a Master file in accordance with the OECD Transfer Pricing Guidelines.

The contents of the Master file include:

Details of the MNE's organizational structure, including a chart illustrating the MNE’s legal and ownership structure and geographical location of operating entities;
Description of the MNE’s business(es), including important drivers of business profit, description of the top five goods or services of the MNE group by revenue, important service arrangements between members of the MNE group, and other information;
Description of the MNE’s intangibles, including a description of the MNE's strategy regarding intangibles, location of research and development (R&D) facilities and management, a list of important intangibles of the MNE group, transfer pricing policies regarding R&D and intangibles, and other information;
Details of the MNE's intercompany financial activities, including how the group is financed, financing agreements with unrelated lenders, group members providing a central financing function for the group and other information; and
Information on the MNE's financial and tax positions, including annual consolidated financial statements for the year concerned and a list and description of any existing advance pricing agreements (APA) and tax rulings related to the allocation of income.

Country-by-Country (CbC) Reporting

On 23 April 2019, Seychelles published the Revenue Administration (Country-by-Country Reporting Multinational Enterprise Groups) Regulations, 2019 implementing the Country-by-Country (CbC) reporting requirements in line with OECD BEPS minimum standards.

The CbC reporting requirement applies for reporting tax years ending on or after 31 December 2019. The standard threshold for the CbC reporting requirement for MNE groups is EUR 750 million of the consolidated group revenue in the preceding year. The required information to be captured in the CbC report includes the following:

Table 1:

revenues (unrelated parties, related parties and total);
profit (loss) before tax;
income tax paid (cash basis);
income tax accrued - current year;
stated capital;
accumulated earnings;
number of employees; and
tangible assets - other than cash and cash equivalents with regard to each jurisdiction in which the MNE group operates.

Table 2:

constituent entities resident in each tax jurisdiction (including Tax ID and address);
jurisdiction of organization or incorporation if different from jurisdiction of residence; and
main business activities of each constituent entity.

The ultimate parent entities resident in Seychelles are required to file a CbC report within 12 months following the end of the reporting fiscal year (i.e., 31 December 2019 for the first year beginning 1 January 2018). Further, all group constituent entities resident in Seychelles are required to notify the Commissioner General whether it is the ultimate parent, or, must notify the identity and tax residence of the group's reporting entity within 3 months from the end of the first year, i.e., 31 December 2019, and by the end of the reporting tax year for all subsequent years.

A penalty of SCR 20,000 will be imposed on companies who:

Fail to comply with the CbC reporting regulations;
Knowingly provide inaccurate information when filing a CbC report; or
Identify inaccuracies after submitting a CbC report and fail to take reasonable steps to inform the Commissioner-General within the specified time (no later than 3 months after becoming aware of an error).

On 9 July 2019, Seychelles signed the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (CbC MCAA). Seychelles has also signed the OECD-Council of Europe Convention on Mutual Administrative Assistance in Tax Matters as amended by the 2010 protocol.

Language of Documentation

Effective 1 January 2024, the transfer pricing documentation must be submitted in English, French, or Creole. Earlier, the law did not explicitly require the use of a specific language.

Penalties

Effective 1 January 2024, the following penalties are introduced in relation to the new transfer pricing documentation requirements:

Failure to submit documentation when requested, without reasonable cause penalty equal to SCR 75,000 plus SCR 2,500 per week or part of a week the failure continues;
Knowingly submission of false or misleading documentation or information – penalty equal to 5% of the annual turnover; and
Failure to keep, retain, and maintain relevant documents, information, and records, knowingly or recklessly - penalty equal to at least SCR 10,000 for small businesses, SCR 50,000 for medium businesses, and SCR 100,000 for large businesses.

Furthermore, failure to furnish the related party dealings schedule of the tax return without reasonable cause may result in an additional tax penalty equal to SCR 5,000. Other penalties in relation to the related party dealings schedule requirements are similar to those for the transfer pricing documentation.

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