(Seychelles News Agency) - A proposed law that will oblige foreigners to pay taxes on their immovable properties is expected to come into force in January 2020, a finance official said in a consultative meeting on Tuesday.

The property tax will apply to foreigners, be it individuals or companies, who own residential establishments in Seychelles.

The tax rate will be 0.25 percent of the value of the property meaning that if your property is worth SCR5 million ($366,000), tax liable will amount to SCR12, 500 ($914).

The director-general of the Tax and Financial Sector Policy at the Ministry of Finance, Seylina Verghese, said the taxes on immovable properties is not only to increase the tax rate, “but it is being implemented to broaden our tax base.”

The consultation meeting gave the public the opportunity to give their views on the legislation and its implementation before it is gazetted on November 29.

Some of the main concerns raised from the public were on the different definitions and procedures on how the tax is going to be collected.

“Usually a lot of countries already have the property tax. Normally the property tax is a financial tool dedicated to collect money for the country to cover some of the services that are being used by that person in that area,” said Verghese.

The idea for a new property tax was made in the 2017 budget address by Peter Larose, the Minister of Finance then, after concerns from members of the National Assembly.

Property tax is a tax assessed on real estate and it is usually based on the value of the property.  The property can be classified as land, buildings or other immovable improvements to the land which increase the value of the real estate.

The property tax will be due and payable to the Commissioner General on or before 31 December of each year.

The Commissioner General of the Seychelles Revenue Commission (SRC), Veronique Herminie, said that once this law comes into force foreigners purchasing new property will automatically be registered at the Registrar.

“As for individuals who have purchased their properties before this Act comes into force it will be their responsibility to go and register to pay their taxes,” said Herminie.

A fine of SCR50,000 ($3,650) will be applicable for people who fail to register. A foreigner must also submit proof of valuation of their land at the Seychelles Revenue Commission after registration and if they fail to do so a fine of SCR3000 ($219) will be imposed.

In his recent budget address, the Minister of Finance, Trade and Economic Planning, Maurice Loustau-Lalanne, said that there will be exemptions in certain cases.

“This applies to a foreigner who is married to a Seychellois and whose marriage is still subsisting or, whose spouse has since died after owning the immovable property,” said Loustau-Lalanne.

He added that after the Act comes into force, “a non-Seychellois who is for the first time an owner of immovable property used for residential purposes, may apply in writing to the Commissioner General for exemption from tax. The exemption for immovable property tax will only apply in the year of purchase. The subsequent year the non-Seychellois will pay in view that they pay stamp duty during the first year.”