Tax transparency: Seychelles disagrees with "partially compliant" rating of OECD Global Forum report
He said that this decision is largely based on the demand for tax-related information on an agent previously registered in Seychelles. (401(K) Flickr) Photo License: CC BY-SA 2.0
Seychelles fervently disagrees with the decision of the Global Forum on Transparency and Exchange of Information for Tax Purposes to maintain the island nation's rating as "partially compliant," and fears being placed back on the European Union blacklist, said a top finance official on Thursday.
The Global Forum of the Organisation for Economic Co-operation and Development (OECD) is the leading international body working on the implementation of global transparency and exchange of information standards around the world.
In July, the 2023 Exchange of Information on Request Supplementary Peer Review Report for Seychelles was adopted.
The Secretary of State in the finance ministry, Patrick Payet, told reporters that "even if the report recognises that Seychelles has made a lot of progress by putting in place necessary legislations as well as on the implementation of these standards, the Global Forum has maintained the rating for Seychelles as partially compliant."
He said that this decision is largely based on the demand for tax-related information on an agent previously registered in Seychelles, an archipelago in the western Indian Ocean.
"The agent left the jurisdiction of Seychelles in 2018 with all the records of companies that were registered to him and this means that SRC (the Seychelles Revenue Commission) could not submit any information to any demand regarding these companies," said Payet.
In 2019 and 2020, following the publication of the 'Panama Papers', authorities in Seychelles received a significant number of requests related to this registered agent.
The director general of the Financial Services Development Division, Odile Vidot, said that if requests related to the agent that ceased operations in 2018 are excluded, the success rate of providing necessary information on legal ownership and beneficial ownership was 99 percent and 91 percent respectively. This was during the Global Forum's review period - from April 2019 to March 2022.
Payet outlined that the same agent was the main concern for which Seychelles was downgraded from a largely compliant to partially compliant rating when the Global Forum made the evaluation in 2020.
"This is the concern we expressed to the Global Forum – we are being penalised twice on the same basis, even if we have done our utmost possible to get the information. We showed the Global Forum that today, in most cases we have been able to provide tax-related information. It is regrettable that the Global Forum has taken this decision despite all the progress we have made and continue to make," said Payet.
The European Union (EU) screens countries on several criteria, one of which is the report from the Global Forum, to establish if a jurisdiction is considered cooperative for tax purposes or not. In 2021, Seychelles was moved from Annex 1 - the blacklist - to Annex 2 - the watch list - on the EU list of non-cooperative jurisdictions for tax purposes.
"There is the possibility that, in October, the EU might place Seychelles back onto Annex 1. Should this happen, international bankers will see that Seychelles might be a risk when it comes to the exchange of tax-related information, and as such they might take more time to transact with Seychelles. This is a concern for us," said Payet.