EU removes Seychelles from blacklist of non-cooperative jurisdictions for tax purposes

Seychelles had called for a review of the European Council listing criteria for its list of non-cooperative jurisdictions for tax purposes. (401(K) Flickr) Photo License: CC BY-SA 2.0 

The European Council on Tuesday removed Seychelles along with Bahamas, Belize, and Turks and Caicos Islands from the EU list of non-cooperative jurisdictions for tax purposes.  

The Minister for Finance, National Planning and Trade, Naadir Hassan welcomed the announcement and said, “We are pleased that the Global Forum and EU Council positions are now more reflective of the current state of play of Seychelles’ compliance with the standards on tax transparency, and that they recognise the progress and commitment of the country with meeting these standards.”

He added that the authorities continue to engage actively to address any outstanding deficiencies "and we are confident that following the conclusion of this upcoming review, Seychelles will be removed from the EU list altogether. We continue to urge the need to review the methodology for assessment of a jurisdiction’s compliance with the Standards, to ensure that reports and associated lists appropriately reflect the current state of a country’s commitment, and do not disproportionately damage jurisdictions for legacy matters."

Seychelles was placed back on the EU blacklist in October 2023, two months after the Global Forum on Transparency and Exchange of Information for Tax Purposes maintained the island nation's rating as "partially compliant."

Patrick Payet, the secretary of state for Finance, Trade and National Planning, told reporters on Wednesday that the removal from the blacklist will ease some of the pressures on the financial sector.

This will be especially for the financial sector relationship with correspondence banking and this will benefit Seychelles but efforts will continue to ensure that the island nation is compliant in all areas as well.

He added, "For the moment, there have been no changes to their standards, but we are continuing to urge them to make these changes, to ensure fairness, especially for small island nations."

For Seychelles, the removal comes after representatives from the island nation advised the Organisation for Economic Co-operation and Development (OECD) to start the supplementary review, which will take place in 2024.

"We were able to demonstrate that we have made a lot of progress from 2022 to late 2023, compared to the previous review period," said Odile Vidot, the director general of Financial Services Development in the finance ministry.  

She said that Seychelles has been able to give information on beneficial ownership of 100 percent of the cases when they were asked.

Seychelles, an archipelago in the western Indian Ocean, has been removed from Annex 1 - the blacklist to Annex II - the watchlist.

Annex II includes jurisdictions that have made sufficient commitments to reform their tax policies but remain subject to close monitoring while they are executing on their commitments.

"We were able to give OECD the confidence that we have shown progress, where in 2025, we can be in a position to be upgraded to largely compliant," said Vidot.

This EU list is updated twice a year to keep track of developments, usually in February and October, under the auspices of the EU finance ministers.

Meanwhile, Payet said, "We do have some reforms coming up in the next few months, where we expect the support of the National Assembly, as these reforms are based in international norms, and the hope is that the international community can see that Seychelles remains determined to ensure that all legal instruments remain up to international standards."

Vidot said that for the supplementary review in 2025, Seychelles will receive a questionnaire from the OECD in which information will be given on legislation, statistics and information requests.

An assessment team will then visit the island nation to ensure that all information given in the questionnaire is true, after which a decision will be taken.

The main reason for Seychelles' being blacklisted last year was because of difficulties encountered in responding to the exchange of information requests.

This relates to one single registered agent that left the jurisdiction together with all its records in 2018, following the public disclosures in 2016 of documents linked to the activities of several service providers focusing on offshore operations known as "the Panama Papers".

The EU list of non-cooperative jurisdictions for tax purposes was established in December 2017. It is part of the EU's external strategy on taxation and aims to contribute to ongoing efforts to promote tax good governance worldwide.

Updated: 1.39 pm.