Press release

Seychelles defends its record at OECD Jakarta World Forum

November 21, 2013

The Seychelles has emphasised its commitment to good practices and transparency in relation to tax information exchange while also championing the concerns of smaller jurisdictions in the review process and expressing its regret at some of the findings of the review undertaken on Seychelles’ jurisdiction.

The statements were made by the Minister for Foreign Affairs, Jean-Paul Adam, who led the delegation attending the Organisation for Economic Development (OECD)’s Global Forum on Transparency and Exchange of Information for Tax Purposes this week in Jakarta, Indonesia. The delegation also included representatives from the Ministry of Finance Trade and Investment (MFTI), Seychelles Investment Board (SIB), Seychelles International Business Authority (SIBA) and the Seychelles Revenue Commission (SRC).

Minister Adam noted that Seychelles had benchmarked itself against similar jurisdictions, and stood by its record on cooperation with the OECD as well as in ensuring best practices in terms of exchanges of information for tax purposes.

“Seychelles will never hide from its obligations,” said Mr Adam. “We believe in placing our commitments in the sunlight for all to draw their own conclusions. In the same way that we do not believe that financial transactions should be carried out in the shadows, neither should our reviews be subject of secrecy or shame.”

Seychelles’ Phase 2 report, which covered the three-year period under review between 1 July 2009 and 30 June 2012, was on the agenda for adoption along with those of 49 other countries.  Although the conclusion of the report is that Seychelles met the standard for 8 essential elements out of 10, there are two elements where Seychelles has been rated non-compliant. The elements assessed were availability of information, access to information and exchange of information for tax purposes.

The two areas of concern relate to the issue of bearer shares and availability of record keeping of IBCs and their agents, and in response to these issues, Seychelles has illustrated that it has cooperated fully with the OECD and has also taken action to address these concerns.

However, these actions can only be formally recognised through a supplementary review and thus the Global Forum will maintain the overall rating of non-compliant relating to Seychelles until re-assessment can take place.

Whilst Seychelles acknowledges and supports the work of the OECD, particularly OECD’s work in promoting transparency and accountability, Minister Adam, acting on behalf of the Ministry of Finance, Trade and Investment, formally objected to the rating of non-compliant based on Seychelles’ track record. He highlighted that Seychelles has consistently worked in cooperation with the OECD to implement best practices with the resources at its disposal.

The Minister emphasised that in a number of areas in relation to financial governance, Seychelles has actually led the way in enhancing regional cooperation relating to tackling financial crimes and money laundering.  Seychelles have been one of the frontline states in pursing the financial flows linked to piracy and has successfully intercepted a significant amount of illicit financial flows into its jurisdiction, and has also worked with partners to bring the perpetrators to justice.

Minister Adam also pointed out to the Global Forum that the report and the ratings do not reflect the current situation on the ground, as Seychelles has already made considerable improvements since the end of the reporting period, which was mid-2012. Nonetheless, Seychelles is already well-positioned to address all the recommendations in the report.

The Minister also briefed the forum on measures that Seychelles is adopting as part of the way forward.  The amendments to the International Business Companies (IBCs) Act to eliminate bearer shares and to strengthen the framework for the keeping of records and strengthening the sanctions for non-compliance, have been gazetted on 15th November and will be presented to the National Assembly on 26th November.

Seychelles has also requested for a supplementary review to be considered by the PRG within a limited period and have already engaged with the OECD secretariat to review the overall rating.

A number of delegations similarly raised concerns, particularly of smaller states, with regards to the manner in which the process of review is undertaken, where the framework for interaction is based on experience in sharing information which is not equal among states.  So for example, while Seychelles has cooperated in every instance with requests for information, the total number of requests processed is still seen as small in relation to the exponential growth of its financial services sector.

Seychelles has called for more support to smaller states, and also stressed the importance of capacity building based in the realities of individual states:

“We should not champion a process that requires the minimum. We must rather aim to adopt governance frameworks based on good practices and incremental improvements reflecting the capacity of individual states.”

The OECD secretariat has welcomed the initiatives taken by Seychelles and has also agreed to provide technical assistance to Seychelles to address any remaining gaps, as well as conducting a review of Seychelles’ rating within the next year.

Editor’s notes:

1) The Global Forum brings together 121 countries cooperating for tax purposes, supported by the secretariat of the Organisation for Economic Cooperation and Development (OECD).

2) At the 6th meeting of the Global Forum, 50 countries were being peer reviewed on 10 sectors, and were rated as being compliant, largely compliant, partially compliant or non-compliant.  It should be noted that this review process is separate from the OECD process of rating jurisdictions as being on the ‘black list’ or ‘the white list’.

3) At the 6th forum 4 states have been rated overall as non compliant and these are: British Virgin Islands, Luxembourg, Cyprus and Seychelles. In relation to this rating, Seychelles contested its review findings and has already requested a supplementary report to address the updates in its governance framework that have been made.