Seychelles: Overview

RENTAL YIELDS

Last Updated: Jan 10, 2007

Yields are low to moderate in the Seychelles

Built-up property prices are surprisingly low at around US$1,000 – US$1,200 per sq. m.

But the rents which properties will produce are also low. A 150 sq. m. property costing US$180,000 might typically rent for around US$700 per month. This is equivalent to a yield of 4.7%. Larger properties produce lower yields, as is typical in most places.

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TAXES AND COSTS

Last Updated: May 15, 2009

The Seychelles' rental income tax is high

Rental Income: Rental income is considered as business income and is taxed at progressive rates, from 0% to 40%. Income-generating expenses are deductible when computing for taxable income.

Capital Gains: There is no capital gains tax.

Inheritance: There is no inheritance tax in Senegal.

Residents: Only locally-sourced income is taxed in Senegal. Business income is taxed at progressive rates, from 0% to 40%.

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BUYING GUIDE

Last Updated: Aug 04, 2006

Transaction costs are moderate to very high in the Seychelles

Round-trip transaction costs, i.e., the total cost of buying and selling a property, are around 15% to 42%, the biggest cost being the Government Sanction for foreign buyers, at 10% to 30%. All costs are paid by the buyer.

Stamp Duty is 4% of the first SCR50,000 (US$8,844) of the purchase price, and 10% on the remaining balance.

Buyers should note that there are unresolved issues relating to government land confiscations in the 1970s and 1980s. The owners were never compensated, and if the East European and Ugandan cases are followed, this could become an issue in future.

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LANDLORD AND TENANT

Tenancy laws

Research in this field is on-going.

ECONOMIC GROWTH

Last Updated: Sep 12, 2006

Tattered economy is deteriorating further

Seychelles per capita income is around US$8,090, buoyed by tourism and the islands’ offshore tax haven status, but this number reflects the artificially high exchange rate.

Seychelles growth has been very low over the past decade, despite its many advantages. Over the past ten years per capita GDP has actually declined by around 5%. Tourism, which employs 30% of the labor force and accounts for more than 70% of export earnings, has only seen around a 10% growth in visitor nights since 1993.

The Seychelles problems are due to state control of the economy, an overvalued currency, high regulatory and tax costs, and the difficulty of repatriating profits.

From 1993 on there were persistent foreign currency shortages, reflecting the current account deficit and the currency peg (effectively to the US$). Increasingly strict controls have been introduced, which obstruct businesses, and prevent profit repatriation.

The Seychelles is, per capita, the most highly indebted country in the world, with total public debt at around 122.8% of GDP. If a currency crisis were to occur, the impact on the government’s accounts would be potentially catastrophic, because of high debt levels. Yet without devaluation, the needed tourism growth is unlikely.

Politics is dominated by France Albert René and the Seychelles People's United Party (SPUP), which seized power in 1987 in a coup against the popularly-elected pro-business party.

The results of socialist-style policies included high levels of government expenditures, an array of state trade and monopolies, and an abundance of concessions and exemptions.

Press freedom is severely restricted, and the government’s tentacles spread everywhere.

On the positive side, the government successfully made the Seychelles a tax haven through well-drafted legislation (see lowtaxnet.com). In addition, the government created a successful International Trade Zone, making the Seychelles an Indian Ocean trading entrepot (Mahe has the deepest port in the Indian ocean).

Opposition parties were legalized in 1991, but René won the elections held in 1992.

Parliamentary elections in 2002 saw another victory for René's party, but there was a mood of change in the air, and the opposition Seychelles National Party increased its representation from one to 11 seats. In 2003 the Government introduced a Macroeconomic Reform Programme (MERP), slashing Government spending, increasing taxes, and restoring a budget surplus.

The René era finally came to an end in April 2004, when the president resigned and was succeeded by former vice-president James Michel (who is nevertheless a member of Rene’s party and a close associate). The Government is now said to be moving more rapidly toward reform.