Seychelles Fiscal Reform Agenda On Track

By Editorial 02 November, 2012

The Seychelles is in good stead to achieve its medium-term debt reduction target, the International Monetary Fund (IMF) has said, welcoming the forthcoming introduction of a value-added tax regime from January 2013, as a key feature of the territory's revamped tax regime.

A visiting IMF mission reported that the government has made "sustained progress" in implementing the IMF-supported program.

The IMF stated:

"All end-June 2012 quantitative targets under the program were met - some, including the fiscal primary balance target, by a wide margin."

�The Seychelles economy has shown resilience in the face of the difficult global environment. Economic growth has held up thanks to increasing tourist arrivals from non-traditional markets; fiscal policies have remained firmly on track toward the government�s target of bringing public debt down to 50% of gross domestic product (GDP) by 2018; and debt restructuring is nearly complete."

"The broader structural reform agenda is also moving ahead, with implementation of the electronic clearing house and completion of a study on utility tariff reform. The mission welcomes adoption of the value-added tax, and notes that delayed implementation to January 1, 2013 does not materially affect the reform agenda."

According to local authorities, VAT is being introduced with the aim of "improving integration in the economy, broadening of the base, elimination of cascading, and increased efficiency and fairness."

Looking ahead, the IMF said the Seychelles' open economy remains highly vulnerable to external shocks, and stressed the importance of rebuilding the territory's fiscal buffers. To support the government's efforts, the IMF has approved a one-year extension to an IMF financial assistance program, until December 2013, and an increased quota worth an additional USD10.2m. In return, authorities in the Seychelles have committed to a number of economic policies and reforms to lock in the fiscal gains achieved to date.

The introduction of a VAT regime comes following several years of fiscal reform. Local authorities have reduced the personal income tax rate from 18.75% to 15%, effective October 1, 2010, and on January 1, 2011, the personal income tax rate for expatriates was hiked by 10%, introducing one harmonized rate of personal income tax for all employees in all sectors.

Tags: Expatriates | Tax | Economics | Fiscal Policy | Gross Domestic Product (GDP) | Employees | International Monetary Fund (IMF) | Offshore | Seychelles |


News Archive