Transfer Pricing in Seychelles

The legal framework

Seychelles' published international picture lags its law badly. The OECD transfer pricing country profile still carries a December 2021 date and describes a regime with no prescribed methods, no documentation rules, no transfer pricing return and no transfer pricing penalties. Almost every one of those answers is now wrong.

The operative rule is section 54 of the Business Tax Act 2009, but not the section the profile quotes. Section 3 of the Business Tax (Amendment) Act 2022 repealed the old two-subsection provision outright and replaced it with thirty-one subsections. The rewritten section is drafted as a prohibition rather than a power: a person must not obtain a transfer pricing benefit from actual conditions differing from arm's length conditions, nor enter into commercial or financial relations giving itself or another person such a benefit. A benefit arises where arm's length conditions would have produced greater taxable income, a smaller loss, smaller tax concessions or more withholding tax on interest or royalties (section 54(4)-(5)); where one is obtained, the Commissioner General may substitute arm's length conditions (section 54(9)).

The detail sits in the Business Tax (Transfer Pricing) Regulations 2025 (S.I. 21 of 2025), made on 29 April 2025 but deemed in operation from 1 January 2023 — published two filing seasons after the years they govern. Scope is wide: section 54(1) catches arrangements between associates, between different businesses of the same person, and between a person and its own permanent establishment, and regulation 4 reaches purely domestic dealings where the parties face different business tax rates. Section 54(23) gives the OECD Transfer Pricing Guidelines direct statutory force on an ambulatory basis; section 54(24) anchors permanent establishment attribution to Article 7 and its Commentary as they read before 21 November 2017.

Methods, comparables and benchmarking

Regulation 14(2) of S.I. 21 of 2025 approves six methods: CUP, resale price, cost plus, TNMM, contribution profit split and residual profit split. An alternative is permitted only in exceptional circumstances and only if it is more reliable than any of the six.

Crucially, Seychelles does not run a pure most-appropriate-method test. Regulation 15 overlays a hierarchy. If the functional analysis shows a reliable CUP is available, CUP shall be used. Failing that, cost plus, resale price or TNMM shall be used where available. Only if none of those is appropriate may either profit split apply. A study that arrives at TNMM without reasoning through the availability of an internal CUP is exposed on its face.

The range rules are equally prescriptive. Under regulation 18 the full range is the arm's length range only where every uncontrolled transaction is equally comparable and the highest point is no more than 50 per cent above the lowest; otherwise a statistical approach is mandatory and the interquartile range governs. A result inside the range is not adjusted; a result outside is reset to the median, subject to a one-way proviso that no adjustment may reduce taxable income, reduce withholding tax remitted in Seychelles or increase a loss. Comparables must come from the tested party's own region first, wider markets only where no reliable regional set exists — which points to African and emerging-market screens rather than pan-European defaults. Secret comparables are barred by regulation 19(2). Regulations 7, 8, 11 and 12 add non-recognition, debt-to-equity recharacterisation, control-of-risk reallocation, and a DEMPE rule under which a legal owner performing no relevant functions receives no share of intangible income.

Documentation: what the Seychelles Revenue Commission expects

Documentation became mandatory on 1 January 2024 under the Business Tax (Transfer Pricing Documentation) Regulations 2023 (S.I. 73 of 2023), and the trigger is low. Any person with a controlled arrangement under section 54(1) whose annual turnover exceeds SR 1,000,000 must prepare documentation verifying arm's length consistency for the year, with no transaction-value de minimis. The content required is a full local file in substance: business and market overview, group structure with shareholding percentages, the role, job title and location of key decision makers, supply chain, intra-group services and cost allocation policies, a functional analysis of value creation, key Seychelles competitors, financial accounts, and the author's name and approval date.

Two escalations sit above that. Where controlled arrangements exceed 10 per cent of turnover or SR 50,000,000, the Schedule adds intercompany agreements, a party-by-party functional analysis, a full comparability analysis including search process and adjustments, tested party selection and reasons, rejected methods, and disclosure of APAs held elsewhere. Separately, a member of a group with consolidated turnover above EUR 100 million must prepare an OECD-form master file — far below the EUR 750 million country-by-country level set by regulation 3 of S.I. 25 of 2019, where the report itself is due within twelve months of the tax year end and the notification by the last day of the reporting tax year.

Production is on request within 21 days (regulation 3(3)). Public Ruling 2015-3 still says five days and has never been withdrawn, so plan for the shorter period on anything requested outside regulation 3. Documentation should exist by the return filing date, be kept seven years, and may be in English, French or Creole. Separately, the Related Party Dealings Schedule (S.I. 74 of 2023, carried into the Schedule 3 return by S.I. 108 of 2024) is filed with the annual return by 31 March; the first year was 2024, filed in March 2025. It captures the ultimate controlling entity, every associate transacted with, flows by counterparty, loan balances and interest, guarantees and directors' shareholdings — a ready-made risk-assessment dataset.

Audits, penalties and the enforcement climate

Seychelles has built a penalty regime that bites on process, not only on price. Failure without reasonable cause to furnish documentation within the 21 days attracts additional tax of SR 75,000 plus SR 2,500 for every week or part week it continues, uncapped. Failure to furnish the Related Party Dealings Schedule attracts SR 5,000 under limb (a) of regulation 5(1) and, under limb (b), a further SR 75,000 plus SR 2,500 for each week or part week — drafted conjunctively, so SR 80,000 up front plus the weekly escalation on a literal reading, with regulation 5(2) disapplying the ordinary late-return additional tax in section 42 of the Revenue Administration Act. Knowingly failing to keep records draws floors of SR 10,000, SR 50,000 or SR 100,000 by business size.

The provision that should concentrate minds is the false or misleading information penalty: additional tax of 5 per cent of annual turnover. It is measured on turnover, not profit or shortfall, so for a low-margin distributor or trader it can dwarf the tax in dispute. Lodging a schedule nobody has reconciled is riskier than it looks.

On an adjustment the Revenue Administration Act machinery applies: 10 per cent additional tax on unpaid revenue, simple interest at the Central Bank of Seychelles quarterly average prime lending rate plus three points, and culpability loading of 25 per cent for lack of reasonable care, 50 per cent for recklessness and 75 per cent for intentional disregard, with a further 20 per cent for repeat behaviour. SRC's stated position is that ignoring a published transfer pricing ruling is itself reckless, so 50 per cent is the realistic starting point in a contested case. Section 54(27) extends the amendment window to seven years for arm's length adjustments, against the general four.

Dispute resolution and advance certainty

There is no advance pricing agreement programme in Seychelles — no unilateral, bilateral or multilateral procedure, no application route, no fee schedule, no rollback. Nothing prevents the Commissioner General agreeing one, and the documentation Schedule requires disclosure of APAs held elsewhere, but prospective certainty on a Seychelles margin is unavailable.

What exists instead is the ruling power in Part XI of the Revenue Administration Act 2009 — section 58 for public rulings, section 62 for private rulings — together with SRC's advisory function. Public Ruling 2015-3 is a section 58 public ruling, and it needs care: it quotes a version of section 54 that no longer exists, lists five methods in preferential order where the regulations name six, and states a five-day production period the regulations have overtaken. It is a live instrument built on repealed law.

Domestically, a taxpayer objects under Part IV of the Revenue Administration Act and then appeals to the Revenue Tribunal. No Seychelles transfer pricing judgment could be located, and tribunal decisions are not published, so the absence of reported authority proves little. Treaty relief runs through the 29 double tax agreements SRC lists as in force, alongside 11 tax information exchange agreements, but Seychelles' OECD dispute resolution profile records no MAP experience, no cases appear in the OECD statistics and no MAP guidance has been published. Relief is therefore largely domestic: a mandatory corresponding adjustment where SRC adjusts one side of a Seychelles-to-Seychelles arrangement on audit, a discretionary one where the taxpayer self-adjusts, and the disadvantaged person determination in section 54(25)-(26). There are no secondary adjustments.

Pillar Two, Amount B and what changes in 2026

Seychelles has not enacted the GloBE rules. No income inclusion rule, no UTPR and no qualified domestic minimum top-up tax appears in Seychelles law as at August 2026. The official traces are Cabinet approval in September 2024 to sign the multilateral instrument implementing the Pillar Two subject to tax rule, and ATAF GloBE training for SRC officers in May 2026. Groups with Seychelles entities should model STTR exposure on outbound interest, royalties and service fees now, since that route bites without any domestic top-up tax. No Seychelles position on Amount B could be identified, and the regulation 15 hierarchy would not accommodate a fixed-return distribution matrix without amendment.

The enforcement signals for 2026 are far clearer. In May 2026 ATAF ran an intensive programme for more than thirty SRC officers and sector stakeholders on transfer pricing methods, risk assessment for audit case selection, and testing positions against audit strategy. On 1 June 2026 SRC launched a Voluntary Disclosure Programme offering waiver of penalties though not interest, a payment plan and no prosecution, reaching back four years and closed to anyone already under audit. Alongside it runs a multinational enterprise and country-by-country reporting questionnaire, submission by 5 June 2026 preserving eligibility to apply by 31 July 2026. Read together: a jurisdiction mapping its MNE population, training its auditors and inviting correction before it starts selecting cases.

How practitioners should respond

First, re-paper the years already in scope. The rewritten section 54 has applied since tax year 2023, the 2025 regulations are retrospective to the same date, and documentation has been mandatory since 1 January 2024, so a group that filed Seychelles returns for 2023 to 2025 without a study is exposed across three open years inside a seven-year assessment window.

Second, test the file against the Seychelles rules rather than the group template: confirm the method reasoning walks the regulation 15 hierarchy, check the comparable set is regional-first, apply the regulation 18 range test including the 50 per cent spread condition, and match intangible and risk positions to actual DEMPE conduct rather than contractual allocation.

Third, treat the Related Party Dealings Schedule as a penalty-bearing disclosure, not form-filling. It should reconcile to the statutory accounts and to the documentation before lodgement, given the 5 per cent of turnover exposure on misleading information and the SR 80,000 conjunctive fixed penalty for failing to furnish it.

Fourth, build a 21-day production pack — documentation, intercompany agreements, benchmarking workpapers, reconciliations — handed over intact and retained seven years.

Finally, use the 2026 window. For groups with historic exposure and no open audit, the Voluntary Disclosure Programme alongside the MNE questionnaire is the cheapest correction available, and it will not stay open indefinitely. Verify every position against current SRC material before filing: this area of Seychelles law has changed four times in four years.