- Basic data
- Public finances and the state budget
- Banking system
- Tax System
Due to the shortfall in income from tourism, Seychelles’ GDP fell by 13.8% in 2020. In 2021, the GDP grew by 6.8%, which was due, among other things, to the rapid vaccination of the entire population and campaigns for the return of tourists. In 2021, the government launched several large infrastructure projects that will help economic recovery. The end of the moratorium on the construction of large hotels at the end of 2020 should attract foreign investors. Inflation is expected to reach 10% in 2021 due to global food and oil price increases, well ahead of forecasts of 4.5%.
According to cheeroutdoor.com, the main engine of the Seychelles economy is services, which account for more than 85% of GDP. Tourism contributes more than 30% to GDP and employs over 25% of the working-age population. The fishing industry contributes 20% of GDP, employs 17% of people and accounts for 96% of all Seychelles exports. 68% of fish exports go to Europe. Seychelles is dependent on imports for almost all raw materials, goods and specialized services. Their susceptibility to external shocks is enormous. The main items of import include petroleum products, machinery and industrial goods.
|GDP growth (%)||5.3||-13.8||6.8||4.6||5.2|
|Export of goods (billion USD)||0.2||0.2||0.2||0.2||0.2|
|Import of goods (billion USD)||0.9||0.7||0.8||0.9||0.9|
|Trade Balance (Billion USD)||-0.6||-0.4||-0.5||-0.6||-0.6|
|Industrial production (% change)||ON||ON||ON||ON||ON|
|OECD export risk||ON||ON||ON||ON||ON|
Source: EIU, OECD, IMD
Public finance and state budget
|State budget balance (% of GDP)||-5.5|
|Public debt (% of GDP)||87.1|
|Current account balance (billion USD)||-0.3|
|F.O||0-30% depending on the amount of income|
Government spending climbed to an all-time high in 2020 in the wake of the global pandemic and election campaign. The Seychelles government continued a similar trend in 2021, driven by investments in healthcare and infrastructure projects along with higher import spending due to a devaluing currency. However, the end of some government welfare programs should make spending sustainable. Government revenues have been hit hard by the pandemic. The campaign against tax evasion and the simplification of the tax system should bring more funds to the state budget in the next period.
Due to the pandemic, the balance of the Seychelles state budget has increased significantly. While in 2019 the budget was even in surplus (0.9% of GDP), in 2020 the balance climbed to -16.2% of GDP. In 2021, Seychelles managed to reduce this balance to the level of 5.5% of GDP. The deficit is mainly financed by loans from the central bank with a zero interest rate and budget support from multilateral institutions.
The current account deficit also recorded a similar development as the state budget balance. In 2019 it was -15.9% of GDP, in 2020 it jumped dramatically to -29.4% of GDP. In 2021, it fell to -25.3% of GDP, and the downward trend should continue in the next period, so that in 2023 it should return to figures similar to the pre-pandemic ones. Seychelles’ public debt expressed as a percentage of GDP is the 7th highest in sub-Saharan Africa, reaching 87.1% of GDP in 2021.
The Seychelles banking system consists of the Central Bank of Seychelles and traditional commercial and offshore banks. Both local and foreign banking institutions operate on the islands. For example, the following foreign banks operate in Seychelles – Barclays Banking Group, Bank of Baroda, Mauritius Commercial Bank, Habib Bank. Main representatives of local banks include Seychelles Savings Bank or Seychelles International Mercantile Banking Corporation.
The amount of taxes for natural persons differs for residents and non-residents. For resident individuals with an income of up to SCR 8,555.50, the rate is 0%, the lowest rate is at 15% of income and for the highest category, earning more than SCR 83,001, the rate is 30%. For non-residents, incomes up to SCR 10,000 are taxed at a rate of 15%, incomes above SCR 10,000 at a rate of 20% and those above SCR 83,001 as for residents at a rate of 30%.
VAT is applied to most goods at a rate of 15%.
Trade Tax covers three areas:
- imports – applies to all imported goods, the rate is in the range of 0-200% of the value of the goods; but on average 25%; does not apply to re-exports
- services – are paid monthly and the amount depends on the turnover of the provider
- domestic production – refers to alcohol, beverages and tobacco
Social insurance: the employer pays for each worker, the rate ranges from 10-40% of the paid salary, depending on its amount
Business Tax: it is determined on the basis of net profit or taxable income, depending on its amount it ranges from 0-40%, it is also governed by the Business Tax Act
Withholding Tax: applies to income from securities, interest, royalties and royalties, also governed by the Business Tax Act