How Seychelles Became an Offshore Hub
The Seychelles offshore industry was born in 1994. Parliament adopted a package of laws—the International Business Companies Act and the Seychelles International Business Authority (SIBA) Act—creating both the IBC structure itself and the body that regulated and simultaneously promoted it. The bet was on simplicity and price: a company in a couple of days, no tax, no public reporting. On this basis, Seychelles, together with BVI and Belize, grew into one of the most massive factories of cheap offshore companies.
In 2014, SIBA gave way to the Financial Services Authority (FSA): from an industry promoter, the regulator became a supervisory body with an emphasis on licensing and compliance. Two years later, the 1994 law was replaced by the International Business Companies Act 2016—a modern corporate code. By that time, the global agenda had already shifted: the OECD with its BEPS project and the European Union with its list of jurisdictions stopped tolerating companies that pay nowhere. The subsequent history of the Seychelles IBC is a consistent adjustment of the local regime to these requirements, and the overall logic is clearly visible against the backdrop of the history of tax havens.
Concept
The Seychelles International Business Company (IBC) is a basic offshore vehicle: a cheap and fast-to-register company used as a holding, holder of assets and shares, for international trade and ownership of intellectual property. For thirty years, its attractiveness rested on complete tax exemption and owner confidentiality. The 2018–2021 reforms preserved the company form itself but switched it to territorial taxation and subjected it to real presence requirements—more on this below.
IBC Act 2016
Companies are created under the International Business Companies Act 2016 through a licensed registered agent—direct registration in the registry is not possible, and it is the agent who remains the company's point of contact with the state. Registration takes a matter of days. No minimum capital is required, shares without par value are permitted, and redomiciliation to another jurisdiction and back is provided for. Information about directors and shareholders is not filed in the public registry; beneficial owner data, however, is stored with the agent and in a closed state database accessible to competent authorities. The combination of corporate flexibility and low cost made the Seychelles IBC a mass product.
Territorial Tax
Before the reform, the Seychelles IBC was completely exempt from tax—that was its main product. Under pressure from the OECD (BEPS project) and the European Union, the islands adopted the Business Tax (Amendment) Act 2018 and switched to the territorial principle from January 1, 2019. Income from Seychelles sources is taxed; income from sources outside the islands is not taxed. For a typical IBC that conducts all its activities externally and does not derive income in Seychelles, the effective rate on foreign income remained zero. Legally, the company transformed from a tax-free entity into an ordinary resident with a territorial base, although the practical result for external business changed little.
Economic Substance
The territorial principle alone was not enough for the European Union: exemption of passive foreign income without real activity was classified as harmful tax practice. The response was the Business Tax (Amendment) Act, which came into force on September 15, 2021. Now the exemption of foreign passive income—dividends, interest, rent, royalties, capital gains—is tied to economic presence. Pure holding companies need "light" economic substance: an office, an agent, basic reporting. Others need full-fledged presence—making key decisions, managing risks, and expenses commensurate with income (CIGA).
Beneficial Owners and Automatic Exchange
Parallel to taxes, Seychelles closed the opacity issue. Since August 28, 2020, the Beneficial Ownership Act 2020 has been in effect: each company maintains a beneficial owner register at its agent's location, and the information flows into a centralized encrypted database maintained by the Seychelles Financial Intelligence Unit (FIU). The database is closed but accessible to regulators and law enforcement; the agent must submit beneficial owner data within 14 days. In addition, Seychelles participates in automatic exchange of financial information—CRS under the OECD Global Forum and FATCA with the US. The owner anonymity for which offshores were chosen in the 2000s ceased to work in Seychelles: the data is available both to the state and to the tax authorities of the country of residence.
Regulation: EU and OECD Lists
Seychelles' relationship with the European Union involves two entries on the EU blacklist. The first happened because of taxes: in 2020, the islands were placed in Annex I as a jurisdiction with a harmful foreign income exemption regime that had not completed promised reforms by the deadline. The 2021 reform with the substance requirement removed the complaint, and on October 5, 2021, Seychelles was removed from the blacklist.
The second entry was about transparency. In October 2023, Seychelles was again placed in Annex I—this time because the OECD Global Forum downgraded the country's rating on exchange of information on request to "partially compliant." In February 2024, they were moved from the blacklist to the "grey" list (Annex II), and on February 17, 2026, they were removed from there as well. Seychelles is now off the EU lists, but the history itself shows: the jurisdiction's status is now reviewed regularly, and it depends on how the country passes periodic reviews.
Reputation and Banking
The most difficult thing about a Seychelles structure is opening and maintaining a bank account. After the wave of de-risking, international banks massively curtailed work with clients from classic offshore jurisdictions: a Seychelles IBC account in a decent bank opens slowly, expensively, and sometimes not at all. Correspondent relationships are narrowing, compliance is increasingly insistent about real activity and beneficial owners. In practice, companies move to specialized second-tier banks and neobanks, which adds costs and operational risks. The reputational trail of an offshore works against the owner even with a completely legal structure.
Application
A Seychelles IBC is chosen where price and speed matter: holding assets and shares, owning intellectual property, simple trading operations, an intermediate company in a group. It works neatly as a top or intermediate holding and as a holder of a separate asset in combination with a trust or foundation. When easy access to banks and reputation with counterparties and investors are critical, BVI is more often chosen, and for trade within the EU—European companies with real substance. Seychelles remains a budget solution for tasks where banking limitations are tolerable.
Evolution and Conclusion
The Seychelles IBC has traveled from a "zero tax and anonymity" instrument to a company with territorial zero on foreign income, a requirement for real presence for passive income, and mandatory disclosure of beneficial owners to the state. Each step was a forced response to pressure from the OECD and EU, but together they changed the meaning of the product. Today, an IBC is a legitimate low-cost vehicle for holding and trading; it has lost its role as an instrument of tax invisibility.
Complete removal from EU lists in 2026 restored reputational normalcy to the jurisdiction, but the era of "register and forget" is over. A Seychelles company requires maintaining substance where applicable, careful reporting on beneficial owners, and sober expectations regarding banks. With this approach, it remains one of the cheapest entries into an international corporate structure; with carelessness—it turns into a source of problems with banks and tax authorities.
Q/A
Is all foreign income of a Seychelles IBC always taxed at 0%?
No. Seychelles retains a territorial system, but from 16 September 2021 covered companies have been subject to revised foreign-income rules, including an economic-substance test for passive income received from a non-resident. The source and type of income, the company’s status and the conditions met must be tested; incorporation alone does not guarantee a nil result.
Does every Seychelles IBC need the same full economic substance?
No. The requirements depend on the activity, the category of foreign income and whether the entity is a covered company. A pure holding company and an operating or intellectual-property business do not undergo an identical test. People, decision-making, expenditure and records should be scoped under the current Business Tax Act, not a generic offshore label.
Can an owner incorporate an IBC directly without a licensed local agent?
No. The FSA directs applicants to a licensed International Corporate Service Provider, which registers the company and maintains its Seychelles registered office and records. A direct filing by the beneficial owner does not replace the agent. The provider’s licence and its actual performance of the statutory duties should be verified.
Is the beneficial owner of a Seychelles IBC unknown to the authorities?
No. The Beneficial Ownership Act requires a beneficial-owner register, and the resident agent submits the information to the FIU’s secure central database. The database is not a public shareholder register, but authorised bodies can access it and changes must be reported. A nominee shareholder does not remove the duty to identify the natural person who owns or controls the company.
Does IBC incorporation licence a regulated business or guarantee a bank account?
No. The FSA registers IBCs but expressly warns that an ordinary IBC is not licensed or supervised as a regulated service provider unless it obtains the relevant authorisation. Banks conduct their own KYC and risk assessment. A certificate of incorporation neither replaces a sector licence nor obliges a bank to open or retain an account.