Recent Amendments to Seychelles’ Transfer Pricing Regulations

In Seychelles, modifications to the Transfer Pricing (“TP”) regulations have been implemented through the enactment of Act 31 within the Business Tax (Amendment) Act, 2022, effective since January 2023. The Seychelles Revenue Commission (“SRC”) conducted a TP Awareness Session to elucidate these changes.

Key Highlights of the Updated TP Laws:

Application: The regulations pertain to agreements among associates, diverse entities within a single entity, dealings between businesses and other activities of an entity, or an entity and its permanent establishment.
Arm’s Length Principle: TP benefits obtained from conditions differing from arm’s length standards are not permissible.
Adjustments: Non-arm’s length deals can be substituted with arm’s length terms, adjusting taxable income or loss accordingly.
Incorporation of OECD Standards: The regulations align with the OECD TP Guidelines and Model Tax Convention on Income and Capital.

Reporting and Documentation Specifications:

Mandatory Reporting: From 2024, mandatory reporting entails submitting a Related Party Dealings schedule with the business tax return.
Non-Compliance Penalties: Penalties apply for failure to submit the Related Party Dealings schedule.
Documentation Requirements: TP documentation is mandatory for companies with turnovers exceeding SCR 1 million.
Additional Documentation: Companies with controlled arrangements exceeding 10% of turnover or SCR 50 million must provide an added layer of documentation.
Retention Period: Maintaining documentation for 7 years is compulsory.
Non-Compliance Penalties: Penalties are applicable for inadequate TP documentation.

Certificate of Incumbency: Purpose, Contents, and Importance

In the modern business world, where interactions between companies and organizations span on a global level, compliance with legal norms and ensuring transparency plays a crucial role. In this context, the Certificate of Incumbency holds significance as an official document that helps determine the authority and status of individuals holding executive positions within an organization.

The Certificate of Incumbency is an official certification issued by companies, which identifies current directors, shareholders, or members of an organization and confirms their authority. This document is actively used in international transactions, banking operations, and interactions with government bodies and third-party stakeholders.

The content of the Certificate of Incumbency contains significant information about the company. It includes comprehensive details about the organization, such as its full name, registration information, and address. Additionally, the document provides a list of current executives, shareholders, or members, along with their roles and authorities. Depending on the country where the document is issued, additional documents such as articles of incorporation or appointment records may be attached to the Certificate of Incumbency to validate the provided information.

It is important to emphasize that the Certificate of Incumbency holds great value in the field of corporate law. It serves as evidence of the legality and legitimacy of individuals managing the company and helps validate their authority to third parties. This document not only contributes to establishing trust and transparency in business partnerships but also plays a crucial role in banking operations and interactions with government bodies.

The Certificate of Incumbency is an official document issued by companies to identify current directors, shareholders, or members of an organization and confirm their authority. This document is widely used in international transactions, banking operations, and interactions with government bodies and third parties.

To obtain a Certificate of Incumbency, the following conditions are typically required:

Company identification details: The document must include the full name of the company, its registration information, and legal address. These details are necessary for unambiguous identification of the organization.
List of current executives: The Certificate of Incumbency should include a list of individuals holding executive positions within the company. This may include directors, founders, shareholders, or members, depending on the type of organization. Each person should be identified with their full names and positions.
Roles and authorities: The document should also provide information about the roles and authorities of each executive, indicating the functions they perform within the organization. This helps establish their legal status and power.
Attachments: In some cases, additional documents may be attached to the Certificate of Incumbency to substantiate information about the company and its executives. These may include articles of incorporation, appointment records, or other relevant documents required to validate the provided information.

Ensuring the accuracy and currency of information in the Certificate of Incumbency is crucial as it is used to establish the legitimacy and authority of company executives to third parties. Therefore, regular updates to the certificate may be required in the event of changes in the company’s management or structure.

Which organizations often require the provision of a founder’s certificate:

Banks and financial institutions: Banks often require the provision of a founder’s certificate when opening a corporate account or conducting other financial transactions. This helps banks establish the authority and legitimacy of individuals acting on behalf of the company.
International companies and business partners: When establishing business relationships with international companies, especially in the context of joint ventures or equity investments, the provision of a founder’s certificate is required to confirm the authority of the management and the legitimacy of the organization.
Government bodies and regulators: When interacting with government bodies such as tax authorities, registration agencies, or other regulators, a company may be required to provide a founder’s certificate to confirm its legal status and authority.
Lawyers and legal professionals: During legal consultations, transactions, or court proceedings, lawyers often require the provision of a founder’s certificate to confirm the authority of the company’s management and its participants.
Investors and shareholders: Potential investors and shareholders may request a founder’s certificate to assess the authority and role of the current management of the company before making investments or purchasing shares.

These are just a few examples of organizations and parties that may request the provision of a founder’s certificate. In each specific case, requirements may vary depending on the jurisdiction, industry, and specific circumstances.

Here are some key aspects reflecting its significance:

Confirmation of authority: The founder’s certificate serves as documentary evidence of the authority of the company’s directors and founders. It indicates the names and positions of individuals authorized to make decisions on behalf of the organization, contributing to the establishment of their legitimacy and authority.
Trust and transparency: Providing a founder’s certificate during business interactions helps establish trust and transparency between companies, banks, investors, and other parties. It demonstrates that the company operates in accordance with the law and has the authority to interact with other entities.
Protection of rights and interests: The founder’s certificate protects the rights and interests of both the company itself and its directors and founders. It serves as evidence of their authority and can be used in the event of disputes, legal proceedings, or other legal situations.
International operations: In the context of international operations and transactions, the founder’s certificate plays a special role. It allows foreign companies, banks, and government bodies to establish the authority and powers of the company’s management and founders, facilitating the establishment of business relationships and ensuring legal validity.
Banking operations: Banks require the provision of a founder’s certificate when opening corporate accounts and conducting other financial transactions. This helps banks establish the legality and legitimacy of operations and ensures the security of financial transactions.

In conclusion:

The founder’s certificate is an important document that plays a significant role in the field of business and corporate law. It confirms the authority of the company’s directors and founders, ensuring trust, transparency, and legal validity in business relationships. This document is required by various organizations, including banks, investors, and government bodies, to establish the legitimacy and authority of the company in its interactions with other entities.

The founder’s certificate holds particular significance in international operations, where it serves as evidence of the company’s authority and powers to foreign partners and government bodies. It is also important in banking operations, where it confirms the legality and legitimacy of financial transactions.

It is important to emphasize that the accuracy and timeliness of the information in the founder’s certificate are integral aspects of its significance. Regular updating of the document may be required in case of changes in the management or structure of the company to ensure its relevance and accuracy.

Overall, the founder’s certificate is an integral part of the business world, contributing to the establishment of authority, transparency, and trust in the business environment. Its usage promotes legal stability and protects the interests of the company, its directors, and founders in interactions with other entities and parties.

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Crypto Asset Licensing in the UK: Navigating the Regulatory Landscape

Cryptocurrencies and the underlying blockchain technology have revolutionized the financial landscape, offering decentralized and borderless transactions. As the adoption of crypto assets continues to grow, governments worldwide are recognizing the need to establish regulatory frameworks to ensure investor protection and maintain financial stability. In the United Kingdom, obtaining a crypto asset license has become essential for businesses operating in the crypto space. This article explores the regulatory environment surrounding crypto assets in the UK and the short process of obtaining a license.

Regulatory Framework for Crypto Assets

The Financial Conduct Authority (FCA), the regulatory body responsible for overseeing financial markets in the UK, has taken significant steps to regulate crypto assets. In January 2020, the FCA implemented the Money Laundering and Terrorist Financing (Amendment) Regulations 2019, bringing crypto assets within the scope of anti-money laundering (AML) and counter-terrorist financing regulations. The regulations require crypto asset businesses to register with the FCA and comply with stringent AML procedures. This regime is known as the FCA AML/CTF Cryptoasset Registration regime.

To be registered with the FCA, companies must meet certain requirements, including:

Having a business plan that sets out how they will comply with anti-money laundering and counter-terrorist financing (AML/CTF) regulations.
Having adequate systems and controls in place to prevent money laundering and terrorist financing.
Having a fit and proper management team.

Companies that are registered with the FCA are subject to ongoing supervision by the FCA. This means that the FCA will regularly review the company’s compliance with AML/CTF regulations and other financial regulations.

The FCA crypto license is a requirement for any company that wants to provide cryptoasset services in the UK. The license is designed to protect consumers and to ensure that the UK financial system is not used for money laundering or terrorist financing.

Which activity should be licensed

The FCA crypto license is required for any company that wants to provide cryptoasset services in the UK. Cryptoasset services include:

Issuing and managing cryptoassets
Providing exchange services for cryptoassets
Providing custodian services for cryptoassets
Providing lending or other financial services that are linked to cryptoassets

Companies that provide cryptoasset services without an FCA crypto license are breaking the law and could face enforcement action from the FCA.

Here are some examples of companies that need an FCA crypto license:

Crypto exchanges
Crypto lending platforms
Crypto wallets
Crypto mining companies
Crypto investment funds

Here are some of the benefits of having an FCA crypto license:

Increased consumer protection: The FCA is a government-backed regulator that is responsible for protecting consumers in the UK financial markets. By having an FCA crypto license, you demonstrate to your customers that you are committed to protecting their interests.
Enhanced reputation: Having an FCA crypto license can help to enhance your company’s reputation and credibility. This can be important for attracting new customers and investors.
Reduced risk of regulatory scrutiny: By having an FCA crypto license, you reduce the risk of your company being subject to regulatory scrutiny. This can save you time and money, and it can also help to avoid reputational damage.
Increased access to financial services: Having an FCA crypto license can help you to access financial services that would not otherwise be available to you. This can include things like banking, insurance, and investment services.

If you are considering providing cryptoasset services in the UK, you should carefully consider whether you need to apply for an FCA crypto license. You should also be aware of the requirements and conditions that apply to FCA-licensed cryptoasset businesses.

How to Get an FCA Crypto License

The process for getting an FCA crypto license is as follows:

Complete an application form.
Provide the FCA with the required information and documentation.
Pay the application fee.
Attend an interview with the FCA.

The FCA will review your application and decide whether to grant you a license. The FCA will consider a number of factors in its decision, including:

The quality of your business plan.
The adequacy of your systems and controls.
The suitability of your management team.

The FCA will also consider the risks associated with your business. For example, if your business is involved in trading high-risk cryptoassets, the FCA may be more likely to require you to take additional steps to mitigate these risks.

If the FCA grants you a license, you will be required to comply with a number of conditions. These conditions may include:

Keeping records of all transactions.
Reporting suspicious activity to the FCA.
Taking steps to prevent money laundering and terrorist financing.

Conclusion

As the crypto asset industry continues to evolve, regulatory frameworks become imperative to ensure investor protection and maintain financial stability. In the UK, obtaining a crypto asset license from the FCA is a crucial step for businesses operating in this sector. By complying with the necessary regulations, businesses can foster trust, access banking services, and position themselves for long-term success in the rapidly growing crypto asset market.

International tax optimization

International tax optimization is a strategy and practice aimed at minimizing tax liabilities for international companies through the use of various legal and financial instruments. It is based on the analysis and application of the tax regulations and policies of various countries in order to reduce the overall tax burden.

International tax optimization involves the development and implementation of tax strategies that allow companies to use tax credits, deductions, double tax treaties and other tools to reduce taxable profits and minimize tax payments.

International tax optimization plays an important role in today’s business environment and offers a number of significant benefits for companies operating internationally. By applying various tax strategies and instruments, companies can effectively reduce their overall tax burden and increase their competitiveness in the international market.

One of the key benefits of international tax optimization is the reduction of tax liabilities. Companies can use various tax strategies, such as the use of tax credits, deductions and double tax treaties, to reduce their taxable income and minimize tax payments. Tax incentives provide companies with the opportunity to take advantage of certain tax advantages provided by the state or region in which they operate. Deductions allow companies to take certain costs and expenses into account when calculating the tax base, resulting in a lower overall tax liability. Double tax treaties, in turn, help to avoid double taxation when carrying out international activities and reduce tax risks for companies.

Another important advantage of international tax optimization is the possibility of increasing the company’s profits. By reducing tax costs, companies free up additional funds that can be used to invest in business development, research and development, marketing, or other strategic initiatives. This enhances the company’s competitiveness and ability to attract new investors.

In addition, international tax optimization allows companies to manage the risks associated with taxation. Proper planning and compliance with tax requirements helps to avoid unwanted tax disputes and conflicts with the tax authorities, which can have a negative impact on the company’s reputation and financial results. It also allows companies to avoid having to pay fines and sanctions related to tax violations.

Finally, international tax optimization can help companies improve their operational efficiency. Analysis and optimization of tax processes allow companies to determine effective ways to manage tax liabilities and minimize the time and resource costs associated with taxation.

In general, international tax optimization provides companies with the opportunity to reduce tax liabilities, increase profits, manage tax risks and improve operational efficiency. However, it is important to note that when using tax strategies, companies must comply with the principles of legality and ethics, as well as take into account the requirements of the tax laws of the various countries in which they operate.

Choosing a country for company registration is an important step in international tax optimization. There are several key factors to consider when choosing a country:

Tax system: One of the main factors when choosing a country for company registration is the tax system of that country. Different countries have different tax rates, tax rules and tax incentives. Therefore, it is important to study the tax legislation of the country and determine what tax advantages and opportunities it provides for companies.
Double Tax Treaties: Check if there are double tax treaties between the selected countries. Such agreements can help avoid double taxation and simplify taxation when doing business between different countries.
Business Environment and Investment Climate: Assess the business environment and investment climate in your chosen country. Infrastructure, availability of resources, the legal system, the stability of the political and economic situation – all these factors can significantly affect the success and efficiency of a business.

If you want to study the topic “how to choose a country for company registration” in more detail, follow the link to our article or if you want to learn more about international tax planning or order a service, then contact our company’s specialists at this link.

What is a Legal Opinion and Why is it Important?

A legal opinion is a formal written statement provided by a lawyer or law firm, which expresses their professional assessment of a legal matter. Legal opinions can be used in a variety of contexts, including in litigation, commercial transactions, and regulatory compliance. They can provide critical guidance to clients, help to manage risk, and support decision-making in complex legal matters. In this article, we will explore what legal opinions are, why they are important, and how they are typically used, with a particular focus on their application in the spheres of international tax and international corporate law.

What is a Legal Opinion?

At its core, a legal opinion is a statement of legal advice. Lawyers may be asked to provide a legal opinion in a variety of situations, such as when a client needs guidance on how to comply with a particular law or regulation, or when a company is considering a significant transaction or investment. Legal opinions are typically provided in writing, and can take many different forms depending on the specific situation and the needs of the client.

In the sphere of international tax, legal opinions can be particularly important. International tax law is complex and constantly evolving, and companies operating across borders must navigate a complex web of national and international tax laws in order to ensure compliance and manage risk. Legal opinions can provide guidance on a range of issues, such as whether a particular transaction is subject to tax in a particular jurisdiction, how to structure cross-border transactions in a tax-efficient manner, and how to comply with the increasingly complex reporting requirements associated with international tax matters.

In the sphere of international corporate law, legal opinions are also a critical tool. Companies operating across borders must navigate a complex web of legal requirements, including corporate governance laws, securities regulations, and local business laws. Legal opinions can provide guidance on a range of issues, such as whether a particular transaction is compliant with local laws and regulations, how to structure cross-border investments in a legally sound manner, and how to ensure compliance with corporate governance requirements in multiple jurisdictions.

Why are Legal Opinions Important?

Legal opinions can be crucial in a wide range of legal matters. In the spheres of international tax and international corporate law, legal opinions can be particularly important for the following reasons:

Managing Risk: Legal opinions can help clients to identify and manage legal risks, by providing a clear assessment of the legal issues at play and the potential consequences of different actions. In the context of international tax and international corporate law, legal opinions can help clients to navigate complex legal requirements and minimize the risk of noncompliance or legal disputes.

Supporting Transactions: Legal opinions are often a critical component of commercial transactions, such as cross-border mergers and acquisitions, joint ventures, and financing agreements. In the context of international tax and international corporate law, legal opinions can provide assurance to parties that the transaction is legally valid and enforceable, and can help to identify potential legal hurdles that may need to be addressed before the transaction can proceed.

Ensuring Compliance: In the spheres of international tax and international corporate law, legal opinions can help to ensure that companies are complying with applicable laws and regulations. For example, a legal opinion might be used to confirm that a cross-border transaction is compliant with local tax laws in multiple jurisdictions, or that a particular corporate governance structure meets the requirements of local securities regulations.

Supporting Litigation: Legal opinions can be used to support litigation in a variety of ways, such as by providing an assessment of the legal merits of a case or by identifying potential legal defenses. In the context of international tax and international corporate law, legal opinions can help clients to navigate complex legal disputes, such as disputes over cross-border tax liabilities or allegations of corporate misconduct.

Conclusion

Legal opinions are an important tool for lawyers and clients alike, providing critical guidance on complex legal matters. In the spheres of international tax and international corporate law, legal opinions can be particularly important, helping clients to navigate complex legal requirements, manage risk, and ensure compliance with applicable laws and regulations.

If you have additional questions or for a detailed consultation and further calculation of the cost, terms and necessary documents, please contact White and Partners specialists by clicking on this link.