Seychelles operates a progressive income tax system alongside social security contributions, impacting both employers and employees. Employers play a crucial role in the tax collection process, primarily through the Pay As You Earn (PAYE) system for income tax and by remitting mandatory social security contributions for their workforce. Understanding these obligations is essential for compliant and smooth payroll operations within the country.
The tax year in Seychelles aligns with the calendar year, running from January 1st to December 31st. Employers are responsible for calculating, deducting, and remitting taxes and contributions to the Seychelles Revenue Commission (SRC) on a regular basis, typically monthly.
Employer Social Security and Payroll Tax Obligations
Employers in Seychelles are required to contribute to the Social Security Fund (SSF) on behalf of their employees. This contribution is a percentage of the employee's gross salary. The primary employer obligation is the Social Security Contribution.
For 2025, the standard employer Social Security Contribution rate is 20% of the employee's gross monthly salary. There is typically a maximum monthly salary cap for calculating this contribution, which is subject to annual review. Employers must calculate this contribution for each employee and remit the total amount along with the employee's contribution to the Social Security Fund by the specified deadline.
There are no separate payroll taxes beyond the Social Security Contribution for employers based on the total payroll value itself; the obligation is tied to individual employee salaries.
Income Tax Withholding Requirements
Employers are mandated to withhold income tax from their employees' salaries under the Pay As You Earn (PAYE) system. The amount of tax withheld depends on the employee's taxable income, which is calculated after accounting for any applicable deductions and allowances. Seychelles has a progressive income tax rate structure.
For 2025, the income tax rates are expected to follow the current structure:
| Monthly Taxable Income (SCR) | Tax Rate (%) |
|---|---|
| 0 - 8,333 | 0 |
| 8,334 - 16,667 | 15 |
| Above 16,667 | 25 |
Employers must calculate the monthly taxable income for each employee, apply the relevant tax rates, and deduct the resulting income tax amount from the employee's gross salary. This withheld tax must then be remitted to the Seychelles Revenue Commission (SRC) monthly.
Employee Tax Deductions and Allowances
Employees in Seychelles are entitled to certain deductions and allowances that reduce their taxable income. The most significant is the personal allowance.
For 2025, the standard monthly personal allowance is SCR 8,333. This means the first SCR 8,333 of an employee's monthly income is not subject to income tax.
Other potential deductions or allowances may exist for specific circumstances, such as contributions to approved pension schemes or certain types of insurance premiums, though the personal allowance is the primary factor in reducing taxable income for most employees. Employers need to be aware of how these allowances impact the calculation of taxable income for PAYE purposes.
Tax Compliance and Reporting Deadlines
Employers must adhere to strict deadlines for reporting and remitting both Social Security Contributions and PAYE income tax.
Monthly obligations:
- Social Security Contributions: Due by the 15th of the following month.
- PAYE Income Tax: Due by the 15th of the following month.
Employers are required to file monthly returns detailing the contributions and taxes withheld for each employee. Annual reporting is also mandatory, typically involving the submission of annual PAYE returns and providing employees with income statements (similar to P60s or W-2s) summarizing their earnings and deductions for the year. The annual reporting deadline is usually by the end of January following the tax year.
Failure to comply with reporting and payment deadlines can result in penalties and interest charges.
Special Tax Considerations for Foreign Workers and Companies
Foreign workers employed in Seychelles are generally subject to the same income tax and social security rules as local employees. Their income earned from employment in Seychelles is taxable, and their employers are required to withhold PAYE and contribute to the Social Security Fund on their behalf, based on the same rates and thresholds.
Foreign companies employing individuals in Seychelles, even if they do not have a registered branch or permanent establishment, may still trigger employer obligations. Engaging an Employer of Record (EOR) service is a common strategy for foreign companies to ensure compliance with local payroll, tax, and employment regulations without needing to establish a local entity. The EOR acts as the legal employer for tax and compliance purposes, handling all payroll processing, tax withholding, social security contributions, and reporting requirements in accordance with Seychelles law. This simplifies operations for foreign businesses and ensures that all employer tax obligations are met correctly.
