Belize
International Business Company (Company limited by shares)
Belize is a Central American country known for its English-speaking ability, and robust offshore environment.
In December 2018, the National Assembly of Belize passed the International Business Companies (Amendment) Act, 2018, the Income and Business Tax (Amendment) Act, 2018, and the Stamp Duties (Amendment) Act, 2018 to address the considered 'harmful tax regimes' identified by the FHTP.
IBCs can now be incorporated by both residents and non-residents, can do business locally and with residents, own land in Belize and hold shares in Belize domestic companies. Under the Income and Business Tax (Amendment) Act, 2018, IBCs doing business within Belize are now subject to both Belizean income tax and stamp duty and are required to file an income tax return.
Belize IBCs doing business in Belize will be subject to 1.75% of the chargeable income amounting to a sum greater than BZD 3 million, or 3% of the chargeable income amounting to a sum lesser than BZD 3 million. Taxes will need to be paid in US Dollars. Belize IBCs whose income is derived outside of Belize shall not be liable for payment of income tax in Belize. Capital gains, dividends, and interests received may be exempt from taxation. Payments to non-residents may be exempt from withholding taxes.
To qualify for the IBC regime, certain companies may be subject to physical presence and tax residency status:
- the activities of a company must take place in Belize (i.e. company meetings);
- all documents must be kept in Belize.
- depending on the scope of activity, a company must employ a sufficient number of well-trained and qualified personnel who are physically present in Belize to carry out the company core income-generating activities
- the expenditures shall take place in Belize (adequate for the scale of a particular business)
- there is a requirement of a rented office in Belize (according to the scale of a particular business).
- Conduct their control and management activities from Belize, either directly or through a management agency, including that board meetings are held in Belize and at least two directors are resident in Belize.
Most businesses may fulfill the physical presence requirement via hiring a management agency.
International Financial Services licensed companies and certain other businesses such as companies providing services to or trading goods with affiliates, holding companies and companies deriving income from intellectual property - must be physically present and tax resident in Belize.
Companies that wish to obtain a tax exemption certificate and non-resident status may need to prove economic substance and tax residency in another jurisdiction.
Note that companies physically present in Belize may be subject to capital controls under the Exchange Control Regulations Act.
IBCs will be able to obtain Tax Identification Number (TIN) and may be required to file annual tax returns and financial statements. IBCs with receipts of at least USD 6,000,000 may be required to file audited financial statements.
IBCs registered before October 16, 2017, are allowed to grandfather their existing tax exemption benefits up to June 30, 2021 - at that time they will need to comply with all the above requirements.
For IBCs registered from October 17, 2017, to December 31, 2018, the above requirements are immediately applicable to them. A transition period of 1 year has been granted – whereby IBCs must take the appropriate steps to ensure they are compliant.
The country has implemented the OECD automatic exchange of information (AEoI) and has signed tax information exchange treaties (TIEa) with 18 countries.
Legal
Country code – BZ
Legal Basis – Common law
Legal framework – International Business Companies Act of 1990 (As amended)
Company form – International Business Company (IBC) (Company limited by shares)
Liability - The liability of the shareholders for the company is limited to the amount of their respective shareholdings.
Share capital – The amount of the authorized capital can be freely determined at incorporation by the owners of the IBC. At their issue, the shares in an IBC must be paid up. Capital may be expressed in any currency.
Shares issued may be voting shares, non-voting shares, shares having more or less than one vote per share, shares that may be voted only on certain matters or upon the occurrence of certain events, shares that may be voted only when held by persons who meet specified requirements, no par value shares, common shares, preferred shares, redeemable shares and shares that entitle participation only in certain assets.
Economic Substance - To qualify for the IBC regime, certain companies may be subject to physical presence and tax residency status:
- the activities of a company must take place in Belize (i.e. company meetings);
- all documents must be kept in Belize.
- depending on the scope of activity, a company must employ a sufficient number of well-trained and qualified personnel who are physically present in Belize to carry out the company core income-generating activities
- the expenditures shall take place in Belize (adequate for the scale of a particular business)
- there is a requirement of a rented office in Belize (according to the scale of a particular business).
- Conduct their control and management activities from Belize, either directly or through a management agency, including that board meetings are held in Belize and at least two directors are resident in Belize.
Most businesses may fulfill the physical residence and tax residency status via hiring a management agency.
International Financial Services licensed companies and certain other businesses such as companies providing services to or trading goods with affiliates, holding companies and companies deriving income from intellectual property - must be physically present and a tax resident in Belize.
Note that companies physically present in Belize may be subject to capital controls under the Exchange Control Regulations Act.
Shareholders – International Business Companies may be formed by one or more shareholders, who can be either natural or legal persons and may be non-residents. Details of shareholders are not available to the public.
Directors – An International Business Company must appoint at least 1 director, who may be a natural or legal person and may be non-resident. Directors’ details are not disclosed in a public record.
Secretary – The company may appoint a secretary, but it is not mandatory. Secretary may be a natural or a legal person, resident or non-resident.
Registered Address – A company shall appoint a licensed registered agent and shall have a registered address and office in Belize.
General Meeting – An international business company need not hold AGM, and it can be held anywhere and by electronic means.
Electronic Signature – Permitted.
Re-domiciliation – Inward and outward re-domiciliation is allowed.
Compliance - IBCs can obtain Tax Identification Number (TIN) and may be required to file annual tax returns and financial statements. IBCs with receipts of at least USD 6,000,000 may be required to file audited financial statements.
Companies that wish to obtain a tax exemption certificate and non-resident status may need to prove economic substance and tax residency in another jurisdiction.
- Shareholders not disclosed
- Directors not disclosed
- Corporate shareholders permitted
- Corporate directors permitted
- Local director required
- Secretary required
- Local secretary required
- Annual general meetings required
- Redomiciliation permitted
- Electronic signature
- Annual return
- Audited accounts
- Audited accounts exemption
- Exchange controls
- Common law Legal basis
- 1 Minimum shareholders
- 1 Minimum directors
- USD 1 Minimum issued capital
- - Minimum paid up capital
- USDAny Capital currency
- Anywhere Location of annual general meeting
- 2018 AEOI
Taxes
Corporate income tax – In December 2018, the National Assembly of Belize passed the International Business Companies (Amendment) Act, 2018, the Income and Business Tax (Amendment) Act, 2018, and the Stamp Duties (Amendment) Act, 2018.
Under the Income and Business Tax (Amendment) Act, 2018, IBCs doing business within Belize are now subject to both Belizean income tax and stamp duty and are required to file an income tax return.
Belize IBCs doing business in Belize are subject to 1.75% of the chargeable income amounting to a sum greater than BZD 3 million, or 3% of the chargeable income amounting to a sum lesser than BZD 3 million. Taxes will need to be paid in US Dollars. Belize IBCs whose income is derived outside of Belize shall not be liable for payment of income tax in Belize. Capital gains, dividends, and interests received may be exempt from taxation. Payments to non-residents may be exempt from withholding taxes.
IBCs registered before October 16, 2017, are allowed to grandfather their existing tax exemption benefits up to 30 June 2021 – at that time they will need to comply with all the above requirements.
For IBCs registered from October 17, 2017, to December 31, 2018, the above requirements are immediately applicable to them. A transition period of 1 year has been granted – whereby IBCs must take the appropriate steps to ensure they are compliant.
Other taxes – Tax residents and non-residents individuals are subject to income tax on their income derived from Belize. Income from foreign-source is not subject to taxation.
The personal income tax rate is progressive up to 25%. Capital gains are tax-exempt.
Belize levies a real property tax of 12.5% of the annual rental value for an occupied property, and a 2% tax on the annual rental value for unoccupied properties. Property tax may not exceed 2% of the market value of the property. There is a land tax of 1% for unimproved lands.
There is a stamp duty on the transfer of assets, rates depend on the asset class. Purchase of real property is subject to a 10% stamp duty. The sale of goods and provision of services may be subject to 12.5% General Sales Tax (GST).
- Offshore Income Tax Exemption
- Offshore capital gains tax exemption
- Offshore dividends tax exemption
- CFC Rules
- Thin Capitalisation Rules
- Patent Box
- Tax Incentives & Credits
- Property Tax
- Wealth tax
- Estate inheritance tax
- Transfer tax
- Capital duties
- 3% Offshore Income Tax Rate
- 3% Corporate Tax Rate
- 0% Capital Gains Tax Rate
- 0% Dividends Received
- 0% Dividends Withholding Tax Rate
- 0% Interests Withholding Tax Rate
- 0% Royalties Withholding Tax Rate
- 0 Losses carryback (years)
- 0 Losses carryforward (years)
- 25% Personal Income Tax Rate
- 30 Tax Treaties
Country details
Belize, formerly British Honduras, is a CARICOM and SICA member. Located in the northeastern corner of Central America, bordering to the north with Mexico and to the south and the west with Guatemala. The capital is the city of Belmopan and the most populated city is Belize City, which has the main port of the country.
Although is the only Central American country with English as the official language, its just over 380,000 inhabitants speak predominantly Spanish and Creole. Its currency is the Belize Dollar (BZD), which is currently pegged to the US$ (2:1), but most commercial establishments accept US dollars.
Belize is a constitutional monarchy with a parliamentary system of government. The Head of State is Queen Elizabeth II, who is represented in the country by the Governor General.
The executive power is headed by a Prime Minister, who heads the Cabinet of 13 ministers, plus 5 deputy ministers, who represent the majority political force of the Belizean Parliament.
The legislative power is bicameral, composed of a House of Representatives of 31 members democratically elected for a period of five years and a Senate of 12 members appointed by the Governor General from proposals of the Prime Minister, the leader of the opposition and of Various religious, economic and social institutions.
The Belizean economy is the smallest in the Central American region, but it is the third largest in GDP per capita, only after Panama and Costa Rica.
Belize has an economy based primarily on agriculture and services. Domestic industry is limited, constrained by relatively high-cost labor and energy, and a small domestic market.
Tourism attracts the most foreign direct investment although significant foreign investment is also found in the energy, telecommunications, and agricultural sectors. The stability of the currency is one of the attractions for foreign investment.
Belize's exports of goods and services account for over half of its GDP. The export products mainly consist of seafood such as shrimp, followed by sugar, citrus products, bananas and small manufactures.
Its Barrier Reef (longest in the Western Hemisphere), 127 islands, excellent fishing, safe waters for boating, scuba diving, and snorkeling, abundant jungle flora and fauna, and numerous Mayan ruins has bolstered tourism and ecotourism industry.
Belize is a well-known offshore jurisdiction for its privacy policies, tax advantages for non-residents and its full tax exemption for its domiciled International Companies. Although its banking sector is not as large as other offshore financial centers, it is gaining popularity in recent years.