Belize: Offshore Legal and Tax Regimes

Belize Forms of Offshore Operation

Offshore entities may take the following forms:

• International Business Corporation
  
• Trust
  
• International Bank

Licenses are required only for financial institutions (see Offshore Business Sectors). Corporations do not have to disclose beneficial ownership, and Trusts need not disclose the names of their beneficiaries. See Forms of Companies for more information.

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Belize Tax Treatment of Offshore Operations

International Business Companies

Under the International Business Company Act of 1990, IBC's are exempt from most types of taxation. Exemptions include:

• all income of an IBC;
  
• all dividends paid by an IBC to persons resident in Belize or elsewhere;
  
• all interests, rent, royalties, compensations and other amounts paid by an IBC to persons who are not residents in Belize;
  
• capital gains realized on any shares, debt obligations or other securities of an IBC by persons who are not residents in Belize.

IBC's are exempt from the payment of stamp duty on:

• all instruments relating to transfer of any property to or by an IBC;
  
• all instruments relating to transactions in respect of the shares, debt obligations or other securities of an IBC;
  
• all instruments relating in any way to the assets or activities of an IBC.

Trusts

Provided that the settlor is not resident in Belize during a tax year, that none of the beneficiaries are resident in Belize during that year, and that the trust property does not include any land situated in Belize, exemptions include:

• the income of the trust for that year from all provisions of the Income Tax Act;
  
• no estate, inheritance, succession or gift tax or duty is payable with respect to the trust property by reason of any death occurring during that year; and
  
• no stamp duty is payable on all instruments executed in that year and relating to the trust property or to transactions carried out by the trustee on behalf of the trust.

For the purposes of the Exchange Control Regulations, 1976, with regard to the trust property and to all transactions carried out by the trustee on behalf of the trust, a trustee of an exempt trust is considered non-resident.

International Banks

A Belize International Bank is exempt from all forms of taxation on its profits or gains, or upon any interest or dividends earned in respect of banking business carried on from within Belize; also there is no stamp duty on Bills of Exchange or promissory notes or any other document, instrument or certificate executed by or in connection with an offshore banking business. At the time of writing:

The annual license fee for a Class A (Unrestricted) Banking License is USD20,000; the annual license fee for a Class B (Restricted) Banking License is USD15,000.

Shipping Registration

The annual tax is calculated at USD0.10 per net ton or fraction thereof. Most other government fees vary depending on the gross tonnage of the vessels, for example:

Registration Fees USD300 - USD3,000
Annual Service Tax USD300 - USD3,000
Annual Inspection Tax USD500 - USD3,000

There are also other miscellaneous documentary fees and taxes:

Ownership documents USD300
Ship mortgages USD750
Mortgage supplements, addenda or assignments USD300
Discharge deeds USD200

According to the International Merchant Marin Registry of Belize (IMMARBE), the annual tax for a small yacht (less than 24 metres) used for non-commercial purposes is USD300. The registration fee is also USD300.

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Belize Export Processing Zones

The rules and regulations governing the EPZ Programme are contained in the EPZ Act 1990 and Export Processing Zone Regulations 1992.

Various incentives to investors under the EPZ Act include:

• full import and export duty exemptions, extending to capital equipment, intermediate goods, spare parts and service vehicles utilized inside the EPZ;
  
• exemptions from capital gains, property and land tax, excise, sales, and consumption tax, trade turnovers, foreign exchange, and transfer tax;
  
• a guaranteed income tax holiday of 20 years with an option to extend and deduct losses from profits following the tax holiday period;
  
• divided tax exemption in perpetuity;
  
• opportunity to open foreign currency bank accounts in Belize and abroad;
  
• opportunity to sell, lease or transfer items, goods and services within an EPZ;
  
• customs inspection at the zone for expediency;
  
• work permits at no cost for all professionals and technical staff;
  
• exemption from the Supplies Control Act and its regulations;
  
• no raw material import restrictions;
  
• no import or export- licensing requirement;
  
• no trade licensing for business to operate;
  
• no licensing requirement for domestic suppliers who sell to EPZ business.

NB: Since April 2010, a 'Social Fee' of 1.5% is charged on all goods and services imported into an EPZ.

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Belize Commercial Free Zone

The Commercial Free Zone Act 1994 established a Commercial Free Zone at Corozal to attract foreign investment. The Zone provides facilities for various activities including manufacturing, processing, packaging, warehousing and distribution of goods and services.

Benefits and exemptions available to companies in the Commercial Free Zone include:

• No restrictions on foreign exchange including the sale of foreign currency or the transfer of foreign exchange into, out of or within a CFZ by CFZ businesses;
  
• No Government charges and taxes on the use of foreign currency within a CFZ;
  
• CFZ businesses are allowed to open an account in any currency with a duly registered bank of its choice which is located in the CFZ;
  
• All merchandise, articles, or goods entering a CFZ for commercial purposes are exempt from import duties, stamp duties and revenue replacement duties;
  
• All fuel and goods including buildings materials, furniture, equipment, supplies and parts required for the proper functioning of a CFZ business are exempt from all duties and taxes;
  
• NB: A 'Social Fee' of 1.5% is charged on all goods and services imported into the CFZ, except for fuel; the fee on fuel is 10%;
  
• No quotas apply to imports or exports of a CFZ business;
  
• Imports or exports of a CFZ business do not require an import or export license;
  
• With some exceptions, all imports and exports of a CFZ are exempt from all custom duties, consumption taxes, excise taxes, and export duties.

CFZ businesses pay an income tax at the following rates:

• Up to BZD15,000 of total chargeable income, 2%;
  
• Over BZD15,000 and up to BZD30,000 of total chargeable income, 4%;
  
• Over BZD30,000 and up to BZD100,000 of total chargeable income, 6%;
  
• Over BZD100,000 of total chargeable income, 8%.

A credit of up to 2% is available to companies which employ Belizean workers as follows:

• From 10 to 30 Belizean workers employed, 1% of taxable income;
  
• Over 30 and up to 50 Belizean workers employed, 1.5% of taxable income;
  
• Over 50 Belizean workers employed, 2% of taxable income.

During the first ten years of its operation, a CFZ business is exempt from income tax or capital gains tax or any new corporate tax levied by the Government of Belize, and any dividends paid by a CFZ business are exempt from tax for the first twenty years of its operation.

Where a CFZ business incurs a total net loss over the five years' tax holiday, that loss may be carried forward and deducted against profits in the three years following the tax holiday period.

Any proceeds from the sale of stock or other partial or complete ownership interest in a CFZ business are exempt from the tax described above.

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Belize Taxation of Foreign Employees of Offshore Operations

This section refers to the taxation of foreign employees of offshore operations, see Domestic Personal Taxes for the general principles of individual taxation in Belize, which also apply to the resident employees of offshore entities.

There is no distinction between foreign and Belizean employees, whether or not the business is 'offshore'. Tax is deducted under the 'PAYE' system, and there are compulsory social insurance contributions.

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Belize Exchange Control

Under the Exchange Control Regulations, Chapter 43 of the Laws of Belize (1980) only the Central Bank, authorized dealers and authorized depositories may deal in foreign currency, and a foreign exchange permit must be obtained from an authorized dealer or the Central Bank. The permission of the Central Bank is also required in order to secure a loan from outside Belize which involves a foreign currency, and also to service repayment of foreign debt.

The necessary approvals, however, can be easily secured in the case of genuine, approved enterprises. Foreign investors are required to register any investments made in Belize with the Central Bank to facilitate the repatriation of profits, dividends, etc.

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Belize Offshore Activities

The IBC act prohibits an IBC from:

• Carrying on business with persons resident in Belize;
  
• Owning an interest in real property situated in Belize, except lease property for office purposes;
  
• Carrying on banking business;
  
• Carrying on insurance or reinsurance business;
  
• Carrying on the business of providing registered agents/offices for companies.

Otherwise, a Belize IBC may engage in any activity that is not unlawful in Belize.

A Belize International Bank can carry on the following activities within Belize:

• establish, maintain, and operate a business office in Belize;
  
• transact international banking business through its business office in Belize without restrictions;
  
• transact international banking business with a local entity in Belize licenced under the Banks and Financial Institutions Act, 1995.

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Belize Employment and Residence

Any individual can apply for permanent residence after one year of legal residence in Belize on a continuous basis. At the time of writing, the permanent residence fee is BZD200 and a deposit is needed which can range from USD187.50 to USD1,562.50 depending on the nationality of the applicant. This deposit may be refunded three years after residency is granted.

To acquire nationality status an applicant should have permanent residence or have resided legally in Belize for at least 5 years.

The Retired Persons Incentive Act passed by the Belize legislature in early 1999 is now in force and being implemented by the Belize Tourism Board. The program, which resembles the formerly popular but now defunct pensionado program in Costa Rica, is designed to attract more retirees to Belize. Qualified retirees are able to live full time tax-free in Belize and bank there, under a 'permanent' tourist visa.

Application forms for work permits are available at any Labour Department Office free of cost. There are two types of forms- one for self employment, the other for hiring a foreign worker.

The application process takes approximately three (3) weeks. Although the Ministry of Labour processes and approves the issuing of work permits, the permit is issued by the Immigration Department - the fee can range anywhere from BZD100 to BZD1,000 (at the time of writing) depending on the level of skill. Two recent passport size pictures endorsed by the applicant must accompany the application.

In the case of an investor he must present his passport, have three passport size pictures, substantive proof of his ability to sustain himself without infringing on the country's limited economic resources. Bank statements or other proof of financial independence are also required. The 'life' of a work permit ranges from three months to one year and is subject to renewal.

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