Belize Offshore Company
Belize is now a white list nation no longer considered an opaque tax haven by Europe. Opening an offshore company in Belize allows you to operate secretly taking advantage of the privacy that Belize offers through its offshore companies called IBC, International Business Company.
Belize is an English-speaking Central American country with a 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.
Belize 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 national Belize companies. Under the Income and Business Tax (Amendment) Act, 2018, IBCs operating in Belize are now subject to both Belizean income tax and stamp duty and are required to file a tax return. Belize IBCs are in effect true Belize offshore companies. Belize offshore companies are among the most used to manage offshore activities in a totally anonymous and tax free way. You do not need to be a resident of Belize to open a Belize Offshore Company or Belize IBC.
Incorporating a company in Belize: fees and costs
Belizean IBCs operating in Belize will be subject to 1.75% of taxable income in excess of BZD 3 million or 3% of taxable income in excess of BZD 3 million. Taxes must be paid in US dollars. Belizean IBCs whose income is derived outside of Belize will not be subject to Belizean income tax. Capital gains, dividends and interest received may be exempt from taxation. Payments to non-residents may be exempt from withholding taxes.
To qualify for the IBC regime, some companies may be subject to physical presence and tax residency status:
- a company's business must take place in Belize (ie corporate meetings);
- all Belize IBC documents must be maintained in Belize;
- depending on the scope of business, a Belizean IBC business must employ a sufficient number of well-trained and qualified personnel physically present in Belize to perform the principal income-generating activities of the business;
- expenses must occur in Belize (appropriate to the size of a particular business);
- there is a requirement for a rented office space in Belize;
- conduct its management and control activities from Belize, either directly or through a management agency, including that board meetings are held in Belize and at least two directors reside in Belize;
- Most companies that can meet the physical presence requirement hire a management agency.
Belize Offshore Company, business types and controls
Corporations licensed for international financial services and certain other businesses, such as corporations that provide services or trade goods with affiliates, holding companies, and corporations that derive income from intellectual property, must be physically present and tax resident in Belize.
Businesses wishing to obtain a tax exempt certificate and non-resident status may need to demonstrate 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.
Belize IBCs will be able to obtain your Tax Identification Number (TIN) and may be required to file tax returns and annual financial statements. Belizean IBCs with receipts of US$6,000,000 or more may be required to submit audited financial statements.
Belizean IBCs registered before October 16, 2017 can maintain their current tax exemption benefits until June 30, 2021 – by which time they will need to meet all of the above requirements.
For Belizean IBCs registered from 17 October 2017 to 31 December 2018, the above requirements are immediately applicable. A transition period of 1 year has been granted, under which IBCs must take the appropriate steps to ensure compliance.
The country has implemented the OECD Automatic Exchange of Information (AEoI) and has signed Tax Information Exchange Treaties (TIEa) with 18 countries.
Belize has major anti-money laundering problems and shortcomings, and efforts to fight tax evasion are almost nil. The United States, which is Belize's largest trading partner and financial backer, has declared Belize a country of primary money laundering concern. While the full list is long and has a rather one-sided approach to defining money laundering risk, Belize is criticized harshly and the criticism is deserved.
This puts Belize in the awkward position of being criticized by its biggest benefactor, on whom it relies heavily for financial support and trade.
Money laundering is probably rampant in Belize; both physically on Belizean soil and remotely through its poorly regulated and barely audited international banks, many of which struggle to maintain correspondent accounts, expelled from large international banks for failing to meet international due diligence standards and failing to provide enough revenue to justify the risk they represent.
Despite being rated largely compliant by the OECD, it has a problematic and present history with narcotics, human trafficking and money laundering. The OECD's rating is based largely on the jurisdiction's eagerness to, at least on paper, be internationally compliant in tax matters.
In its eighth follow-up report released in May 2015, CFATF (the Caribbean offshoot of the FATF) acknowledged Belize's efforts to improve its AML laws, but the effective enforcement and success of these laws remains to be seen.
Belize borders Mexico and Guatemala. Although it enjoys favorable relations with Mexico, relations with Guatemala are hostile as Guatemala has claimed Belize as its territory since 1940. Belize is a major transit point for drugs from Mexican drug cartels and there is a small-scale narcotics in Belize.
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 operating in Belize are now subject to both Belizean income tax and stamp duty and are required to file a tax return.
Belizean IBCs operating in Belize are subject to 1.75% of taxable income in excess of BZD 3 million or 3% of taxable income in excess of BZD 3 million. Taxes must be paid in US dollars. Belizean IBCs whose income is derived outside of Belize will not be liable to Belizean income tax. Capital gains, dividends and interest received may be exempt from taxation. Payments to non-residents may be exempt from withholding taxes.
IBCs registered before 16 October 2017 can retain their existing tax exemption benefits until 30 June 2021 – at which time they will need to meet all of the above requirements.
For IBCs registered from 17 October 2017 to 31 December 2018, the above requirements are immediately applicable. A transition period of 1 year has been granted, under which IBCs must take the appropriate measures to ensure compliance.
Other Taxes: Tax residents and non-resident individuals are subject to income tax on income originating in Belize. Foreign source income is not subject to tax.
The personal income tax rate is progressive up to 25%. Capital gains are exempt from tax.
Belize charges a real estate tax of 12.5% of the annual rental value for an occupied property and a 2% annual rental value tax for unoccupied properties. Property tax cannot exceed 2% of the market value of the property. There is a 1% land tax on unimproved lands.
There is a stamp duty on the transfer of assets, the rates depend on the asset class. The purchase of a property is subject to stamp duty of 10%. The sale of goods and the provision of services may be subject to a general sales tax (GST) of 12.5%.
Legal Basis
Country code: BZ
Legal basis: Common Law
Legal framework: International Business Companies Act 1990 (as amended)
Company form: International Business Company (IBC) (Stock Company)
Liability: The shareholder's liability for the company is limited to the amount of their respective holdings.
Registered Capital: The amount of authorized capital can be freely determined at the time of incorporation by the owners of the IBC. Upon issuance, shares of an IBC must be paid for. The capital can be expressed in any currency.
Shares issued may be shares with voting rights, shares without voting rights, shares with more or less than one vote per share, shares which can only be voted on certain matters or upon the occurrence of certain events, shares which can only be voted on if held by persons who meet certain requirements, shares of no par value, common shares, preferred shares, redeemable shares and shares which give the right to participate only in certain activities.
Economic Substance: To qualify for the IBC regime, some companies may be subject to physical presence and tax residency status:
- a company's business must take place in Belize (ie corporate meetings);
- all documents must be kept in Belize;
- depending on the scope of operation, a business must employ a sufficient number of well-trained and qualified personnel physically present in Belize to perform the principal income-generating activities of the business;
- expenses must occur in Belize (appropriate to the size of a particular business);
- there is a requirement of an office space for rent in Belize (based on the scale of a particular business);
- conduct its management and control activities from Belize, either directly or through a management agency, including that board meetings are held in Belize and at least two directors reside in Belize;
- most businesses can meet physical residency and tax residency status by hiring a management agency.
Corporations licensed for international financial services and certain other businesses, such as corporations that provide services or trade goods with affiliates, holding companies, and corporations that derive income from intellectual property, must be physically present and 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 incorporated by one or more shareholders, who may be natural or legal persons and may be non-resident. Shareholder details are not publicly available.
Directors: An International Business Company must appoint at least 1 director, who can be a natural or legal person and can be non-resident. The details of the directors are not disclosed in a public register.
Secretary: The company can appoint a secretary, but it is not mandatory. The Secretary may be a natural or legal person, resident or non-resident. Registered Address – A company must appoint an authorized registered agent and must have a registered address and office in Belize.
General Meeting: An international business corporation does not have to hold a general meeting, and it can be held anywhere and by electronic means.
Electronic signature: Allowed.
Redomiciliation: Inbound and outbound redomiciliation is allowed.
Compliance: IBCs may obtain tax identification number (TIN) and may be required to file tax returns and annual financial statements. IBCs with receipts of US$6,000,000 or more may be required to submit audited financial statements.
Businesses wishing to obtain a tax exempt certificate and non-resident status may need to demonstrate economic substance and tax residency in another jurisdiction.
In addition to opening your Belize Offshore, you will probably be interested in creating a life insurance policy on your taxation, taking up a second tax residence, in a country with territorial taxation, such as a residence in Panama or a residence in Paraguay
Also consider a company in Panama
Obtaining TIN (Tax Identification Number) for Belize companies
Every IBC in Belize must obtain a TIN or NIT in Italian (Tax Identification Number). The TIN is equivalent to the Belize company's VAT number and is now mandatory. To obtain a TIN the company must be in good standing in the year of the request; the completed TIN form along with the necessary fee is sent to the Belize Companies and Corporate Affairs Registry (BCCAR). If the company has a shareholder/company director, the application must be accompanied by that shareholder/director's articles of association.
The Economic Substance of Belizean Companies
Each Belizean company is required to report its financial situation annually.
In the context of commercial companies, “economic substance” means that Belize companies must have an adequate presence and/or carry out economic activities in the jurisdiction in which they have tax residence. Jurisdictions around the world have now introduced broadly similar economic substance requirements in response to European Union and OECD initiatives to prevent harmful tax practices and profit shifting. In the case of Belize, the government passed the Economic Substance Act, 2019 (ESA), which came into effect on October 11, 2019.
Any entity deemed to be an included entity will have a substantial economic presence in Belize that is not taxed in a jurisdiction different from Belize and is a regulated entity.
The entities included are entities engaged in the following relevant activity
Banking
Insurance Business
Fund Management
Business Financing and Leasing
Business Head Office
Business Distribution and Service Center
Business Shipping Business
As an engaged holding company or where one or more of its subsidiaries are engaged in one of the businesses listed above
All entities regulated under the FSC Act*An included entity will conduct its principal revenue generating activities in Belize. The main income generating activities (CIGA) are listed below. The CIGAs listed below are not all-inclusive. What constitutes the CIGA of a specific business depends on the circumstances and may be specific to a specific business.
Banking
“Banking” means the acceptance of deposits of money which may be withdrawn or repaid on demand or after a fixed period or notice, by check or otherwise, and the use of such deposits, in whole or in part :
When making or giving loans, advances, overdrafts, guarantees or similar facilities,
or
In making investments on behalf of and at the risk of the person accepting such deposits.
- Principal income generating activities
Raising funds, risk management including credit, currency and interest risk
Taking hedging positions
Providing loans, credit or other financial services to clients
Managing regulatory capital
Preparing regulatory reports and filings
Insurance business
“Insurance business” means the business of assuming liability under an insurance contract to indemnify or compensate a person in respect of loss or damage, including the liability to pay damages or compensation subject to the occurrence of a specified event. It includes life insurance business and reinsurance business.
- Main income generating activities
risk forecasting and calculation
Insuring or reinsuring against risk
Providing insurance services to customers
Fund Management Activities
“Fund Management Activities” means carrying on an activity which requires the body corporate to hold an investment business license under section 4 of the Securities and Investment Business Act, 2010 in in relation to the management of mutual funds, separate portfolios, pension plans, insurance products or other types of investments.
- Principal income-generating activities
Making decisions about holding and selling investments
Calculating risks and reserves
Making decisions about currency or interest fluctuations and hedging positions
Preparing regulatory or other reports for government authorities and investors
Corporate finance and leasing
"Financing and leasing activities" means the provision of credit lines of any type for consideration, where the consideration includes interest or the provision of credit in installments for which a charge is made and communicated to the customer separated in relation to any of the following:
The supply of goods by hire purchase
Leasing other than that which gives the exclusive right to occupy land
Conditional sale or sale on credit
- Main income generating activities
Agree on the financing conditions
Identification and acquisition of the assets to be rented (in case of leasing)
Definition of the terms and duration of any financing or leasing
Monitoring and review of any agreements
Managing any risks
Headquarters business
“Headquarters business” means the provision of any of the following services to an entity of the same group:
The provision of senior management
The assumption or control of material risks for the activities carried out by any of such entities of the same group
The provision of substantial advice in relation to the assumption or control of material risks for activities carried out by any such entities of the same group, but does not include banking activities, financing and leasing activities or insurance activities
- Main income generating activities
Making relevant management decisions
Incurring expenses on behalf of affiliates
Coordinating group activities
Shipping Activities
“Shipping Activities” means any of the following activities involving the operation of a vessel anywhere in the world other than Belize only:
Transportation by sea of persons, animals, cargo or mail
Lease or charter of vessels for the business of transporting people, animals, goods or mail by sea
Sale of travel tickets or equivalent and ancillary services connected with the operation of a vessel
Use, maintenance or rental of containers, including trailers and other transport vehicles or equipment of containers, used for the transport of anything by sea.
- Main income-generating activities
Crew management (including hiring, paying and supervising crew members)
Hauling and maintenance of ships
Supervising and monitoring deliveries
Determining which goods to order and when to deliver them
Organizing and supervising voyages
Distribution and Service Centers
“Distribution and service center operations” means one or both of the following:
components or materials for goods
from foreign subsidiaries Merchandise ready for sale
Reselling such components, materials or goods
Providing services to affiliates foreign in relation to the business, but does not include any activity included in any other relevant business except carrying on business
- Main income generating activities
Transportation and storage of goods
Inventory management
Taking orders
Providing consultancy or other administrative services
Holding company
Holding company means a business entity that;
It is a containment body.
Its primary function is the acquisition and holding of shares or participations in other companies.
It does not carry out any relevant activity as a primary function.
- Main income generating activities
Earning dividends and capital gains
All companies must provide the economic substance form to their registered agent to facilitate the provision to the FSC before the deadline for filing the entity, i.e. nine months after the last day of his financial period. This should be done by the entity's director(s) or a shareholder who is not a nominee. The registered agent will be responsible for ensuring that the form is provided to the FSC.
Satisfying Economic Substance
An included entity demonstrates a substantial economic presence in Belize if the following Board management and control criteria are met;
in Belize, a number of meetings of the Board of Directors are held appropriate to the decision-making level required;
a quorum of the Board of Directors is present for meetings in Belize;
the strategic decisions of the included entity taken in the meetings indicated in letter a) must appear in the minutes of the meetings;
all records and minutes of the included entity are maintained in Belize;
And the Board of Directors possesses the knowledge and expertise necessary to carry out its duties
In essence, an entity will have economic substance in Belize if all of the following criteria are met:
It is directed and operated in Belize
It has adequate expenses and employees and suitable premises in Belize
The main income generating activities are performed in Belize
Pure Equity Holding Company IFSC Belize
Included Entities or Holding Company IFSC Belize
Not Included Entity IFSC Belize
