Belize Offshore Company
Belize is now a whitelisted 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 Belize offers through its offshore companies called IBCs (International Business Companies).
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, conduct business locally and with residents, own land in Belize, and hold shares in Belizean domestic companies. Under the Income and Business Tax (Amendment) Act of 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 effectively Belizean offshore companies. Belize offshore companies are among the most popular ways to manage offshore and tax-free businesses anonymously. You do not need to be a resident of Belize to open a Belize offshore company or Belize IBC.
Starting a Business in Belize: Taxes and Costs
Belize IBCs operating in Belize will be subject to a 1.75% tax on taxable income exceeding BZD 3 million or a 3% tax on taxable income less than BZD 3 million. Taxes must be paid in U.S. dollars. Belize IBCs whose income is derived outside of Belize will not be subject to income tax in Belize. Capital gains, dividends, and interest received may be exempt from tax. 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 activities must take place in Belize (i.e., company meetings);
- all Belize IBC documents must be maintained in Belize;
- Depending on the scope of business, a Belize IBC company must employ a sufficient number of well-trained and qualified personnel, physically present in Belize to carry out the company's primary income-generating activities;
- expenses must occur in Belize (appropriate to the size of a particular business);
- there is a requirement for an office for rent in Belize;
- conduct its control and management activities from Belize, 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 Companies, Types of Business and Controls
Companies licensed for international financial services and certain other businesses, such as companies providing services or trading in goods with affiliates, holding companies, and companies deriving income from intellectual property, must be physically present and tax resident in Belize.
Businesses seeking a tax exemption certificate and nonresident status may be required to demonstrate economic substance and tax residency in another jurisdiction.
Please 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 a Tax Identification Number (TIN) and may be required to submit annual tax returns and financial statements. Belize IBCs with receipts of at least $6,000,000 may be required to submit audited financial statements.
Belize IBCs registered before October 16, 2017, may maintain their current tax exemption benefits until June 30, 2021 – from which point they will need to meet all of the above requirements.
For Belize IBCs registered from October 17, 2017, to December 31, 2018, the above requirements are immediately applicable. A one-year transition period has been granted, during which IBCs must take appropriate measures 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 significant problems and shortcomings in anti-money laundering, and its efforts to combat tax evasion are almost nonexistent. The United States, Belize's most important trading partner and financial supporter, has declared Belize a country of primary concern for money laundering. While the full list is long and has a somewhat capricious approach to defining money laundering risk, Belize has been heavily criticized, 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 likely rampant in Belize; both physically on Belizean soil and remotely through its poorly regulated and barely supervised international banks, many of which struggle to maintain correspondent accounts, expelled by major international banks for failing to ensure international due diligence standards and failing to provide sufficient revenue to justify the risk they pose.
Despite being rated largely compliant by the OECD, it has a problematic history and ongoing involvement in narcotics, human trafficking, and money laundering. The OECD rating is largely based 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 branch of the FATF) recognized Belize's efforts to improve its AML laws, but the actual implementation 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 Mexican drug cartels, and there is small-scale narcotics production 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 Belize income tax and stamp duty and are required to file a tax return.
Belize IBCs operating in Belize are subject to a 1.75% tax on taxable income exceeding BZD 3 million or a 3% tax on taxable income less than BZD 3 million. Taxes must be paid in U.S. dollars. Belize IBCs whose income is derived outside of Belize are not subject to income tax in Belize. Capital gains, dividends, and interest received may be exempt from tax. Payments to non-residents may be exempt from withholding taxes.
IBCs registered before October 16, 2017, can maintain their existing tax exemption benefits until June 30, 2021 – at which time they will need to meet all of the above requirements.
For IBCs registered from October 17, 2017, to December 31, 2018, the above requirements are immediately applicable. A one-year transition period has been granted, during which IBCs must take appropriate measures to ensure compliance.
Other taxes: Tax residents and non-residents are subject to income tax on Belizean-sourced income. 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 imposes a property tax of 12.5% of the annual rental value for occupied property and a 2% tax on the annual rental value for unoccupied property. The property tax cannot exceed 2% of the property's market value. There is a 1% land tax on unimproved land.
There is a stamp duty on the transfer of assets, with rates depending on the asset class. The purchase of real estate is subject to a 10% stamp duty. The sale of goods and the provision of services may be subject to a 12.5% general sales tax (GST).
Legal Basis
Country code: BZ
Legal basis: Common Law
Legal framework: International Business Companies Act 1990 (as amended)
Corporate form: International Business Company (IBC)
Liability: The shareholder's liability for the company is limited to the amount of their respective holdings.
Share Capital: The amount of authorized capital can be freely determined by the owners of the IBC at the time of incorporation. Upon issuance, IBC shares must be paid for. The capital can be denominated in any currency.
The shares issued may be voting shares, non-voting shares, shares with more or less than one vote per share, shares that can be voted only on certain matters or upon the occurrence of certain events, shares that can be voted only if held by persons meeting certain qualifications, shares with no par value, common shares, preferred shares, redeemable shares, and shares that entitle the holder 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 activities must take place in Belize (i.e., company meetings);
- all documents must be kept in Belize;
- Depending on the scope of business, a company must employ a sufficient number of well-trained and qualified personnel physically present in Belize to carry out the company's primary income-generating activities;
- expenses must occur in Belize (appropriate to the size of a particular business);
- there is a requirement for an office space to rent in Belize (depending on the scale of a particular business);
- conduct its control and management activities from Belize, 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 both physical and tax residency requirements by hiring a management agency.
Companies licensed for international financial services and certain other businesses, such as companies providing services or trading in goods with affiliates, holding companies, and companies deriving income from intellectual property, must be physically present and tax resident in Belize.
Please 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 may be natural or legal persons and may be non-residents. Shareholder details are not publicly available.
Directors: An international business company must appoint at least one director, who may be a natural person or legal entity and may be non-resident. The directors' details are not disclosed in a public register.
Secretary: The company may appoint a secretary, but this 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 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: Incoming and outgoing redomiciliation is permitted.
Compliance: IBCs may obtain a tax identification number (TIN) and may be required to submit annual tax returns and financial statements. IBCs with receipts of at least $6,000,000 may be required to submit audited financial statements.
Businesses seeking a tax exemption certificate and nonresident status may be required 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 tax situation by taking 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 a TIN (Tax Identification Number) for Belize companies
Every IBC in Belize must obtain a TIN (Tax Identification Number). The TIN is equivalent to the company's VAT number in Belize and is now mandatory. To obtain a TIN, the company must be in good standing in the year of application; the completed TIN form, along with the required fee, is submitted to the Belize Registrar of Companies and Corporate Affairs (BCCAR). If the company has a corporate shareholder/director, the application must be accompanied by that shareholder/director's articles of incorporation.
The Economic Substance of Belize Companies
Every Belizean company is required to report its economic substance annually. In the context of commercial companies, "economic substance" means that Belizean companies must have an adequate presence and/or conduct economic activities in the jurisdiction in which they are tax resident. All jurisdictions worldwide have now introduced substantially 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 considered an included entity must have a substantial economic presence in Belize that is not taxed in a jurisdiction other than Belize and is a regulated entity.
Included entities are entities engaged in the following relevant activity:
Banking activities
Insurance activities
Fund management activities
Financing and leasing activities
Head office activities
Distribution and service center activities
Shipping activities
As a holding company engaged in or where one or more of its subsidiaries are engaged in any of the activities listed above
All entities regulated under the FSC Act*. A listed entity will conduct its principal income-generating activities in Belize. The principal income-generating activities (CIGA) are listed below. The CIGAs listed below are not all-inclusive. What constitutes a specific activity's CIGA depends on the circumstances and may be specific to a specific company.
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 cheque or otherwise, and the employment of such deposits, in whole or in part:
In making or giving loans, advances, overdrafts, guarantees or similar facilities,
or
In making investments on behalf and at the risk of the person accepting such deposits.
- Principal revenue-generating activities
Fundraising, risk management including credit, currency and interest risk
Taking hedging positions
Providing loans, credit or other financial services to customers
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 for loss or damage, including the liability to pay damages or compensation contingent upon the occurrence of a specific event. This includes life insurance and reinsurance business.
- Main income generating activities: Risk
forecasting and calculation
Insuring or reinsurance against risk
Providing insurance services to customers
Fund Management Activities
Fund management activities means carrying on an activity that requires the entity to hold an investment business licence under Section 4 of the Securities and Investment Business Act, 2010 in relation to the management of mutual funds, segregated 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 rate fluctuations and hedging positions
Preparing regulatory or other reports for government authorities and investors
Business Finance and Leasing
“Finance and leasing activities” means the provision of credit facilities of any kind for consideration, where the consideration includes interest, or the provision of credit in installments for which a separate charge is made and communicated to the customer in relation to any of the following:
The supply of goods by hire purchase
Leasing other than that which confers the exclusive right to occupy land
Conditional sale or sale on credit
- Main income generating activities
Agreeing on financing terms
Identifying and acquiring assets to be leased (in case of leasing)
Defining the terms and duration of any financing or leasing
Monitoring and reviewing any agreements
Managing any risks
Head office business
“Head office 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 such entity of the same group
The provision of substantial advice in relation to the assumption or control of material risks for the activities carried out by any such entity of the same group, but does not include banking activities, financing and leasing activities or insurance activities
- Main revenue 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 in any part of the world other than Belize exclusively:
Transportation by sea of persons, animals, cargo or mail
Hiring or chartering of vessels for the business of transportation by sea of persons, animals, cargo or mail
Sale of travel tickets or equivalent and incidental services incidental to the operation of a vessel
Use, maintenance or rental of containers, including trailers and other container-carrying vehicles or equipment, used for the transportation of anything by sea.
- Main income generating activities
Crew management (including hiring, paying and supervising crew members)
Hauling out and maintaining vessels
Supervising and monitoring deliveries
Determining what goods to order and when to deliver them
Arranging and supervising voyages
Distribution and service centers
“Distribution and service center activities” means one or both of the following:
Purchasing from foreign affiliates
components or materials for goods
merchandise ready for sale
Reselling such components, materials or goods
Providing services to foreign affiliates in connection with 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
A holding company is a business entity that;
Is a containment body
Has a primary function of acquiring and holding shares or interests in other companies
Does not perform any significant activity as its primary function
- Principal income-generating activities
Earning dividends and capital gains
All companies must submit the Economic Substance Form to their registered agent to facilitate its submission to the FSC before the entity's filing deadline, which is nine months after the last day of its 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 the form is submitted to the FSC.
Satisfying Economic Substance
An included entity demonstrates substantial economic presence in Belize if the following criteria relating to management and control of the Board are met;
A number of Board meetings appropriate to the required level of decision-making are held in Belize;
A quorum of the Board of Directors is present for meetings in Belize;
Strategic decisions of the included entity taken at the meetings referred to in subparagraph (a) must be reflected 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 perform 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 expenditures and employees and adequate premises in Belize;
Its principal 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
Forms of the Belize Companies and Corporate Affairs Registry
