In December 2018, the National Assembly of Belize passed The International Business Companies (Amendment) Act, The Income and Business Tax (Amendment) Act and the Stamp Duties (Amendment) Act.
In order to remove itself from the ‘investment blacklist’, and once again become a reliable ‘financial haven’, the government of Belize has made concessions for international regulatory organizations; some of these include the Financial Action Task Force (FATF) and the Organization for Economic Cooperation and Development (OECD). Making concessions in this context means modifying legislation and adapting practices in order to be recognized as a transparent business destination.
This legislative change will create a new business environment for international business companies (IBCs). To offer a clear picture, we have summed up the amendment changes.
Firstly, these new amendments affect mostly International Business Companies (IBCs), which are offshore business structures. The legislative adjustments mean that IBCs are no longer exempt from paying taxes within Belize. Moreover, the changes mean that IBCs are subject to both local Belizean business tax and stamp duty.
As stated in Amendment 130, an IBC must meet the following requirements:
- Pay Income and Business Tax Act, Cap. 55.
- File an annual tax return based on the Income and Business Tax Act, Cap. 55.
- Act in accordance with the Stamp Duties Act.
Currently, IBCs are left with three options:
- Option 1: Register with the national tax authority and obtain a company tax identification number.
- Option 2: Opt for a tax ID in a foreign country.
- Option 3: Choose to discontinue the company.
Option 1: Registering in Belize
When IBCs choose to register with the national tax authority and obtain a company tax identification number, the following must be taken into consideration:
- Companies must pay a business tax in Belize regardless of where the income comes from.
- Companies will need to prepare and present annual filings with the Belize Tax authorities based on income made outside of Belize.
- As stated in Amendment 82B, companies must have a registered office in Belize.
Business tax rates applicable in Belize vary based on reported net income. The two taxes rates are as follows:
- 1.75% on net income greater than $USD1.5 million.
- 3% on net income equal to or less than $USD1.5 million.
How to Acquire a Tax ID in Belize?
Acquiring a tax identification number in Belize can prove to be quite difficult, especially without the right local support.
- Have a presence in Belize and report on income (both inside and outside of Belize).
- Maintain company documents in Belize.
- Have a registered office address.
Option 2: Register in a Foreign Country
Another option is registering to pay taxes in another jurisdiction. As stated in amendment 139, this will provide the company with an option to be exempt from paying taxes in Belize.
Option 3: Terminate the Company
The last option for any company is to choose to terminate operations in Belize. This choice will be made based on a trade-off between relocating costs and location benefits.
Due to transparency restrictions encouraged by renowned international authorities, the landscape of tax havens is fast changing. In saying that, IBCs still offer companies a great platform to manage wealth and assets. A local partner can support you to register a company in Belize and comply with tax requirements.
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