Belize introduce corporate tax of 1,75% to please the banks.

happyjohn

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The rate of tax for international business companies:

  • 1.75% of the chargeable income amounting to a sum greater than three million Belize dollars derived from business operations, and such tax shall be payable in the currency of the United States of America (US$);
  • 3% of the chargeable income amounting to the sum of three million of a lesser amount in Belize dollars derived from business operations, and such tax shall be payable in the currency of the United States of America (US$);
Where a company is engaged in a trade, business, or profession where the revenue or income is derived outside of Belize, the compan, shall not be liable for payment of income tax in Belize.

If this is going to help to be able to apply for a bank account with the major banks around the globe I'm happy to pay the 1,75%.

I doubt it will make things better but let's see where this is going.
 

fshore

Trusted Member
Business Angel
Where a company is engaged in a trade, business, or profession where the revenue or income is derived outside of Belize, the compan, shall not be liable for payment of income tax in Belize.

/QUOTE]
So still no taxes for offshore companies
 

happyjohn

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Here is more!

The Government of Belize has passed amendments to three important Acts, amending and the International Business Company (IBC) Regime to territorial taxation as of 1st of January 2019:
the International Business Companies Act; the Income and Business Tax Act and the Stamp Duties Act.

IBC registration regime has been extended to Belizean residents and subsequently physical presence granted to the IBCs with specific business activities.

Definition of "person resident in Belize" has been amended by removing the exemption of an IBC and subsequently including an option for IBC to be considered a resident. The Amendment Act has widened the scope of resident companies by including all IBCs managed and controlled within Belize and by defining that those companies with activities licensed by the Financial Services Commission Act (relevant activities), will be considered physically present in Belize, allowing companies with any other lawful operations to decide to become physically present in Belize. Note that, when a company has taken steps to comply with the physical presence requirement, it shall remain in fulfilling this position for at least five years.

The IBC Amendment Act removes the restrictions from international business companies to carry on business with Belizean residents and removes the prohibitions concerning ownership of real property in Belize, by amending and substituting section 5 of the IBC Act.

IBC Act has removed exemptions from taxes and duties:
PART XII, Exemption from Tax in the IBC Act has been substituted with PART XII, Income Tax and Other Taxes and Duties.

This part of the IBC Amendment Act sets out provisions for the companies that are considered resident in Belize:  Liable to pay applicable taxes as at rate specified in the Income and Business Tax Act.  Must file an annual return based on requirements of the Income and Business Tax Act  Shall be subject to the Stamp Duties Act. Banking requirements for physically present company

Amendment of section 134 (1) provides guidelines for a company physically present in Belize concerning bank accounts, i.e., that such companies may maintain US dollar account in a domestic branch of a foreign or international bank located in Belize. And further that company under 134 (1) will have to submit a monthly report to the Central Bank of Belize, and such monthly report shall include all transactions in dollar accounts held by the company and sales and purchases of the company.

Income and Business Tax Amendment Act sets out the rate of tax for companies, provisions for a tax regime for companies engaged in certain business activities as well as exempts from tax the interests and dividends from specific trade or business.
 

Tepesch

Member
So Belize IBCs used for Online Business when all income of the IBC is coming from OUTSIDE Belize, will these ibcs be taxed or not?
 

fshore

Trusted Member
Business Angel
So Belize IBCs used for Online Business when all income of the IBC is coming from OUTSIDE Belize, will these ibcs be taxed or not?
Under Sections 4 and 7 of the Income and Business Tax Act, income derived by IBCs outside of Belize is exempt from income and business tax.
 

Mr Magoo

Building Trust
Entrepreneur
Under Sections 4 and 7 of the Income and Business Tax Act, income derived by IBCs outside of Belize is exempt from income and business tax.
so what is all the fuzz about. Dont think many people use an IBC to generate income in Belize
 

fshore

Trusted Member
Business Angel
Regardless if you have to pay up to 3% tax or not, the big question is if all this helps to get a bank account easier for a Belize company again or if it all keep to be the same.
Would you really pay 3 % for a bank account?
 

TurnedToRobot

Trusted Member
Business Angel
This is not to please the banks, it's to please EU and OECD.
true, but as they claim then it is something that will make it much easier to get a bank account for a Belize company.
 

fshore

Trusted Member
Business Angel
true, but as they claim then it is something that will make it much easier to get a bank account for a Belize company.
Who claims that, you mean OP? I find it very unlike that it would change the banks view. Substance requirements might be of more help.
 

James Turner

Trusted Member
Business Angel
Mentor Group
I doubt very much this will make any difference in the ability of a Belize IBC to obtain banking with more banks. It is merely an attempt by Belize to look more legitimate, but banks in other countries will not take this seriously.
 

JohnD

Active Member
This is very interesting topic. I've found following information, any comments ?

Belize IBC Act Changes February 2019

A new IBC Regime came into force on 1st January 2019 in Belize.

Following several consultations with our legal advisors and some guidance received from the Belize International Financial Services Commission (“IFSC”) and the Belize Income Tax Department, we can now provide the following clarifications on the impact of the new regime on Belize IBCs.

Under the new IBC regime in Belize:

1. Belize IBCs can now:
  • Acquire real property or an interest in real property in Belize
  • Hold an interest in any Belize company, whether domestic or international
  • Conduct business with any Belize resident person
  • Open and operate a domestic bank account in local Belizean currency
  • Engage in direct investment and trade in Belize

2. IBCs that hold a license issued by the IFSC (e.g. Trading in Securities, Forex, Brokerage, etc.) are now required to establish a physical presence in Belize before the end of 2019;

3. IBCs that do not hold a license from IFSC may decide to be physically present in Belize;

4. IBCs that do decide to be physically present in Belize will consequently be deemed as persons resident for tax purposes in Belize;

5. IBCs that decide to remain outside of Belize and carry out their core income generating activities outside of Belize will not be deemed resident in Belize and will thus not be liable to taxes on income derived outside of Belize;

6. IBCs, whether physically present in Belize or not, may apply for a Certificate of Good Standing, subject to payment of registry renewal fees;

7. IBCs, physical presence and date of incorporation notwithstanding, may apply for a TIN and thus file annual tax returns along with unaudited financial statements subject to requirements 8 and 9 below;

8. Accounting records – this requirement has already been established with the Accounting Records Maintenance Act of 2013 and remains in effect. (ie a Belize IBC shall maintain accounting records and must keep a note in its registered office revealing a street address where those records are kept).

9. The Commissioner of Income Tax may require the following companies to be audited by an independent audit firm:
(a) IBCs with income of at least USD6m;
(b) Entities operating in a designated processing area in Belize with income of at least USD250,000;
(c) Any other entity-
  • Listed on a stock exchange;
  • Restructuring or liquidating or selling all assets via auction;
  • Regulated by the IFSC;
  • Preparing consolidated Financial Statements;
That the commissioner may direct to be audited and having regard to total revenues, assets and employees;

10. IBCs incorporated on or before 16th October 2017 remain tax exempt up to 30th June 2021 and can still obtain a Tax Exemption Certificate up to 30th June 2021;

11. Any IBC incorporated on or after 17th October 2017 that requires a Tax Exemption Certificate must give evidence that:
  • the IBC is not physically present in Belize;
  • the IBC’s core income generation activities are conducted in a country where taxes under the Income and Business Tax Act would become applicable had it been located in Belize; and
  • the IBC is paying the rate of taxes payable;

12. Each Belize IBC must keep at its registered office up-to-date registers of directors, shareholders and ultimate beneficial owners (duly signed by a director).

Tax Resident Companies

For IBCs that choose to be physically present in Belize or those that carry out a licensed activity, the following rules are applicable/relevant:

1. Belize has a territorial tax system;

2. The Belize Income and Business Tax Act Cap55 (IBTA) provides:
(a) A Tax exemption on income below USD37,500 per year;

(b) Interest on a bond and dividends paid or received by an IBC is tax exempt and free from withholding tax provided it is not paid or received in Belize by a tax resident;

(c) Royalties and commissions paid to a non-resident are tax exempt and free from withholding tax;

(d) There is no capital gains tax in Belize;

(e) IBCs that are physically present and are resident in Belize for tax purposes: i. Must file monthly business tax returns;
ii. Income below USD37,500 is tax exempt;
iii. IBCs with income greater than USD37,500 per year will be subject to the payment of business tax every month as per the tax rates applicable to business type, this will count as a credit toward annual tax assessments. Business tax will be on gross receipts. Business tax rates range from 1.75% to 19%, depending on business type. E.g. Most business pay at 1.75% of business tax rate; professional services business pays 6%.
iv. Annual tax returns (annual assessments) 3% on net Income up to USD1.5m; 1.75% on Net Income greater than USD1.5m; tax payable in USD. This assessment is done yearly, before March 31, and requires completion of corporate tax return accompanied by an audit report.

3. General Sales Tax Act (GST): IBCs with income greater than USD37,500 per year will be required to register as a General Sales Tax Agent, and depending on income source, will be required to charge 12.5% GST on its sales to consumers in Belize and will also be able to nett of general sales tax paid on its purchases. The net amount of general sales tax is payable to the GST department on a monthly basis.

For the avoidance of doubt, an IBC is therefore only liable to taxes in Belize if it is a person resident in Belize. Furthermore, the IBTA was also amended to provide that, “…where a company is engaged in a trade, business, or profession where the revenue or income is derived outside Belize, the company shall not be liable for payment of income tax in Belize.”

Intellectual Property

A further update on the new IBC regime addresses intellectual property (IP) assets. Statutory Instrument No. 11 of 2019 came into force as of 1st January 2019 and essentially abolishes the IP regime. Key provisions to note include:
  • IBCs incorporated on or after 17th October 2017 are not allowed to acquire, hold, own or deal with any IP asset.
  • IBCs incorporated prior to the aforementioned date shall not acquire any new IP asset and are required to apply to the IFSC for approval to continue holding current IP assets up to 30th June 2021.
  • For IP assets, for each case, the company will have to send letter to IFSC to seek guidance. They may be required to establish physical presence, but only upon instruction from IFSC.
 

clemens

Corporate Services
Business Angel
Mentor Group
@JohnD how does your post differ from OP.
 

JohnD

Active Member
@JohnD how does your post differ from OP.
well, it's more detailed. Plus, as far as I understand the details, having (even an existing) IBC after June 2021 with income above 37.5 means you have to pay tax in Belize or elsewhere. I'm a bit surprised, that there is not a broader discussion about this here.
 

fshore

Trusted Member
Business Angel
well, it's more detailed. Plus, as far as I understand the details, having (even an existing) IBC after June 2021 with income above 37.5 means you have to pay tax in Belize or elsewhere. I'm a bit surprised, that there is not a broader discussion about this here.
If you are not physically present in Belize then you don't have to pay tax there.
You might have to pay tax in another country if the company is resident there, but that is the same. As before.
 
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