Navigating Belize's Evolving Tax Landscape

Belize Envolving Tax

Managing taxes is a crucial part of any business. If you hold a business in Belize and are unaware of how to manage taxes seamlessly. This guide can be your right ally. So, let’s get straight into how businesses, whether offshore or onshore, are taxed in Belize, what reporting requirements come into play, and the incentives available to foreign businesses. 

Taxes for Domestic (Onshore) Entities and Individuals

• Business Tax (Corporate Tax):

  
  

  • The current corporate tax is imposed on the gross receipts (revenue), not on the profit. 

  • The current corporate tax ranges from  1.75% to 19%. Notably, receipts from trade and business are taxed at 1.75%, while a 15% tax is imposed on receipts from financial institutions. Additionally, unlike other sectors, telecommunication service providers are obligated to pay 19% corporate tax. 

  • If the income tax exceeds the business tax, the authority writes off the difference between the two; the taxpayer must pay the higher of the two. 

    
    

• Income Tax (Personal):

  
  

  • If the annual income exceeds the tax-free threshold, the taxpayer must pay a tax of 25%. Notably, no income tax is charged on the income up to BZD $26,000 (about USD $13,000).

    
    

• General Sales Tax (GST):

  
  

  • The current GST rate is set at 12.5% on the supply of goods and services

  • The GST registration is mandatory for businesses with an annual turnover of BZD $75,000 or more.

    
    

• Withholding Tax (WHT):

  
  

  • The withholding tax comes into effect when a taxpayer makes a payment to non-residents. The current WHT is set at: 

    • Dividends: 15%

    • Interest on Loans: 15%

    • Management fees, Insurance Premiums, Technical Services, and Rental of plant/equipment: 25%

• Capital Gains Tax: Belize has yet to implement Capital Gains Tax.

  
  

Taxes for International (Offshore) Entities – International Business

Companies (IBCs)

• Belize IBCs relying on the foreign-sourced income and lacking local operation are exempt from income and business tax. 

• Such entities are not obligated to pay withholding taxes, capital gains taxes, or stamp duty.  

  
  

Economic Substance and Reporting Requirements

To ensure transparency and accountability, the offshore entities are not required to comply with the Economic Substance Act (ESA) of 2019. The act necessitates consistent reporting with the respective authorities to ensure compliance. Here are some crucial obligations for offshore entities in Belize. 

• Tax-exempt entities are required to secure the tax Identification Number (TIN) from the Belize Companies and Corporate Affairs Registry (BCCAR). The issuance of a TIN does not make offshore entities liable to pay any taxes, as long as they rely on the foreign-sourced income. 

• Adherence to the Economic Substance criteria is mandatory for the entities belonging to the following sectors:

  • Banking

  • Fund Management

  • Insurance 

  • Financing and Leasing

  • Shipping

    
    

Ensuring an economic substance requires offshore businesses to have Core Income Generating Activities (CIGA) within Belize’s territory, an adequate number of employees, physical presence, and operating expenditure. 

• Reporting Requirements (Annual Filing):

  
  

  • Offshore entities registered as IBCs must file an Economic Substance Report.

  • Claiming Non-Tax Residency: IBCs belonging to tax residency other than Belize can skip the economic substance requirements, provided they provide the authority with 

    • A certificate of tax residency 

    • Evidence of a tax assessment or

    • Tax payment from the jurisdiction

      
      

  • Financial Records: Offshore entities that rely on foreign-sourced income must maintain records of accounts payable and accounts receivable for a minimum of five years.

  • Such entities must report the details of UBOs to the relevant authority within the stipulated timeframe. 

    
    

  • IFSC-Licensed Entities:  International Financial Services Commission (IFSC)-registered companies must file Audited Financial Statements and various compliance declarations within recommended timeframes.

    
    

Taxes in Belize are streamlined and non-stringent. By ensuring timely filing and reporting, offshore entities can avoid penalties and enhance their credibility. However, if doing taxes is not your specialty, BSW’s assistance can be a great relief. Over the past eight years, BSW has helped numerous clients succeed offshore, regardless of the jurisdiction or industry. 

From company formation to tax management, BSW offers a broad spectrum of services that make your business stands out in any jurisdiction.  By managing taxes from the ground up, BSW simplifies the compliance journey, allowing clients to focus on their core tasks. Contact us today to book a free consultation.