Changes in Belize’s corporate and tax laws
Since January 1, 2019, significant changes have been made to the corporate and tax legislation of Belize governing the activities of international business companies (“IBC”) in this jurisdiction. Below is a brief overview of the most important changes that may affect the activities of a number of IBCS.
In addition, it should be noted that the regulatory authorities of Belize have the right to make additions, as well as to provide official explanations (instructions) for legal entities in connection with the application of these amendments. At the moment, Belize's registration agents are awaiting the publication of official clarifications.
Prohibition of ownership of intellectual property
IBC is prohibited to own or transact with intellectual property (“IP”). In case of violation of this requirement for the first time the fine will be 25 thousand dollars, and for each subsequent violation – 100 thousand dollars.
If the IBC already existed as of 30 June 2018 and owns IP objects, it is obliged to apply to the international financial services Commission of Belize for the right to own IP objects. However, based on the results of the application, the office may not grant it such a right – and then the IBC will be obliged to get rid of the IP objects.
If IBC is registered after June 30, 2018, it is clearly not entitled to own or acquire IP objects.
Criterion of "real economic presence"
IBCs whose activities are subject to mandatory licensing in Belize (for example, banking and insurance activities, trust management of third party assets, etc.) must necessarily comply with the requirement of a "real economic presence". In particular, such IBCs are required to rent an office in Belize, hire local employees, bear operating costs, keep all corporate documents in Belize, etc.
For all other IBCs, compliance with the requirement of a "real economic presence" is not mandatory.
Companies that meet the criterion of "real economic presence" will be recognized as tax residents of Belize.
Assets / property in Belize
Previously, IBCs were not entitled to own property (e.g. real estate) located in Belize. Now this restriction is removed.
Preparation of financial statements and audit. Tax implications
All IBCs that meet the "real economic presence" criterion, as well as other IBCs that receive income from sources in Belize, will be required to prepare annual tax reports and submit them to the Belize tax authorities, as well as to pay income tax. The amount of income tax is calculated on a progressive scale (3% – for profits up to 3 million Belize dollars, 1.5% – for profits exceeding 3 million Belize dollars).
IBCs that own property located in Belize will also be required to pay stamp duties.
The tax authorities of Belize is entitled to present to the IBC any requirement for mandatory audit of the financial statements, if the annual income of the IBC is at least 6 million U.S. dollars.
The IBC, established no later than October 16, 2017, in the period up to June 30, 2021, continues to apply the regime that was in force before the adoption of the new law. Starting from July 1, 2021, a new regime will be applied to such IBCs.
The new regime will apply immediately to IBCs established as of 17 October 2017. It is assumed that they will be given a transitional period of about 12 months from the date of adoption of amendments to the legislation in order to implement the new regulations.