Belize: International Business Company (IBC) Regulatory Updates
International Business Company, is a Company Limited By Shares, (IBC) 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 to address the considered ‘harmful tax regimes’ identified by the Forum on Harmful Tax Practices (FHTP).
IBCs can now be incorporated by both residents and non-residents, can do business locally and with residents, own land in Belize and hold shares in Belize domestic companies. Under the Income and Business Tax (Amendment) Act, 2018, IBCs doing business within Belize are now subject to both Belizean income tax and stamp duty and are required to file an income tax return.
IBCs doing business in Belize will be subject to 1.75% of the chargeable income amounting to a sum greater than BZD 3 million, or 3% of the chargeable income amounting to a sum lesser than BZD 3 million. Taxes will need to be paid in US Dollars. CNETLYs whose income is derived outside of Belize shall not be liable for payment of income tax in Belize. Capital gains, dividends, and interests received may be exempt from taxation. Payments to non-residents may be exempt from withholding taxes.
To qualify for the IBC regime, certain companies may be subject to physical presence and tax residency status:
- the activities of a company must take place in Belize (for example, company meetings)
- all documents must be kept on-site in Belize
- depending on the type of activity, a company must employ a sufficient number of well-trained and qualified personnel who are physically present in Belize to carry out the company’s income-generating activities
- the expenditures must take place in Belize and be adequate for that type of business
- it is required to have rented office space in Belize and according to the scale and size of that type of business
- businesses must conduct their control and management activities from Belize, either directly or through a management agency, including that board meetings are held in Belize and at least two directors are resident in Belize
- most businesses may fulfill the physical presence requirement via hiring a management agency
International Financial Services licensed companies and certain other businesses such as companies providing services to or trading goods with affiliates, holding companies and companies deriving income from intellectual property – must be physically present and tax resident in Belize.
Companies that wish to obtain a tax exemption certificate and non-resident status may need to prove economic substance and tax residency in another jurisdiction.
Note that companies physically present in Belize may be subject to capital controls under the Exchange Control Regulations Act.
IBCs will be able to obtain Tax Identification Number (TIN) and may be required to file annual tax returns and financial statements. IBCs with receipts of at least USD 6,000,000 may be required to file audited financial statements.
IBCs registered before October 16, 2017, are allowed to grandfather their existing tax exemption benefits up to June 30, 2021 – at that time they will need to comply with all the above requirements.
For IBCs registered from October 17, 2017, to December 31, 2018, the above requirements are immediately applicable to them. A transition period of 1 year has been granted – whereby IBCs must take the appropriate steps to ensure they are compliant.
The country has implemented the OECD automatic exchange of information (AEoI) and has signed tax information exchange treaties (TIEa) with 18 countries.
Please click here to download a copy of International Business Companies (Amendment) Act, 2018.