The Belize Legislature has passed into law*certain Compliance changes as regards Belize Incorporated IBCs. In this Article we will discuss the details, the impacts and the options.
To begin with there are now a number of new documents that must be collated. These are the items that we must meet/collect for each company:
- IPAG (Intellectual Property Assets Grandfathering Program form) – to be done by all companies incorporated before January 2019.
- IP Declaration form – to be done by all companies incorporated on or before 16 October 2017.
- TIN application form (Tax Identification Number) – all companies
- Economic Substance Reportingform – depends on what kind of activity the company is engaged in
- Form B – Included entities, which are those companies engaged in a relevant activity (banking business; insurance business; fund management business; financing and leasing business; headquarters business; distribution and service center business; shipping business; as a holding company, engaged, or where one or more of its subsidiaries is engaged in one of the relevant activities stated.)
- Form C - Pure Equity Holding Companies, which are companies which only hold equity participations and earn only dividends and capital gains or related incidental income
- Form D – Non-included entities, which are those companies not engaged in a relevant activity
- IBC Tax Return– to be submitted by all companies before 31 March 2022 (except those companies that apply for tax exemption)
- a company that was incorporated prior to 16 October 2017 must submit a tax return to reflect gross receipts (gross revenue) earned between 1 July 2021 – 31 December 2021.
- A company was incorporated on or after 17 October 2017 must submit 2 tax returns. One to reflect gross receipt for all of 2020 and another for 2021.
- Tax Exemption – a company (except an included entity or a PEHC) may apply for tax exemption by completing Form E and the Annual Confirmation of Tax Exemption form. It is advised that companies apply for tax exemption before 31 March 2022. Note, this application captures the tax jurisdiction of the ubo. This information will be shared by our authority with said tax jurisdiction.
- Tax Exemption – a company that is a registered tax resident in another jurisdiction (not blacklisted by EU) may apply for tax exempt status by submitting an Information Return form and supporting evidence of its tax residence outside of Belize.
Tax rates:
| BusinessActivity | Tax Rate |
| Trade or Business | 1.75% |
| Professional Services | 6.0% |
| Commissions (if revenue is less than US $12,500) | 5.0% |
| Commissions (if revenue is US $12,500 and above) | 15.0% |
| Rental Income | 3.0% |
| Long Term Lease – Real Estate | 1.75% |
| Radio, On-air 0TV, Newspaper Revenue | 0.75% |
| Domestic Airline Revenue | 1.75% |
| Insurance Institutions General Revenue | 1.75% |
| Telecommunications Revenue | 19.0% |
| Fuel/lubricant Revenue | 0.75% |
| Tour operators and Travel agents | 6.0% |
| Real Estate Business – Real Estate Broker and Agents, earning Commissions | 15.0% |
| Real Estate Business – real estate sales, developers, condominium owners and fractional Interest, Long term Leases, Time Share operators | 1.75% |
| Foreign sourced Income: Dividends/Interest/Royalties | 5.0% |
| Annual Net Gain | 5.0% |
| Pure Equity Holding Company, Holding Company not engaged in a relevant activity | 0% |
BELIZE COMPLIANCE CHANGES – YOUR QUESTIONS ANSWERED
What are the set up and annual Compliance/reporting tax payable requirements in Belize for a new Belize IBC?
- Consider the activity. If the company is a relevant activity, then economic substance must materialize as soon as possible.
- TIN. All companies (does not matter what activity) must apply for a TIN.
- Preferably at anniversary of incorporation, the company must file ES forms. (B,C,D)
- By 31 March every year, the company must file a tax return. OR it must apply for tax exemption (if it is not engaged in a relevant activity)
- Usual annual renewal fees apply, no late penalties. However, it must be paid before any other filing service or request of the registry is done.
- KYC (passport, utility bill)
What are the set up and annual Compliance/reporting tax payable requirements in Belize for a new Belize LLC?
No changes to LLCs. Not included in ES legislation. No tax.
What kind of business can a new IBC do as of right? What kind of business can a new IBC NOT do as of right?
IBC can do any business except IP business (holding IP etc.). Relevant activities require economic substance.
What kind of business can a new LLC do as of right? What kind of business can a new IBC NOT do as of right?
An LLC can do any business not prohibited by law. LLCs can hold IP assets.
What kind of assets can a new IBC hold? What kind of assets can a new IBC NOT hold? An IBC cannot hold any IP Assets.
What kind of assets can a new LLC hold? What kind of assets can a new LLC NOT hold?
No restriction.
The Belize LLC – Under the Microscope
Simply put, moving forward, it would appear that the preferred Corporate Vehicle for anyone looking to incorporate in Belize would be an LLC.
An LLC (Limited Liability Corporation) is, effectively, a hybrid of a Limited Company and a Partnership.
It’s like a Company in that that liability of the Company is limited to the capital invested and assets purchased by the Company.
Like a partnership it’s a flow through entity: An LLC does not have to file a tax return; the nett profits are passed through to the members of the LLC (members are to an LLC what shareholders are to a Limited Company) who are responsible for taxes (if applicable) in their country of tax residence. (ie same tax treatment as partners in the case of a Partnership).
From a member/partner’s perspective an LLC is superior from a liability perspective to a Limited Partnership (“LP”) because in the case of a Limited Partnership (which is constituted by a Limited Partner and a General Partner) one partner can be made liable for the debts of the partnership. In the case of an LLC the liability of the members is limited to the extent of the member’s capital contribution (unless a personal guarantee has been given by a member to a supplier of the LLC).
LLC members can fully participate in the management of the LLC (which is different to an LP – in the case of an LP the Limited Partner usually can’t participate in the management of the enterprise without risking his/her Limited Liability status).
Key Benefits include:
Privacy: There is no public register of owners/members or Directors/Managers in Belize
Tax Effectiveness: Belize LLCs are not liable to corporate or business or any other form of tax in Belize
Simplicity: There is no requirement in Belize to prepare annual accounts or appoint an auditor
Flexibility: Belize LLCs can be used to own/operate a wide range of businesses as of right
Asset Protection: Before you can sue a Belize LLC you have to pay a deposit being an amount equal to the greater of (i) one half of the amount claimed or $US50,000 whichever is the greater
Other features of the Belize LLC Law include:
- A Belize LLC:
(a) can be structured according to its own rules rather than being dictated to by statute
(b) is a legal entity with separate rights and liabilities distinct from its members & managers. (This means noone other than the LLC itself can be made liable for the debts of the LLC)
(c) Somebody suing a Belize LLC member at best can only have the members rights assigned to him; he can’t participate in the management of the LLC
- Belize doesn’t recognize foreign judgments. Only a judgment made by a Belize Court can be given against a Belize LLC
- LLCs from other jurisdictions can migrate to Belize and vice versa (ie a Belize LLC can redomicile and become eg a Nevis LLC)
- Civil legal proceedings against a Belize LLC must be held in private (and there are penalties for unauthorised disclosure).
Set Up cost: $UD1,200 From 2nd year $890
Would you like to know more? Then please Contact Us:
info@offshorecompaniesinternational.com
DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.
*Information current as at 3 March 2022
