A country’s tax regime is always a key factor for any business owners to concern about before incorporating or moving into new markets.
This article addresses the business tax applicable for IBCs in Belize as well as obligations and liabilities associated to help you effectively manage your taxes, maintain compliance status, and avoid troubles.
Table of Contents
1. Business tax implications for IBCs in Belize
According to Amendment No.24/2018 of the International Business Companies Act in Belize, income tax was chargeable for all Belize-resident IBCs. In the same year, Amendment No.26/2018 was also established which stated that all Belize IBCs were liable for an income tax rate of 1.75% – 3%.
But later in 2019, the principle of IBC taxation was significantly changed by the adoption of Amendment No.25/2019, the income tax was abolished for all IBCs except petroleum industry enterprises. Another tax called Business Tax became chargeable on the income of resident IBCs in Belize.
Following the new amendments, IBCs are no longer exempt from paying taxes within Belize. This means all Belize IBCs must pay business tax for all receipts of the company, regardless of where the receipts come from, and shall file annual tax returns, except IBCs that fall into exemption cases mentioned in section 2.3 below.
The new tax regime has officially come into force on 1st January 2020, meaning all IBCs will have to comply with the taxation rule and might start paying taxes.
Our Belize International Business Company Guideline will give you a complete overview of this popular legal entity!
2. Key factors of Belize business tax
The key factors of business tax in Belize are listed below:
2.1. Rates of tax
The Belize business tax rate is charged on total receipts, without any deduction except for granted relief.
IBCs exceed the threshold of annual revenue including:
- Trade business & other income: $37,500
- Professional services: $10,000
- Retail receipts: $4,800.
shall be taxed at the prescribed tax rate.
The standard tax rate applicable for regular Trade and Business is 1,75%. There are also various rates of tax for specific business activities, such as 6% for professional services, 3% for licensable financial services provided to non-residents, 3% for rent, etc.
For the full list of tax rates on different business activities, click here.
2.2. Time and method of payment
The payment of estimated tax must be accompanied by filing annual tax returns due for the basis year.
Tax payment can be made online via bank transfer and must be done before 7 PM to be accounted for on the same day, any payment made after 7 PM would be accounted for the next working day.
Exemption from business tax is granted to IBCs that satisfy all of the requirements below:
(1) The IBC is a non-included entity under the Economic Substance Act 2019;
(2) The IBC is a tax resident in a foreign jurisdiction (with the exception of EU blacklisted jurisdiction);
(3) The IBCs meet the conditions under section 106 of the Income and Business tax, which includes filing a form claiming the benefit by the due date.
(4) The IBCs obtain a Tax Identification Number (TIN) in Belize.
The form for requesting a tax exemption certificate for IBCs can be found here.
The Belize Tax Administration has the authority to exchange information with jurisdictions that IBCs declare as their place of tax residency for the purpose of exemption from business tax.
Did you know?
Your company will be subject to certain requirements whether it is exempt from Belize tax or not. You can check the tax status and related compliance duties of your company with Belize Tax Status Assessment Tool.
If you need help with filing your Tax Exemption Form in Belize, feel free to contact us for assistance!
3. Tax obligations for IBCs in Belize
Apart from paying taxes, IBCs are required to fulfill certain obligations in accordance with the law, including:
3.1. Obtain Tax Identification Number (TIN)
The Belize Tax Administration clearly states that every IBCs, with no exception, must have TIN so that regulatory and tax authorities can efficiently monitor the status of the IBCs.
In order to obtain a TIN in Belize, the IBCs would be required to submit the TIN registration BTS150 Form.
3.2. File annual tax return
All Belizean IBCs are required to file annual business tax returns with the Belize Tax Service Department.
The first tax return must be filed on or before 31st March 2022 for the accounting period of 2020 and 2021.
For grandfathered IBCs, the first tax return must be filed on and before 31st March 2022 for the accounting period of 2021.
Grandfathered IBCs refer to IBCs that were registered on or before 16th October 2017 and were engaged in relevant activities after 16th October 2017.
IBCs must also submit Financial Statements at the time of filing the Business Tax return.
If the IBCs’ receipts exceed $6 million dollars, the financial statements must be audited in accordance with IFRS. Other IBCs shall submit Financial Statements audited in-house.
For a better understanding of this matter, check out our in-depth review of Belize Annual Tax Return.
4. Liability for non-compliance of tax obligations
There will be penalties imposed for IBCs that fail to comply with the filing and payment deadlines and they are as follows:
- Late or non-filing of business tax returns – 10% of the tax due every month that the return remains outstanding, minimum of $10 for a maximum period of twenty-four (24) months.
- Late or non-payment of business tax – a charge of 1.5% per month on all unpaid balance for every month while it remains outstanding.
- Failure to file a tax return – a fine not exceeding 10,000 Belize dollars (4,952 US dollars) will be imposed if taxpayers fail to return a file or at least two years imprisonment.
According to the Tax Administration and Procedure Act, the time limit to collect outstanding tax and impose penalties is 6 years from the date of contravention.
Due to the legislative changes, the tax landscape for International Business Companies in Belize is collectively affected. Nevertheless, IBCs still offer entrepreneurs a great platform to manage wealth and assets.
With BBCIncorp’s dedicated support and responsive consulting, business owners can register a company in Belize and comply with tax requirements with ease.
You are welcome to get in touch with us!