By using our website you consent to all cookies in accordance with our Privacy Policy.

In response to demand from EU council and OECD, Belize through years has implemented necessary tax reforms to remove its harmful tax practices, as in opinion of these bodies and to comply with international norms.

A Belize international business company (IBC) no longer benefited from automatic tax exemption status. Since the beginning of 2019, like domestic entities, tax treatment of international business companies is mainly governed by Belize Income and Business Tax Act (IBTA).

In this article, we will summarize key changes of Belize tax regime for an IBC.

Belize Tax Law on IBCs

Belize maintains a dual system of taxation, under which IBTA mainly resolves around 2 types of tax:

  • Corporate income tax (CIT) assessed on chargeable income; and
  • Business tax (similar to VAT) calculated based on gross income or turnover.

For the last 2 years, Belize has undergone significant changes to its tax treatment for an IBC. Namely, there were two tranches of the amendment into its IBTA in 2018 and 2019.

1. Belize IBTA amendment released in Dec 2018 and came into effect in 1 Jan 2019

In December 2018, Belize amended its International Business Companies Act to eliminate ring-fencing and preferential tax treatment for offshore companies.

The amendment remarked a transformation of Belize tax system into territorial basic in which foreign sourced income is exempted from all kinds of tax in Belize.

1.1. CIT tax treatment under this amendment:

  • General income tax rate in Belize is set at 25%.
  • For petroleum operation, CIT is 40%
  • For IBCs and companies operating in Designated Processing Areas (DPA), CIT shall be:
    • 1.75% for chargeable income exceeding 3mil BZD
    • 3% for chargeable income less than 3mil BZD

Importantly, where a company is engaged in a trade, business, or profession where the revenue or income is derived outside of Belize, the company shall not be liable for payment of income tax in Belize.

1.2. Business tax treatment under this amendment:

The business tax rates vary for different types of income and are stipulated in the ninth schedule in the principal act (IBTA).

Moreover, business tax shall NOT apply to:

  • Persons or companies engaged in petroleum operations;
  • IBCs engaged in a trade, business, or profession if the revenue or income is derived outside of Belize;
  • Companies developing or operating in a designated processing area (DPA).

Despite the country’s aggressive steps toward improving its tax legislation, Belize’s new foreign source income exemption regime was still considered retaining harmful features with respect to ring-fencing and limited scope of economic substance applied to entities benefiting from tax exemption, just to name two.

This led to further amendment in its IBTA and the introduction of new economic substance legislation in late 2019.

2. Belize latest IBTA amendment released in Dec 2019 and came into force in 1 Jan 2020

2.1. CIT tax treatment under this amendment:

Starting from 1 Jan 2020, no income tax shall be payable upon the chargeable income of a company, other than a company engaged in petroleum operations.

2.2. Business tax treatment under this amendment:

Effective from 1 Jan 2020, every individual, self-employed person, professional, firm or partnership will be subject to business tax on all receipts regardless of receiving in or out of Belize.

There are three cases where a company will be discharged from business tax:

  • Companies engaged in petroleum operations;
  • An approved company under the Designated processing area (DPA);
  • Tax resident in other counties not named in EU annex I for tax purposes and not have a PE (permanent establishment) in Belize. And the company have to provide sufficient evidence of its tax residency abroad to claim this tax exemption. In addition, foreign sources income has to come from a Permanent Establishment (PE) of the source state (country where the income is derived) to be eligible for the benefit.

In order for an IBC to qualify for business tax exemption, it must provide supporting documents to demonstrate its tax residence in another country. However, further guide on documents, timeline and procedure for proving foreign tax residency are still under development.

To conclude, all Belize IBCs will now be subject to business tax on turnover unless an IBC can provide proofs of its foreign tax residence and it must derive foreign sourced income from a PE in the source state.

Should you have any question for tax liability of an IBC in Belize, please feel free to contact us via service@bbcincorp.com.

For further information on Belize Tax Guide, you can find out more at: Belize Economic Substance Requirements & Tax Guide [Infographic]

Recent Posts

doing-business-in-hong-kong-the-ultimate-guide-for-foreigners
26 Nov 2020

Doing Business In Hong Kong: The Ultimate Guide For Foreigners

Here is a guide to doing business in Hong Kong for foreigners! The blog covers all you need to know about the benefits of forming a business in Hong Kong and how to start it.

Read more
offshore-company-for-international-trading
26 Nov 2020

Offshore Company for International Trading: Things to consider

Let’s take a glance at things you should consider in terms of benefits and hindrances before turning your typical trading company into an offshore entity.

Read more
how-to-choose-hong-kong-financial-year-end
20 Nov 2020

How to choose Hong Kong financial year end

Wonder how to determine the financial year end in Hong Kong? In this article, we will shed light on everything about Hong Kong financial year. Learn more with us!

Read more
a-guide-to-exempted-company-in-cayman-islands
25 Nov 2020

A guide to Exempted Company in Cayman Islands

A glance at Cayman Islands Exempted Company and all of its key features as well as the incorporation process. Stay tuned to find out!

Read more
guide-to-controlled-foreign-corporation-rules
18 Nov 2020

An Overview of Controlled Foreign Corporation Rules (CFC rules)

Many countries have implemented Controlled Foreign Corporations Rules to avoid profit shiftings among jurisdictions. Learn more about CFC rules with BBCIncorp.

Read more
banking-tool
18 Nov 2020

Choose the Best Banks for Your Offshore Companies

Use BBCIncorp’s banking tool to see what banks suit your offshore business most. You can also check the approval rate to get a bank account. Use it for free!

Read more
offshore-holding-company-how-to-use
25 Nov 2020

Offshore holding company: How to use & Where to consider

Offshore holding company manages equity participations in subsidiaries. In this article, we tell you popular uses and best offshore jurisdictions for a holding structure.

Read more
why-doing-business-in-vietnam
25 Nov 2020

Why Doing Business In Vietnam: Benefits vs Challenges

Still uncertain about doing business in Vietnam? Here we walk you through both the benefits and challenges of Vietnam business to reach your final decision!

Read more
belize-es-quiz-tool
11 Nov 2020

Belize Economic Substance Assessing Tool

Now you can self-check whether your business is subject to Belize economic substance requirements by joining our Belize Economic Substance Self-Assessment Tool. Check it out!

Read more
vietnam-virtual-office-vs-co-working-space
25 Nov 2020

Vietnam Virtual Office vs Co-Working Space: Which to choose?

Vietnam virtual office is an emerging trend for business people investing in Vietnam in recent years. Learn more on how it differs from a traditional physical office!

Read more
joint-stock-company-in-vietnam
25 Nov 2020

A Go-To Guide To Joint Stock Company In Vietnam

A joint stock company in Vietnam is the only business form allowed to issue shares. Find out key features of this type and how it is different from an LLC in Vietnam!

Read more
how-to-start-a-business-in-vietnam-as-a-foreigner
25 Nov 2020

2020 Update: How to Start A Business in Vietnam as A Foreigner

Below is a useful guide to how to start a business in Vietnam as a foreigner. Key highlights include business restrictions, needed documents, and associated costs.

Read more