Taxation System in Belize

Basis

Belize tax resident companies are subject to business tax on worldwide receipts. For eligible receipts, a credit against tax is allowed for any income or withholding tax paid to a foreign country through a branch or permanent establishment but not more than the amount of business tax payable in Belize.

The following receipts are eligible for the foreign tax credit:

• (a) dividends, other than those paid by a company;
• (b) interest, other than interest paid by a resident person or relating to a domestic permanent establishment;
• (c) natural resource payments made in respect of or calculated by reference to natural resources taken from land or the sea situated outside Belize or its territorial waters;
• (d) rent paid for the use of, right to use, or forbearance from using an asset situated outside Belize;
• (e) royalties paid for the use of, right to use, or forbearance from using an asset outside Belize;
• (f) premiums for general insurance in respect of the insurance of any risk outside Belize;
• (g) a payment received by a person who conducts a business of land, sea or air transport operator or charterer in respect of–
  • i. the carriage of passengers who embark, or cargo, mail, or other moveable tangible assets that are embarked, outside Belize; or
  • ii. rental of containers and related equipment which are supplementary or incidental to carriage referred to in sub-paragraph (i);
• (h) payments received by a person who conducts a business of transmitting messages by cable, radio, optical fibre, or satellite or electronic communication in respect of the transmission of messages by apparatus established outside Belize;
• (i) payments attributable to a business conducted outside Belize having a permanent establishment located in a foreign country;
• (j) a gain from the realization of–
  • (i) real estate located outside Belize;
  • (ii) any asset of a permanent establishment outside Belize; or
  • (iii) any debt, equity, or other financial instrument issued by a person other than a resident person.

Tax Identification Number

A Tax Identification Number (TIN) is required to file a tax return and pay taxes. The process takes about 6 weeks but may take longer depending on the volume of registrations at the time.

Residence

A corporation is deemed resident in Belize once it has been incorporated or registered in Belize. It may, however, apply for tax exemption if:

• It is a non-included entity as defined in the Economic Substance Act,
• The company is in good standing with the Belize Companies and Corporate Affairs Registry (BCCAR),
• The company is tax resident in another jurisdiction other than a blacklisted jurisdiction,
• The company has no central management and control in Belize,
• The company has no permanent establishment or relevant activities in Belize, AND
• The company has no Ultimate Beneficial Owners resident in Belize.

Business Tax Rates

Business tax is a tax on total receipts (or revenues) without any deductions for expenses. The applicable tax rate depends on the classification of the receipts. It is generally accepted that most receipts will fall under the classification of ‘Business or Trade’ or ‘Professional services’. However, there are other classifications for specific activities.

Sample rates:

A company which pays dividend shall not deduct tax from the dividend if the dividend will be paid to a related party or to a company which -

• (a) is a resident of a country other than a country on the European Union list of non-cooperative jurisdictions for tax purposes;
• (b) has no permanent establishment in Belize; and
• (c) self-certifies in the prescribed form that the dividend is taxable under the laws of the relevant country of residence.

Holding companies

Holding companies and pure equity holding companies are levied a rate of 0% provided that the receipts derive from passive income and that the holding company is not involved in any active trade or business.

Holding company means a company which-

• (a) is a holding body;
• (b) has as its primary function the acquisition and holding of shares or equitable interests in other companies; or
• (c) does not carry on any relevant activity for purposes of the Economic Substance Act as its primary function

Pure equity holding company means a company which only holds equity participations and earns only dividends and capital gains or related incidental income.

A Holding Company is classified as a non-included entity for Economic Substance purposes and is only required to file an annual Economic Substance form confirming its continued classification as non-included. A pure equity holding company is subject to reduced substance requirements, as follows -

• It shall comply with all applicable laws and regulations of Belize; and
• It shall have adequate human resources and premises in Belize for holding equity participation in other entities and where it manages those equity participations in other entities, have adequate human resources and premises in Belize for carrying out the management.


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