Businessmen interested in opening a company or get involved in public investment programs in Central America more often regard Belize as an option. This change is the result of Belize’s strive for resetting its positive image after being associated with an offshore location. In fact, the country is making changes to the legislation that governs registration conditions for international business.
Let’s take a closer look at the application of the amended legislation in Belize. Only by examining it in detail, we can define all the advantages and disadvantages of the registration process that companies are about to face.
Restoring good reputation
The 90s for Belize were a period when it became known for low tax requirements for offshore companies that obviously attracted foreign investors vigorously. Alternatively said, companies opened in Belize remotely had a perfect opportunity to pay fewer corporate taxes such as VAT. Resultingly, in recent years levels of corruption made the destination less desired and the market sank.
In response to this situation, local authorities decided to rebuild a positive image of Belize and potentially attract investments again. They had a task to leave the “blacklist” created by international organizations. Consequently, the Belize lawmakers came up with modified legislation presenting these laws:
- On stamp duty
- On income and corporate taxes
- On international business companies.
The goal of the amended legislation is mainly to restore a good position in the world political scene. However, the modifications were a big surprise for the existing companies as well as for those who entrepreneurs who were planning to start an international company in Belize. They are now in a controversial situation.
Advantages for companies
To define the main pros of the new IBC Law for establishing a company in Belize, we have prepared this list:
- Being a member of the ASEAN Free Trade Area and the OECD, Belize becomes a globally recognized safe place for investment. Individuals who are intending to expand their existing business take this argument quite seriously.
- After organizing the policies in conformity with the standards of international institutions, any change in Belize’s judiciary has to be agreed upon at the level of international cooperation. Now the business environment in Belize is to become much more stabilized. Again, stability and reduced risks are important and desired by entrepreneurs entering Belize’s market.
- Tax heavens have become a subject of serious analysis after a series of numerous scandals. Now by having the same transparency levels as other countries Belize can disconnect itself from the negative image.
Possible obstacles
When it comes to companies already established in Belize or those soon to be registered there, new legislation will bring certain barriers for their businesses, that did not exist earlier:
- Each company now must conduct management activities in Belize. This can be done directly or through a management agency.
- 0% tax rates are canceled. For companies that were only planning to register in Belize remotely, the full tax exemption is officially canceled, while existing companies will be treated in an eased tax regime.
- The amendments oblige companies to have a physical office and qualified staff resident managers located in Belize. The availability of real contacts of the company (e-mail, website with a local domain), corporate communication, and submission of financial statements performed in time are necessary, too.
- Businesses are required to register and obtain a Tax ID. If someone wants to conduct business activities in Belize, they must register a Belizean firm and open a corporate account there. This will allow the company to obtain a taxpayer identification number.
Conclusion
The final evaluation of the pros and cons of the new legislation strictly depends on the perspective. From the point of view of the existing companies, the change is not positive and brings discomfort. The new requirements bring time-consuming adaptation involving additional financial costs. It means that entrepreneurs who got to open a company in Belize on the previous terms now are concerned about their stability.
On the other hand, companies that are now entering Belize’s market come to a healthier and steadier environment. In the long run, Belizean jurisdiction will become stable. Then again, taxes there will still be rather low which will definitely attract foreign investments, too.
Are you planning to establish a company in Belize in the near future? Arrange a personal consultation at COREDO to receive professional assistance. Our experts will help you get familiar with the local business environment, necessary legislative aspects, and preparation