Registering a company in Belize is becoming a tempting idea for foreign entrepreneurs looking to start a business in Central America or participate in public investment programs. The reason for this is the amended legislation on the conditions of registration of international business companies, aimed at restoring a positive image after the ambiguous situation with the offshore.
In this article, we will take a detailed look at the implications of the amendments, as well as the key pros and cons that entrepreneurs who decide to register a company in Belize will face.
Steps to restore a good reputation
In the 1990s, Belize was one of the most popular jurisdictions for foreign investors due to the lack of tax requirements for offshore companies. In other words, opening a company in Belize remotely used to be a great opportunity to avoid paying corporate taxes, including VAT. This has led to a marked decline in the country's attractiveness in recent years due to high levels of corruption.
The Belize authorities have embarked on the path of restoring its reputation and investment potential. To exclude themselves from the "black list of investments" of international organizations, new legislation was adopted, including the following laws:
- On international business companies;
- On income and corporate taxes;
- On stamp duty.
The amendments are aimed at allowing the state to take a worthy place in the political arena but they had sudden consequences for existing businesses, as well as for those who were going to register a company in Belize, in particular, to open an international business company.
Business owners, as well as those who intended to establish a company in Belize remotely, found themselves in a dual situation.
Benefits for businesses
If you plan to set up a company in Belize, we suggest you read the list of the main advantages of the amended IBC Law:
- The ASEAN Free Trade Area, OECD are globally recognized markers of safe investment. This is taken seriously by entrepreneurs who are going to start a company in Belize in order to expand their existing business;
- Now that Belize's policies are in line with the standards of international institutions, any changes in the judiciary will be agreed at the international level. Moreover, it promises the stability of the business environment, as well as a significant reduction in risks, which plays a particularly important role for investors and entrepreneurs wishing to register a company in Belize;
- After a series of scandalous events, tax havens have been carefully analyzed. Accepting the same level of transparency as in many other countries, Belize is losing its negative connection with possible scandals. Therefore, the same applies to those who want to register a company in Belize remotely, as well as open an account for a company in Belize in order to invest in the country's economy.
On the other hand, foreign businessmen who have set up a business in Belize before and those who plan to start a business in this jurisdiction will have to face the following shortcomings in the legislative amendments:
- The mandatory presence in Belize of a physical office and qualified staff, resident managers, the availability of corporate communications and real contacts of the company (e-mail and site with a local domain), and timely submission of financial statements;
- Elimination of 0% tax rates. The law abolishes the full tax exemption for those who intend to open a company in Belize remotely in the future, while easing the tax regime for existing businesses benefiting from these benefits;
- Mandatory business registration to obtain a Tax ID. Anyone intending to do business in Belize is now required to register a Belizean firm, open a corporate account in Belize and obtain a taxpayer identification number. As the registration process can be quite lengthy, and at the same time, require a good knowledge of the law, companies are encouraged to find a local partner who can help solve this issue.
- Companies must carry out management activities in Belize either directly or through a management agency.
How business is affected
Comparing the pros and cons of legislative amendments, generates a different vision of the results obtained. Of course, it is worth saying that for existing companies in international business, these changes are disadvantageous. The abolition of 0% tax rates, as well as the requirement to register a business and obtain a Tax ID, requires considerable financial costs.
Those who managed to set up a Belizean company before the legislation was amended are now facing its consequences, which could affect their stability. On the other hand, foreign entrepreneurs who have not previously decided to expand their business in this jurisdiction will gain confidence in the light of these events.
These laws will help create a healthy business environment in the long run, and given the low tax burden, will play a key role in attracting foreign investment.
If you are planning to set up a company in Belize in 2020, we recommend that you sign up for an IQ Decision UK expert consultation. Our seasoned professionals will acquaint you in detail with the main features of a business climate in this jurisdiction and will assist in preparing all necessary documents.