{"id":26909,"date":"2019-08-31T08:00:58","date_gmt":"2019-08-31T12:00:58","guid":{"rendered":"https:\/\/www.escapeartist.com\/?p=26909"},"modified":"2020-08-15T07:46:18","modified_gmt":"2020-08-15T11:46:18","slug":"understanding-legislative-changes-in-belize-and-how-they-impact-ibcs","status":"publish","type":"post","link":"https:\/\/www.escapeartist.com\/blog\/understanding-legislative-changes-in-belize-and-how-they-impact-ibcs\/","title":{"rendered":"Understanding Legislative Changes In Belize And How They Impact IBCs\u00a0"},"content":{"rendered":"

As 2018 came to a close, the National Assembly in Belize took action on amendments to three existing Acts. The goal was to modify current legislation, so it was more in line with the expectations set by organizations like the Organization for Economic Cooperation & Development and the Financial Action Task Force. As international organizations charged with evaluating and regulating financial policies and procedures within different nations, there was some concern about the laws applying to the establishment and management of offshore accounts within Belize. <\/span>
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\n<\/span>Specifically, three Acts that provide the framework for offshore banking in Belize<\/a> – The International Business Company Act, The Income and Business Tax Act, and the Stamp Duties Act – underwent modifications that allowed Belize to regain the status of a <\/span>favored financial haven<\/span><\/a>.\u00a0<\/span><\/p>\n

What were those changes and how will they affect International Business Companies (IBCs) now and in the future? Here\u2019s a breakdown that will help you understand the impact on establishing and maintaining accounts in Belize. <\/span><\/p>\n


\n<\/span>A Fresh Take On Who Can Own An International Business Company<\/strong><\/h2>\n

Passed in 1990, The International Business Company Act is no stranger to amendments. Legislative action to alter the Act occurred more than once over the years. The last revisions and\/or changes took place in 2011. With the amendments that went into effect on 1 January 2019, three significant changes occurred. <\/span>
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\n<\/span>The first has to do with who may own an IBC. Up to this point, owners of IBCs could not also be legal residents of Belize. It\u2019s now possible to be a resident of Belize, have a physical presence within the country, and structure the company in full compliance of the laws that relate to IBCs.<\/span>
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\n<\/span>How was that accomplished? The changes broadened the definition of a Belize<\/a> resident. An exemption that once prevented an IBC from being classed in this manner no longer exists. This brought about the second significant change by also removing the prohibition of conducting business with other lawful residents, something that could help broaden sales and other business opportunities for qualifying companies.\u00a0<\/span><\/p>\n

Thirdly, IBCs can now own physical property within the country, providing the change to establish facilities that actively serve a local as well as an international customer base. <\/span>
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\n<\/span>There are still qualifications that must be met in order to comply with the new IBC regulations. That includes a physical presence requirement. Business owners seeking this status receive a period of five years to comply.\u00a0<\/span><\/p>\n

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Who Pays Taxes Now?<\/strong><\/h2>\n

The amendments also impact tax obligations. These go hand in hand with what type of entity can now be considered a Belize resident. Depending on the nature of the business operation, the entity may be classed as what\u2019s known as a tax resident. <\/span>
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\n<\/span>In some cases, the changes eliminate the potential of being considered a zero-taxation jurisdiction. Entities of this type are generally considered to be somewhat riskier. In the past, a zero-taxation jurisdiction faced greater expenses related to compliance costs. There was also a more complex process for complying with regulations loosely referred to as \u201cKnow Your Client\u201d requirements. <\/span>
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\n<\/span>Qualifying for residency does mean the IBC has to generate a minimum of annual income. That\u2019s collected revenue rather than generated revenue. <\/span>
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\n<\/span>There\u2019s also the potential for an audit to take place. In order for this to happen, there are several factors that must be present. For example, the entity\u2019s total receipts must be equal to or exceed $6,000,000 in U.S. Dollars. If the entity operates a processing facility within the country, the revenues must equal or exceed $500,000 Belizean Dollars. <\/span>
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\n<\/span>There\u2019s also a list of five other qualifications included in the amendments that may or may not lead to an audit. A minimum of at least two must apply:\u00a0<\/span><\/p>\n