New requirements to Belize offshore companies since january 1, 2019
Since the beginning of this year, new legislation has entered into force in several Caribbean countries, which has introduced new requirements for resident companies. Belize is no exception. Starting from January 1, 2019 new amendments to International Business Companies Law (INTERNATIONAL BUSINESS COMPANIES (AMENDMENT) ACT, 2018) have entered into force in Belize and drastically changed the format of work with companies registered in this jurisdiction.
Let us dwell on the main changes:
- Resident companies are required to rent an office in Belize. As for the size of the office, it should correspond to the real scale of the business;
- Companies need to hire staff, who will constantly reside in Belize. The number and qualification of personnel must correspond to the real scale of the business;
- Company management needs to be carried out from Belize – this requirement implies the obligation to hold company management meetings in Belize. Company corporate documents must also be kept in Belize;
- The company must bear operating expenses adequate to the size of the business;
- For the first time in Belize, income tax was imposed to international business companies (IBCs) at a progressive rate: 3% on net income up to 3 million Belizean dollars (about 1.5 million US dollars) and 1.75% on net income greater than USD 1.5m;
- All Belize companies are required to keep accounting records, and if the annual turnover exceeds 6 million US dollars, then they also must do an audit.
In fact, the main requirement is now the obligation for resident companies of Belize to confirm their “economic presence”, that is, to prove that they are conducting real economic activity in this state. Companies, which can prove their tax residency in another state are exempt from the obligation to fulfil these requirements.
For all companies registered in Belize before October 16, 2017 (inclusive), the so-called “Grandfathering policy” is applied, giving them time until June 30, 2021 to fulfil all new requirements.
All companies registered since January 1, 2019 must comply with the provisions of the new legislation immediately.
- By June 30th, 2021 IBC-s must have physical presence in Belize either directly or through licensed Managing Agent, except for “Pure Equity Holding Company” *;
- All IBC-s should have TAX ID number except for “Pure Equity Holding Companies”. It will be possible to obtain Tax ID in Belize in certain cases and pay Taxes in Belize or obtain a tax number in another jurisdiction;
*The term for a holding company is “Pure Equity Holding Company”. It is defined as a company, which is a holding body; its function is to acquire and to hold shares or equitable interests in other companies; holds equity participation and earns only dividends and capital gains and does not carry on any commercial activity;
The procedure for registering a company in Belize itself remains the same.
Though, all new Belize regulations are still not complete at this stage, we are constantly monitoring the situation.
Although, we have no control over the changes being made, we are here to assist and support you in adjusting to the changes as smoothly as possible and to provide solutions.
Please contact your consultant to discuss the current situation, options and solutions for future.