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Belize

Country Name: Belize
Currency: Belize Dollar (BZD)
Primary Tax Authority: Belize Tax Service Department (BTSD)
Key Legislation:

  • Income and Business Tax Act
  • General Sales Tax Act (GST)
  • International Business Companies Act

Fiscal Authority Allocation

Centralized Fiscal System:
Belize operates a centralized tax system. The Belize Tax Service Department (BTSD) is responsible for administering and collecting taxes, including corporate income tax (CIT), personal income tax (PIT), and general sales tax (GST). Local governments collect property taxes and municipal fees, but major tax revenues are managed centrally.

Corporate Income Tax (CIT)

Standard Rate:
Belize operates a business tax system rather than a traditional corporate income tax. The business tax is applied to gross revenues rather than net income, and rates vary depending on the business activity:

  • Trade or Business: 1.75% of gross revenue
  • Professional Services: 6% of gross revenue
  • Telecommunication Services: 19% of gross revenue
  • Financial Institutions: 15% of gross revenue
  • Rental Income: 3% of gross revenue

Corporate Forms and Taxation:

  1. International Business Company (IBC): IBCs that conduct business outside of Belize are exempt from taxes on income generated outside Belize, making them a popular choice for offshore companies.
  2. Limited Liability Company (LLC): Subject to business tax based on the nature of its activities, primarily on gross revenues.
  3. Branches of Foreign Companies: Subject to the same business tax system as domestic companies, based on gross revenue generated in Belize.

Exemptions and Incentives:

  • Tax Holidays: Businesses in certain sectors, such as agriculture, tourism, and manufacturing, may qualify for tax holidays of up to 15 years.
  • Investment Incentives: Companies investing in key sectors, such as renewable energy, infrastructure, and agriculture, may benefit from tax credits, customs duty reductions, and exemptions from import duties on certain equipment.

Goods and Services Tax (GST)

Standard Rate: 12.5%
Belize applies a GST rate of 12.5% on most goods and services. GST is levied on sales, services, and imports.

Exemptions:
Basic food items, healthcare services, educational services, and public transportation are exempt from GST. Exports are zero-rated, allowing businesses to reclaim GST on inputs related to their export activities.

Personal Income Tax (PIT)

Flat Rate:
Belize applies a flat personal income tax rate of 25% on chargeable income above BZD 26,000. Income below this threshold is tax-exempt.

Dividends:
Dividends paid by companies are generally not subject to income tax in Belize.

Additional Mandatory Contributions

Social Security Contributions:
Both employers and employees must contribute to Belize’s social security system, which covers pensions, healthcare, and other benefits.

  • Employer Contribution: 8.5% of gross salary.
  • Employee Contribution: 3.5% of gross salary.

Withholding Taxes

  • Dividends: 15% (for non-residents)
  • Interest: 15% (for non-residents)
  • Royalties: 15% (for non-residents)
    Withholding tax rates may be reduced under Belize’s tax treaties.

Transfer Pricing Rules

Belize does not currently have formal transfer pricing rules, but companies engaging in cross-border transactions are expected to adhere to the arm’s-length principle.

Special Tax Regimes

  • International Business Companies (IBCs): IBCs that conduct business outside of Belize are exempt from income tax, making them popular for offshore operations and asset protection.
  • Free Zones: Businesses operating in Belize’s free zones benefit from exemptions on income tax, customs duties, and GST for a specified period. These zones are designed to promote manufacturing, trading, and export activities.

Other Taxes

  • Real Estate Tax: Property taxes are collected by local governments and typically range between 1% and 2% of the property’s assessed value, depending on the location and use of the property.
  • Capital Gains Tax: Belize does not levy a capital gains tax.
  • Excise Taxes: Excise duties are imposed on products such as alcohol, tobacco, and fuel.

Double Taxation Agreements (DTAs)

Belize has signed a few double taxation agreements, primarily with CARICOM countries. These treaties help prevent double taxation on income earned in multiple jurisdictions and may reduce withholding tax rates.

Local Taxes

Local governments in Belize collect property taxes and some municipal fees, but the Belize Tax Service Department is responsible for administering income tax, business tax, and GST.

Compliance and Reporting

Annual Filing:
Companies must file their tax returns by March 31st of the following tax year. Personal income tax returns are due by the same date. The tax year in Belize follows the calendar year.

Penalties for Late Filing:
Penalties for non-compliance or late filing include fines and interest on overdue taxes. Interest rates on unpaid taxes are typically set at 1.5% per month, with additional penalties for significant delays.

Recent Developments

Economic Substance Requirements:
Belize introduced economic substance requirements for IBCs and LLCs to comply with international standards. These rules require certain companies to demonstrate actual business activity and presence in Belize, particularly if they are engaged in activities such as banking, insurance, or shipping.

Digital Economy:
Belize is exploring regulatory frameworks to tax digital services and online transactions, particularly for foreign companies providing services to Belizean consumers.

Environmental Taxes:
Belize is promoting sustainable development by offering tax incentives for investments in green energy projects, including exemptions from import duties on renewable energy equipment.

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