Belize tax system: audit, reporting and optimization of taxation of Belizean companies and individuals: VAT, income tax and capital gains
Basic taxes (briefly)
|Corporate tax (in detail)||Income tax is paid only in the oil sector. Other companies pay business tax, calculated as a percentage of revenue.|
|Capital gains tax. Details||There is no capital gains tax in Belize.|
|VAT. Details||GST is similar to VAT. The tax rate is 12.5%.|
|Other taxes||Social contributions, Property taxes|
International tax agreement
|Antigua and Barbuda, Austria, Barbados, Dominica, Grenada, Guyana, Jamaica, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Switzerland, Trinidad and Tobago, United Arab Emirates, United Kingdom|
|Australia, Belgium, Czech Republic, Denmark, Faroe Islands, Finland, France, Greenland, Iceland, India, Ireland, Mexico, Netherlands, Norway, Poland, Portugal, South Africa, Sweden, Switzerland, United Kingdom|
Personal income tax in Belize is levied on residents’ worldwide income and non-residents’ income earned in Belize at a flat tax rate of 25%. Residents whose income is less than $20,000, are exempt from Income Tax. However, there are income tax deductions:
The filing date for the Income Tax Return is 31st March, otherwise penalties of 3% of the balance of the tax are due for each month, or part of the month that your return is late, while the minimum penalty is $10.00. A refund becomes due when the tax payable is less than the tax deducted from income, or if tax was deducted and total income was below the new threshold of $20,000. The taxes are collected at source under the Pay As You Earn (PAYE) system. This PAYE system requires employers to withhold tax from employees’ emoluments, and remit it to the Tax Administration on a monthly basis by the 10th day following the end of the month.
|Income, BZ$||Deduction, BZ$ Less than 26,000||25,600 26,000 – 27,000||24,600 27,000 – 29,000||22,600 Other cases||19,600|
Business tax is imposed all gross receipts of persons. Taxable persons are self-employed persons, firms, partnership or company. The tax is charged as a percentage of gross receipts, without any deductions with some exceptions, and is declared and paid each month to the Tax Department. The rates vary according to the source of the income and range from 0.75% (on the sale of fuel and lubricants) to 25% (withholding tax on non-residents). Tax returns are to be filed within three months after the close of the taxpayer’s fiscal year. Penalties are accounted for those individual or organizations who do not comply with the filing and payment deadlines and they are as follows:
- Late or Non-Filing – 10% of the tax due every month or part of the month that the return remains outstanding, minimum of $10.00 for a maximum of twenty-four (24)months. Late or Non-Payment – a charge of 1.5% per month on all unpaid balance from the time it was submitted to date of payment. Failure to File a return – A fine of at least $10,000 will be charged if taxpayers fail to return a file or two year imprisonment.
Capital gains tax
There is no capital gains tax in Belize.
VAT / GST
General Sales Tax in Belize is a tax on consumer spending, collected in stages; that is, at the point of importation and on business transactions when goods change hands or services are performed. The GST rate is 12.5%. A business that makes or intends to make taxable supplies, that is Sales or gross revenues of $75,000 or more annually must register for GST. Where the business has been in operation for less than 12 months and the average taxable sales or revenues is $6,250 or more per month over a period of four months, the business is deemed to be eligible for registration, and must register for GST. Procedure on General Sales Tax Registration:
- The applicant submits a completed GST application form to the department and receives a receipt for the application If there is no information on the applicant in the department’s database, a site inspection will be conducted. The department can also request for further information when the need arises. If the Commissioner is satisfied that the details on the application is complete and correct, the person is registered and a Certificate of Registration and additional copies (if requested) will be issued to the applicant. The original “official” copy of the certificate must be publicly displayed in each business location that the person operates.
All non-CARICOM residents, who have any taxable receipts originating from Belize, or in respect of any service provided in Belize, are required to pay business taxes as follows:
Generally CARICOM residents pay at 15% on the same services.
|Type of Income||Rate Dividends||15% Insurance Premiums||25% Interest on Loans||15% Management fees||25% Rental of plant and equipment||25% Technical Services||25%|
Other taxes and duties
|Property Tax||set at 2-2.5% rate of the property value. Land Tax||levied at rate of 1% of land value. Environmental Tax||levied on all goods imported to Belize at a rate of 2%. Customs Duties||vary from 0% to as high as 70% depending on type of product. Revenue Replacement Duty||applies to specific goods (perfume, watches, cigarettes, etc.). The only exception is ice cream, which is exempted from RRD when it originates in another CARICOM country. Excise Duties||applies to domestically produced rum, methylated spirits, tobacco products and aerated waters. An excise duty of $1.00 per barrel of locally extracted crude oil is also applied. Social Security Contribution||weekly contributions to Social Security Board depend on weekly earnings and vary from 5.03% to 6.5% for employer and from 1.5% to 2.98% - for employee.|
Stamp duty or Transfer tax is payable collected to the Department of Lands, and is assessed based on the unimproved value of the land. Both Nationals and foreigners are required to pay 5%-10% of the value of the land. If the value of the land is below US$10,000, then the land is tax exempt. IBC’s, however are exempt from stamp duty. In particular, all instruments relating to transfers of any property to a company incorporated in Belize; all instruments relating to transactions in respect of the shares, debt obligations or other securities of an IBC; and all instruments relating in any way to the assets or activities of an IBC, are exempt from the payment of stamp duty.
Belize companies are renewed annually. To renew a Belize company before the 31st of July of the following year you have to pay annual government fee. For most International Business Companies, this Government fee stands at $100 per year. The actual amount of the Government fee depends on the amount and type of the authorised capital of the IBC, as follows:
|Capital Amount, $||Shares||Government Fee, $ Less than 50,000||all shares with a par value||100 More than 50,000||all shares with a par value||1000 -||some or all of shares with no par value||350|
Foreign exchange control
There are no exchange controls for an IBC.
Adoption and coming into force of Act on Accounting records (2013)
Before keeping accounting records was not necessary, and it was decided by Directors if to keep those records. Since coming into force of Act 18 on Accounting records (Maintenance) of 9 October, 2013, every entity, including IBC shall keep its accounting records.
Requirement to keep accounting records
According to the new Act, every company registered in Belize should keep its accounting records within Belize at its registered office or, as the case may be, at the office of its registered agent in Belize, or at such other place within or outside Belize as may be determined by its directors or other competent persons. In case the accounting records are kept outside Belize, a company should provide its registered agent with written resolution on address of the other place where the accounting records are kept and notify the registered agent of any change of the address within 14 days. All accounting records shall be maintained and retained for a period of not less than five years.
List of documents required to be kept
As there is no unified understanding of the term “accounting records” among different jurisdictions, we consider it important to place the list of the documents which are included into the accounting records according to Belizean legislation:
- financial statements general and subsidiary ledgers; sales slips contracts and invoices records and documentation relating to an entity’s assets and liabilities, all sums of money received and expended and the matters in respect of which the receipt and expenditure take place, all sales and purchases, and all financial transactions.
Form of keeping the accounting records
The accounting records should be accurate and easily accessible within a reasonable time frame and readily available to comply with court orders, requests for exchange of information and so on. There are no statutory requirements to the form of keeping the accounting records, but we recommend our clients to follow the international standards of IFRS.
Where to submit the accounting records?
Accounting records are not required to be submitted, but they can be requested at any time by the competent authorities (Minister of Finance or Financial Secretary), as well as the registered agent for the purpose of checking the compliance with the law.
Who should prepare the accounting records?
There are no statutory requirement on who should prepare the accounting records.
It shall be the duty of the registered agent to obtain accounting records and provide it to the competent authority in Belize upon request within the time specified in such request. If a registered agent fails to obtain accounting records, the following sanctions are imposed on him or a company:
- a fine not exceeding $10,000; revoke of the certificate of registration or incorporation or the license of such entity.
Changes in business practice of registered agents in Belize
Due to the changes of the law, registered agents in Belize are bound to make some changes into their activities. To comply with the law they have to request for accounting records or a resolution about the address of the other place of keeping the records. Most part of the agents prefer the latter. Please click Services and Documents to view the sample of resolution .
Generally speaking, Annual Return is a short review on the current state of the company, which is prepared by the company secretary annually. As a rule it includes the following information:
- Incorporation information (registration date, registered address); Information about directors and their resignation; Information about secretaries and their resignation; Information about registered capital, nominal value of shares and amount of issued shares; Information about shareholders and share transfer.
There is no requirement for Belize IBCs to file a tax return since they not subject to corporation tax.
Taxes of Belize
|Min. rate for corporate tax|
|Capital gains tax||No|