BELIZE ECONOMIC SUBSTANCE AND TAXES REMINDER WITH UPDATES
The Economic Substance Act applies only to Belize IBCs and entities licensed by the International Financial Services Commission, which are companies carrying on relevant activities. The relevant activities are outlined below:
- Banking business;
- Insurance business;
- Fund management business;
- Financing and leasing business;
- Headquarters business;
- Distribution and service center business;
- Shipping business;
- As a holding company, engaged, or where one or more of its subsidiaries is engaged in one of the activities listed under s. 5 (1) to (7)
- All regulated entities under the IFSC Act;
Activities, which are not listed above are out of scope and therefore, not subject to the substantial presence test.
The commission will issue guidance notes, which will assist Licensed Management Service Providers in determining if a company is within the scope of economic substance; we await the guidance notes.
Economic Substance must be met by a Licensed Management Service Provider. Please take note that a Licensed Management Service Provider may differ from that of your Corporate Services Provider if they are not licensed to carry out the Management Services. The Registered Agent is currently in discussions of obtaining such a license, and we will advise you as soon as this is formalized, as well as provide you with all further information pertaining to fees, forms, and substantial presence test.
We have attached the Economic Substance Act for your kind reference along with an extract of the economic substance reporting requirements.
Under economic substance, ONLY companies that fall within scope need to provide evidence of tax residency from their jurisdiction of tax residence. Such evidence is as listed in the economic substance act (attached). Companies that are not within the scope will need to complete FORM D (sample attached).
In regard to taxes and tax liability in Belize, an IBC will be deemed not liable for taxes in Belize if that company operates outside of Belize, has no permanent establishment in Belize, and files an annual tax information form with the tax department claiming tax residency elsewhere. If the company does not file the annual tax information form to claim residence in another jurisdiction, it will be deemed resident in Belize and will be liable to tax.
It is important to note, however, ALL IBC`s need to obtain a TIN (Tax Identification Number) from the Registry in Belize. Having a TIN does not mean that the IBC is liable for tax in Belize. The purpose of this initiative is strictly for regulatory and tax authorities to efficiently monitor the status of the IBC. In the absence of such evidence, the entity will be regarded as an included entity that is subject to the substance requirements of the Act.
All IBCs must obtain a TIN by the 15th of February 2021 to be able to meet the first fiscal tax filing, which is 31st March 2021.
Please take note that companies incorporated on or before the 16th of October, 2017 are exempted from income tax, business tax, and any withholding tax in Belize until June 30, 2021, save and except that any “relevant activity” or new asset acquired after October 16, 2017, shall not be eligible to benefit from such tax exemptions.
Requirements to obtain a TIN were provided in another newsletter issued in June 2020.
We trust the above information was helpful and we remain at your disposal for any inquiries you may have.
The above information is only a brief description of the provisions of the relevant law up to the date of publication of this Memo and in no way is exhaustive. Further professional advice should be sought for each particular case. Our firm does not accept any responsibility for any loss or damage occurring by acting on the basis of this information. Also, please visit our website for further updates.