BELIZE: LAW OF OFFSHORE

Belize Table of Statutes

This is a non-exhaustive list of the main Belizean statutes affecting offshore and non-resident business. The statutes are listed in alphabetical order - click on the statute for a fuller description of the statute or the legal regime it forms part of.

Belizean Nationality Act 1981
Commercial Free Zone (CFZ) Act 1994
Computer Wagering Licensing Act 1995
Exchange Control Regulations 1980
Export Processing Zone (EPZ) Act 1990
Fiscal Incentive Act No 6 Of 1990
IBC Act, 1990
Income Tax Amendment Act 1998
International Insurance Act, 1999
Limited Liability Partnerships Act, 1999
Limited Life Companies Act, 1999
Money Laundering (Prevention) Act, 1996
Money Laundering And Terrorism (Prevention) Act 2008
Mutual Funds Act, 1999
Offshore Banking (Amendments) Act, 2002
Protected Cell Companies Act, 1999
Registration Of Merchants Ships Act 1989
Retired Persons Incentive Act 1999
Trade Unions and Employers Organizations Act of 2000
Financial Intelligence Unit Act 2002
Trust Act 1992
Trusts (Amendment) Act 2007

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Belize Banking Law

Offshore banking in Belize began when the outdated 1977 Banking Act, which did not adequately provide for a sound regulatory and supervisory authority, was repealed and replaced by the enactment of the Banks and Financial Institutions Act, 1995, and the introduction of the Offshore Banking Act, 1996, and the Money Laundering (Prevention) Act, 1996, which incorporated the best features of offshore banking legislation in Panama, Cayman and the British Virgin Islands.

The Offshore Banking Act was amended in 2002 to change the name of the Offshore Banking Act and offshore banks to International Banking Act (IBA) and international banks, respectively. The amendments also strengthened the supervisory and investigative powers of the CBB to meet international standards, to provide better transparency and exchange of information with respect to international banking and to empower the CBB to grant licenses for international banking.

In August, 2009 the Central Bank heightened its prudential supervision assure the soundness of Belize’s financial system. In line with the initiative, all banks, financial institutions and credit unions were required to submit a monthly report of delinquent loans, in addition to the more detailed, semi-annual reporting of delinquent accounts. The international banks were also required to submit their balance sheets and income statements on a monthly, rather than quarterly basis.

The collapse of the CLICO and Stanford groups and the region’s general vulnerability to international financial developments, prompted governors of the CARICOM central banks to give a mandate to the Caribbean Group of Banking Supervisors (CGBS) to craft a Regional Crisis Management Plan that would help member countries in resolving systemic crises within the Caribbean region. The Belize Central Bank developed a National Crisis Management Plan for Belize’s financial system in 2010.

A Belize International Bank can carry on the following activities within Belize:

• establish, maintain, and operate a business office in Belize;
  
• transact offshore banking business through its business office in Belize without restrictions;
  
• transact offshore banking business with a local entity in Belize licenced under the Banks and Financial Institutions Act, 1995.

The major local banks offer a full range of international banking services including foreign currency savings and checking accounts earning tax-free interest and operated for the purpose of exchange control on a non-resident basis. Such accounts are offered to IBCs, individuals and trustees. Credit card services are also available.

Belize International Banks are not subject to exchange control regulations.

The Central Bank of Belize, the financial sector's regulatory and supervisory body, said in 2003 that although many applications for international banking licences have been received since the introduction of the new legislation, only five had successfully met its requirements.

Two categories of Belize International Banks are currently available, "A" Class - Unrestricted and "B" Class - Restricted. A "B" Class bank is restricted to carrying on such business as is specified in its license.

The holder of an "A" Class international banking licence needs to establish, maintain, and operate a business office (physical presence) in Belize. This type of Belize International Bank is permitted to transact international banking business through its business office in Belize without restrictions on that business.

Authorised and paid up capital of not less than US$500,000 must be maintained if the licence is for a local company, or US$25,000,000 in the case of a foreign bank.

"B" Class - Restricted

The holder of a "B" Class international banking licence also needs to establish, maintain, and operate a business office (physical presence) in Belize, but they are limited to transacting only such international banking business as is specified in its licence. A "B" Class Belize International Bank is prohibited from soliciting or accepting monetary deposits or any other valuable property from the general public, as well as from issuing cheque books or providing any current deposits or chequing account facilities to depositors.

Authorised and paid up capital of not less than US$1m must be maintained if the licence is for a local company, or US$15m in the case of a foreign bank.

Belize's International Banking legislation stipulates that an entity is eligible to apply for an international banking licence if:

• it is incorporated or registered under the Companies Act or the International Business Companies Act as a company limited by shares, or if it is a foreign bank;
  
• its shares are in registered form and not in bearer form;
  its memorandum and articles of association are acceptable to the Central Bank; and
  
• its authorized and paid up capital are in compliance with statutory requirements (see above).

Upon application, eligible companies must furnish the following documentation, along with a non-refundable fee of US$500 (at the time of writing):

• name and address of directors and principal shareholders;
  
• the ultimate beneficial ownership of the company or proposed company where shareholders of record are, or are to be, corporations, trusts or other legal entities or organizations, or where the shareholders of record are acting as nominees for or under the direction of any other person;
  
• the shareholding structure, management, and financial standing of the company;
  
• detailed business and financial plans;
  
• particulars of referees, guarantors and other third parties;
  
• details of any subsidiary or affiliated company;
  
• details of any overseas office which the company has or proposes to open;
  
• names and addresses of the external auditors including the experience of the auditors in auditing banks;
  
• if a foreign bank, a written statement confirming that there is no objection to the application from banking supervisory authorities in its country of incorporation and in the country where its principal office is located;
  
• signed application by the directors of the eligible company; and
  
• any other information that the Central Bank may require.

The Central Bank of Belize submits its recommendation to the Minister of Finance within sixty days of receiving a completed application. After which, a decision is rendered within four weeks by the Minister.

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Belize Fiscal Incentives Act

The Fiscal Incentives Act 1990 (FIA) superseded and incorporated previous investment incentive legislation.

A company that meets the necessary criteria set by the Ministry of Economic Development is granted an "Approved Enterprise Order" (locally referred to as a "Development Concession") and is considered an "Approved Enterprise" under the FIA.

Normally tax holidays are given for a period of five years commencing from the date of production, but upon application the tax holiday period may be renewed for a further term not exceeding ten years. As an additional incentive, however, companies that will engage in Agriculture, Agro-industry, Food-processing, Mariculture or Manufacturing and whose operations are highly labour intensive and whose productions are strictly for export, can be granted tax holidays for up to twenty five years.

During the tax holiday period, an approved enterprise is partially exempt from the payment of income tax on all profits and gains accruing to the approved enterprise and arising from the production of the approved product or service under the Income and Business Tax Act, at the specified annual percentage rates.

In addition, any dividends or other profits arising out of such an enterprise during the tax holiday period and paid to shareholders during such period shall not be taken into account when the chargeable income of the shareholders is being ascertained. This benefit, however, shall not apply:

• where the total amount of the dividends or profits paid to the shareholder exceeds an amount which is equivalent to the total amount invested by the shareholder in the said enterprise during its tax holiday period; and
  
• where the shareholder is likely to become liable by the laws of his country of residence to pay additional tax owing to the fact that the dividend he received hereunder was not subject to income tax in Belize.

A duty exemption period is normally not more than fifteen years duration commencing from the date of the approved enterprise order, but in the case of an export enterprise this period may be extended for an additional ten years. And, for those companies engaged in Agriculture, Agro-industry, Food- processing, Mariculture or Manufacturing whose operations are highly labour intensive and whose productions are strictly for export, the duty exemption period can be up to twenty five years.

Upon production to the Comptroller of a certificate issued by the Permanent Secretary in the Ministry of Economic Development (such a certificate specifies under what terms and conditions certain articles or materials may be imported, e.g,. being that they are necessary for the establishment or expansion and conduct of the approved enterprise) an approved enterprise may import the following items into Belize, free of customs duty and stamp duty during the duty exemption period:

• all building materials, plant, machinery, equipment, tools including specialist hand tools (but not including other hand tools), utility and transport vehicles, fixtures and fittings, office equipment and appliances, spare parts on plant and plant related machinery and agricultural machinery;
  
• any raw materials or other items imported for use in the approved enterprise.

However, in the case of an export enterprise exporting to non-CARICOM countries, no duty exemption will be granted for any raw materials or articles which are available in Belize or in any Member State provided that they are of comparable quality and price.

All the rights, privileges, benefits, immunities, duties and obligations conferred or imposed by or under the FIA on an approved enterprise can be transferred to another company where:

• the approved enterprise merges with or is taken over by another company, or forms part of another company's reconstruction, and/or
  
• in the opinion of the Minister of Economic Development it is equitable or in the public interest to do so.

In addition, an approved enterprise can also benefit from Belize's access to a number of preferential markets. These include the USA under the Caribbean Basin Initiative, Canada under CARIBCAN, the Caribbean under CARICOM and Europe under LOME IV.

Establishing an Approved Enterprise

The Government considers several factors before granting development concessions to companies. These include: the company's local value addition, its profitability on investment, the potential for foreign exchange earnings or foreign exchange savings, the creation of employment, the transfer of new technology, the location of industry, the destination of the final products - export/domestic market, and the level of investment.

The following is required in order to obtain the status of an approved enterprise:

• Establishment of a Chapter 206 Corporation;
  
• Formal letter of application addressed to the Permanent Secretary in the Ministry of Economic Development;
  
• Three copies of the project proposal, providing as much information about the project as possible;
  
• The prescribed non-refundable fee, which varies depending on the size of investment as follows (at the time of writing):
  
  • US$250,000 - $500,000, fee US$5,000;
    
  • US$500,000 - $750,000, fee US$6,000;
    
  • Over US$750,000, fee US$7,000.00

A "Belizean Company" with an investment of less than US $250,000 may apply without the payment of any fee. A "Belizean Company" is one which Belizean nationals own 51% or more of the share capital. A number of other supporting documents are also needed.

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Belize Free Zone Acts

The Commercial Free Zone Act 1994 established a Commercial Free Zone at Corozal to attract foreign investment. The Zone provides facilities for various activities including manufacturing, processing, packaging, warehousing and distribution of goods and services.

Merchandize warehoused in the CFZ may be wholesaled or retailed for:

• sales to diplomats of other countries who under customary and conventional international law are exempt from payment of duties;
  
• sales to ships that dock at ports in Belize and are destined for other foreign ports;
  
• sales for direct export whether by sea, air or land, provided that such merchandise arrive at the port of exit under customs control;
  
• entry into national customs territory, provided the goods are sold wholesale, and the import license if so required, is secured and the customs duties paid;
  
• entry into national customs territory, provided that the goods are sold retail in operations which have licenses to sell duty-free to residents and non-residents who are leaving the country and have submitted proof of departure. Such duty-free retailed goods shall be delivered to the buyers at a port of exit or embarkation.

Merchandise may be sold inside a CPZ from one business to another, provided that a proper record is kept of such transactions.

There are no restrictions on foreign exchange including the sale of foreign currency or the transfer of foreign exchange into, out of or within a CFZ by CFZ businesses. There are no Government charges and taxes on the use of foreign currency within a CFZ.

CFZ businesses are allowed to open an account in any currency with a duly registered bank of their choice which is located in the CFZ.

Duty exemptions and tax holidays are available to the investors in the Zone as follows:

• All merchandise, articles, or goods entering a CFZ for commercial purposes are to be exempt from import duties, stamp duties and revenue replacement duties;
  
• All fuel and goods including buildings materials, furniture, equipment, supplies and parts required for the proper functioning of a CFZ business is likewise are to be exempt from all duties and taxes;
  
• No quotas upon any article, item, or goods apply to imports or exports of a CFZ business;
  
• Imports or exports of a CFZ business do not require an import or export license.
  
• Imports and exports of a CFZ to or from whatever destination (other than the territory of Belize) shall be exempt from all custom duties, consumption taxes, excise taxes, and export duties.

See Offshore Legal and Tax Regime for details of low rates of income tax paid by CFZ businesses.

The Export Processing Zone Act 1990

Belize's legislation defines an EPZ as being "a geographic area in Belize designated outside national customs territory and duly restricted by controlled access, wherein the benefits created shall apply to a complex of industries." The legislation also makes allowances for single businesses and their facilities, referring to these as "Special Export Processing Zones".

An EPZ business is only allowed to sell, lease or transfer any article, item, goods or services in an EPZ or outside Belize to other EPZ businesses, to foreign businesses, or to foreign individuals. However, waivers to this regulation may be provided upon application to the EPZ Committee (EPZC) and the Ministry of Trade and Industry. The EPZC comprises representatives from various Government Ministries, The Chamber of Commerce, the small business sector, EPZ developers, EPZ businesses, and the industrial sector.

In the EPZ, facilities are provided for activities in manufacturing, processing, packaging, warehousing and the distribution of goods and services. In fact, amendments made to the legislation in 1994, provide investors with the added option of constructing their own facilities and developing infrastructure within an EPZ, including independent utility installations. This option enables an EPZ to enhance its economic development, since it does not necessarily have to use the electricity or telephone facilities provided by the two local monopolies, The Belize Electricity Limited and The Belize Telecommunications Limited respectively.

Three locations have been designated as EPZs. The San Andres EPZ is spread across 28.5 acres of land in the northern section of the country, only 8 miles away from the Mexican border, and ideally located next door to NAFTA. The other two Zones are both located approximately 9 miles from Belize City, the country's commercial capital. The EPZ adjacent to the Philip Goldson International Airport covers a tract of 4 acres, while the Price Barracks EPZ covers 14 acres.

A developer is responsible for the administration of an EPZ, and needs to own or have leased all the land within the Zone, as well as provide infrastructure and public services within the area.

One of the main incentives for establishing an EPZ business in Belize is that of receiving a guaranteed tax holiday of 20 years. Under the tax holiday period, an EPZ business is exempt from income tax, withholding tax, capital gains tax or any new corporate tax. This incentive also comes with the following benefits:

• the option to extend the tax holiday period;
  
• losses incurred during the tax holiday period may be carried forward and deducted against any future profits;
  
• and any dividend paid by an EPZ business is exempted from tax in perpetuity.

In addition an EPZ business is also exempt from:

• currency export taxes or foreign exchange taxes on all purchases or sales of foreign currency;
  
• customs duties, tariffs, consumption taxes, excise taxes, trade turnover taxes, or other taxes for all imports of an EPZ business into an EPZ;
  
• customs duties, value-added taxes, sales taxes, excise taxes, trade turnover taxes, tonnage taxes, consumption taxes or other taxes for all exports of an EPZ business out of an EPZ;
  
• capital gains tax on the sale of stock or other partial or complete ownership interest in an EPZ business, and property or land tax and property transfer tax. The Land Tax Act does not apply to EPZ property.

Bureaucracy is minimised for EPZ businesses:

• no import or export licenses are required for any imports or exports into or out of an EPZ;
  
• no licenses are required for domestic suppliers who sell to EPZ businesses;
  
• no price controls for items sold by domestic suppliers to EPZ businesses;
  
• no regulatory restrictions on any exports (except of course for fire-arms, military equipment or material, and illegal drugs under the laws of Belize).

The Supplies (Control) Act and the Rent Restriction Act do not apply to an EPZ business either. In addition, an EPZ business will enjoy:

• negotiable factory space and energy rates;
  
• on-site customs facilities;
  
• no costs for work permits;
  
• competitive wages;
  
• satellite telecommunications and fibre-optic capability.

Preference is given to those businesses which will be located in an area designated by the EPZC as in most need of development, as well as to those businesses which will generate more jobs. Some of the most promising areas of interests are assembly plants, seafood processing, fruit processing, wood products, sporting goods, edible oils and fats, pharmaceuticals, canning and packaging materials, garments and yacht manufacturing.

In order to establish an EPZ business in Belize a completed application form along with the documents listed below must be submitted with a non- refundable application fee of US $500.00 (at the time of writing). This information will be reviewed by the EPZC within thirty working days of receipt.

• International Loadline Ship Safety Radiotelephony;
  
• Ship Safety Equipment Ship Safety Radiotelegraphy;
  
• Ship Safety Construction International Oil Pollution Prevention;
  
• International Tonnage Passenger Ship Safety;
  
• Annual General Inspection Shipboard Oil Pollution Emergency Plan.

• a duly notarised power of attorney in favour of the shipping agent of the vessel;
  
• a copy of a tonnage certificate issued by a classification society or technical company or a copy of the last patent from the last registry;

• request for confirmation of availability of vessel’s name;

• application for Registration of Ships form duly completed and signed by the applicant. One application for each vessel is required. This application includes the necessary information for the issuance of a Provisional Ship Station License;
  
• proof of Ownership in the form of a Bill of Sale, Auction Document or Builder’s Certificate;
  
• valid Cargo Ship Safety Radio Certificate in compliance with GMDSS Code (where applicable);
  
• international Tonnage Certificate (where applicable);
  
• proof of compliance with ISM Code-Copy of Document of Compliance and Safety Management Certificate (where applicable);
  
• application for Minimum Safe Manning Certificate;
  
• letter of confirmation from an authorized radio accounting entity undertaking the payment of vessel’s radio accounts;
  
• letter of undertaking from ship owner that the applications for the Endorsements of Licenses for officers will be submitted.
  
  In order to facilitate same day registrations, the above documents may be sent by fax.

• a duly notarised bill of sale, or a duly notarised builder's certificate, if the vessel is newly built;
  
• an original deletion certificate or a certified copy of the extract of registry from the previous flag administration;
  
• a duly notarised power of attorney in favour of the shipping agent of the vessel;
  
• in the case of a vessel which is over twenty years old, an inspection report prepared by an authorised Government Safety Inspection (GIS) Surveyor stating that the vessel has passed an inspection to determine seaworthiness;
  
• an original or a certified true copy of a tonnage certificate issued by a survey company authorised by IMMARBE.
  
• copies of all valid statutory certificates issued by a Recognized Organization on behalf of the Government of Belize, including the ITC, DOC, SMC, ILLC, CSSRC, etc.,
  
• application form for Maritime Ship Station License duly completed;
  
• copies of Document of Compliance and Safety Management Certificate issued by a recognized organization on behalf of the Government of Belize (where applicable).

• full details of the contract, including the name and address of the charterer, and the date of expiration of said contract;
  
• a notarised letter of consent from the mortgagee is also needed, if the vessel has a mortgage recorded on it.

• notarised copy of the charter contract;
  
• certificate of freedom from registered encumbrances or a registered lienholder's letter of consent.

• Application letter - including corporate name, website address and a brief description of the activities of the business;
  
• Description of project - including methodology, operational procedures, etc.;
  
• Business background of the Company as related to Wagering on the Internet;
  
• Memorandum and Articles of Association;
  
• Certificate of Incorporation or registration in Belize;
  
• Names and personal employment record of the beneficial owner(s), officers and principal employees;
  
• Character references of the beneficial owner(s), officers, and principal employees;
  
• Police/criminal history record of the beneficial owner(s), officers and principal employees;
  
• Names of all holding, intermediary and subsidiary companies;
  
• Financial background of the Company;
  
• Financial resources of the Company - including statement of assets, liabilities, net worth;
  
• Bankers/financial references of the Company.

• The maintenance of a separate bank account for processing wager transactions. Licensees may charge a processing fee not exceeding 5% of each transaction, or the sum of US $20, whichever is greater.
  
• A copy of the daily transactions and the bank account balance of each computer user may be required by the Board.