The Tax Benefits of Banking and Investing in Belize
Contributed by Luigi Wewege At Caye International Bank
07 June, 2019
Belize has long been popular as a destination. Known for its beautiful beaches, lush tropical landscape, and friendly people, it's no small wonder people flock here each year for a little rest and relaxation.
What many people might not know about are the tax benefits and asset structures available in Belize that are available to those who choose to retire, invest, or bank here. These tax advantages extend to companies as well.
Every jurisdiction has its own taxation rules for foreign investors and bank account holders, but Belize offers some of the biggest savings. Here are a few of the most significant ways you can benefit.
Tax Exemptions for IBCs
While private account holders will benefit from the taxation system in Belize, some of the biggest advantages are for businesses who operate out of Belize. If you have an International Business Company, also known as an IBC, then your company will benefit from a number of tax exemptions.
When a company incorporates in Belize as an IBC, virtually all transactions and profits that result from that IBC are exempt from taxes. This comes from the Belize International Business Companies Act, Article 130.
More specifically, an IBC operating in Belize won't pay taxes on dividends distributed from the company, capital gains realized, and transactions completed. In short, this makes it very, very appealing to establish an IBC account in Belize.
Income Tax Relief for Foreigners
If you bank in Belize, there are many sources from which your assets can come. Most international bank account holders who opt to bank in Belize have some form of income. While the form of income can vary from person to person, it generally includes capital gains, a salary, or a pension.
If you are a native resident and citizen of Belize, then your income will be subject to a domestic income tax rate. This is similar to any other nation where citizens are subject to income tax, such as Canada, Hong Kong, Great Britain, and the United States.
However, how Belize differs is when it comes to the taxation on foreigners who live or bank in Belize. In most cases, foreigners won't have to pay tax on their earned income. As long as the income is not made in Belize you won't pay any income taxes to the government of Belize.
Taxes for Assets Held in a Trust
Another tremendous tax benefit that comes from banking in Belize is when you decide to place some of your assets in a trust in Belize. When your assets are in a trust, they are no longer legally under your direct control. However, you can establish a plan for the trust so that the assets are used as initially outlined. This can be a key part of estate planning, but it is also a smart way to preserve and protect many different kinds of assets.
Perhaps even more importantly, assets held in a trust in Belize aren't subject to taxation. After all, they are no longer technically your assets, which means that you aren't liable for their taxation. At the same time, the intended beneficiaries of the future also aren't subject to taxation. That creates a fantastic financial instrument with significant tax advantages.
Tax Exemptions for Estates
When you pass your estate on to your heirs or other beneficiaries, you want them to receive the full amount. In many countries, estates are taxed heavily, which means that your hard-earned assets are reduced before passing on to the next generation.
Whatever the value of your estate, you will want to preserve and protect it as much as possible to prevent erosion over time. As part of a Belize International Trust, estates enjoy exemption from taxes as they relate to gifting, inheritance, and succession.
This means you can safeguard more of your assets for those you care about most.
Absence of Tax Treaties with Foreign Governments
Even when you're banking offshore, you may be subject to multiple tax regulations and rules. Unfortunately, avoiding taxes in one country might mean that you're subject to more taxes in another. This is especially true if you're banking overseas in a jurisdiction that has a reciprocal tax treaty with other governments. This means that if you bank in one country, you could still be subject to the taxation laws of your home country.
Belize, however, doesn't have these reciprocal tax treaties with foreign governments. Instead, they protect their investors and those who choose to bank within their country. Although banks in Belize are still subject to reporting laws like FATCA, as an account holder you will have a level of protection that isn't readily available in many other banking destinations.
What Belize Stands to Gain by Being a Tax Haven
Clearly, banking, living, and investing in Belize can lead to a number of substantial tax benefits. The Belizean government has worked many years to create a tax haven for foreign account holders and investors. Doing so has led to better job creation and increased revenue for the country.
Tourism has soared bringing in additional revenue as well contributing to the increase in interest of investing in one of the tax shelters that can be found here. This leads in more contributions to the economy and infrastructure.
Take Advantage of Tax Benefits by Banking in Belize
To take full advantage of these tax benefits, you should establish a bank account in Belize. Fortunately, getting started it is easier than you might expect.
Caye International Bank, located on the beautiful island of Ambergris Caye in Belize, can help you reap the tax benefits of banking and investing within the country. Let one of our experts help you make the most of the tax benefits available to you in Belize.
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