Belize: Offshore Legal and Tax Regimes
Commercial Free Zone
The Commercial Free Zone Act 1994 established a Commercial Free Zone at Corozal (near the Mexican border) to attract foreign investment. The zone provides facilities for various activities including manufacturing, processing, packaging, warehousing and distribution of goods and services.
Benefits and exemptions available to companies in the Commercial Free Zone include:
- 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
- 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 its choice which is located in the CFZ
- All merchandise, articles, or goods entering a CFZ for commercial purposes are 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 are exempt from all duties and taxes
- NB: A 'Social Fee' of 1.5% is charged on all goods and services imported into the CFZ, except for fuel; the fee on fuel is 10%
- No quotas apply to imports or exports of a CFZ business
- Imports or exports of a CFZ business do not require an import or export licence
- With some exceptions, all imports and exports of a CFZ are exempt from all custom duties, consumption taxes, excise taxes, and export duties.
CFZ businesses pay an income tax at the following rates:
- Up to BZD15,000 of total chargeable income, 2%
- Over BZD15,000 and up to BZD30,000 of total chargeable income, 4%
- Over BZD30,000 and up to BZD100,000 of total chargeable income, 6%
- Over BZD100,000 of total chargeable income, 8%.
A credit of up to 2% is available to companies which employ Belizean workers as follows:
- From 10 to 30 Belizean workers employed, 1% of taxable income
- Over 30 and up to 50 Belizean workers employed, 1.5% of taxable income
- Over 50 Belizean workers employed, 2% of taxable income.
During the first ten years of its operation, a CFZ business is exempt from income tax or capital gains tax or any new corporate tax levied by the Government of Belize, and any dividends paid by a CFZ business are exempt from tax for the first twenty years of its operation.
Where a CFZ business incurs a total net loss over the five years' tax holiday, that loss may be carried forward and deducted against profits in the three years following the tax holiday period.
Any proceeds from the sale of stock or other partial or complete ownership interest in a CFZ business are exempt from the tax described above.