Belize: Law of Offshore
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The Fiscal Incentives Act 1990 (FIA) superseded and incorporated previous investment incentive legislation.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 starting from the date of production. On application, this period may be renewed for a further term not exceeding ten years. As an additional incentive, companies that engage in agriculture, agro-industry, food-processing or manufacturing with highly labour-intensive operations and productions strictly for export can be granted tax holidays of up to 25 years.
During the tax holiday period, an approved enterprise is partly 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 15 years’ duration starting 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 or manufacturing with highly labour-intensive operations and productions strictly for export, the duty exemption period can be up to 25 years.
On 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. 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 - US$500,000, fee US$5,000;
- US$500,000 - US$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.