Belize: Country and Foreign Investment
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.
Businesses established in the free zone are free of foreign exchange restrictions and receive a range of other benefits including duty exemptions and tax holidays.
Goods and supplies entering and leaving the free zone for commercial purposes are exempt from import or export duties, quotas, stamp duties and revenue replacement duties.
Income tax is charged at between 2% and 8% on free zone businesses; these rates can be reduced by up to 2% through tax credits earned by employing Belizeans.
A fuller statement of the Free Zone Act can be found in Law of Offshore, and details of tax treatment in Offshore Legal and Tax Regime.
For further information contact:
Corozal Free Zone Management Agency
Tel. No: (501)-4-23643
Fax. No: (501)-4-22341
Export Processing Zones (EPZs)
Three locations have been designated as EPZs under the Export Processing Zone Act. The San Andres EPZ occupies 28.5 acres of land in the northern section of the country, only 8 miles away from the Mexican border, right next door to NAFTA. The other two Zones are both approximately 9 miles from Belize City, the country's commercial capital. The EPZ adjacent to the Philip Goldson International Airport covers 4 acres, while the Price Barracks EPZ covers 14 acres.
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 (Belize Electricity Ltd and Belize Telemedia Ltd.)
While new applications have been approved for ICT companies, the government continues to streamline the EPZ programme. In 2006, only 8 new EPZ companies were approved, bringing the total number of EPZ companies operating in Belize at the end of 2006 to 73.
However, the Minister of National Development has subsequently signed a statutory order revoking EPZ status for 18 non-performing companies, reducing the total number of EPZ companies currently operating in Belize to 55. Despite the lower number of EPZs, employment by EPZ companies was up from 3,746 in 2005 to 4,204 in 2006 and exports were also up from US$148m in 2005 to US$160m in 2006.
In April 2007, the Ministry of National Development, Investment and Culture announced the signature of an agreement with Pinnacle BST Company granting them Export Processing Zone status to establish a state of the art Information and Communications Technology (ICT) operations in Belize. Under the investment plan, Pinnacle BST will provide technical application services and call centre support in software consulting to its parent company, Pinnacle Group Worldwide of the United States. Operations for the company will be conducted from the EPZ park managed by International Communication Services Ltd. (ICSL) at the Burrell Boom junction in Ladyville. At maximum capacity, Pinnacle plans to employ 100 programmers and software technicians, creating much needed high end employment for residents in the Belize City area.
The approval for Pinnacle BST to operate in Belize is part of a new thrust by the government of Belize to expand the EPZ programme to include ICT companies, especially since they create higher income jobs for Belizeans. A total of four ICT companies were operating as EPZs in Belize in the first half of 2007, the largest of which was Ready Call Centre. It relocated to larger premises in September 2009, employing 650 people at the time and declaring its intention of doubling that number over the next few years.
An EPZ business in Belize receives a guaranteed tax holiday of 20 years, being exempt from income tax, withholding tax, capital gains tax or any new corporate tax. Other benefits include:
- an option to extend the tax holiday period;
- losses incurred during the tax holiday period may be carried forward and deducted against any future profits;
- any dividend paid by an EPZ business is exempted from tax in perpetuity;
- exemption from currency export taxes or foreign exchange taxes on all purchases or sales of foreign currency;
- exemption from customs duties, value-added taxes, sales taxes, excise taxes, trade turnover taxes, tonnage taxes, consumption taxes or other taxes for all imports and exports of an EPZ business;
- exemption from capital gains tax on the sale of stock or other partial or complete ownership interest in an EPZ business;
- exemption from property or land tax and property transfer tax. The Land Tax Act does not apply to EPZ property.
In the 2010 budget, Prime Minister Dean Barrow announced the introduction of a 'social fee' at a rate of five per cent on the value of all goods and services imported into an Export Processing Zone (EPZ). Mr. Barrow justified the move by saying that: “It is felt that a small fee to offset the duty free status of the EPZs would not threaten their operations or their international competitiveness."
Application for EPZ status requires a number of documents, including layout, construction and financial plans, together with a non-refundable application fee of US$500 (at the time of writing).
The Ministry of Trade and Industry issues a Certificate of Compliance which authorises a company to take advantage of EPZ benefits. The applicant company also signs an operations contract with the Ministry of Trade and Industry. Further information about EPZ procedures can be found in Law of Offshore, and details of tax treatment in Offshore Legal and Tax Regime.