in the warm and windy tropics, Belize lies on the North
East Coast of Central America just south of the Yucatan
Peninsula. The Caribbean Sea washes the 174-mile long
eastern coastline of this former British colony, which
also boasts the longest barrier reef in the hemisphere.
The country has an area of 8,867 square miles and a population
of approximately 240,000. Though Belmopan is the capital
Belize City is still the major commercial center, with
almost a third of the population living there. Vigorously
pursuing legislation to enhance its offshore financial
status, Belize is one of the fastest growing offshore
centers. Favorable banking regulations, a good legal system
and political stability all contributes to it being an
emerging destination for services and investment. In fact,
Belize had to re-think its former economic policy and
concentrate on developing its 'Services Sector' to go
hand in hand with tourism and its traditional agricultural
and fisheries produce.
airline carriers link Belize to the US, Central America and
the world. Excellent telephone, telex, E-mail communication
and Internet links serve its global clientele. The mixed blessing
of an IMF report made public in July of this year has indicated
that the Belize 'Economic Train' accelerated to log 10.4%
growth in GDP last year. However at same time the public sector's
deficit widened from 8.2% to 9.7% of GDP. It's a paradox of
having more and less at the same time. The government's aim
is to reduce the public sector deficit to 1% of GDP over the
next three years.
laws and investment incentives have been put in motion to
stimulate sustained growth in the country's economy. The nation's
investment policy welcomes foreign investment that creates
new employment, increases production, uses local raw material
as much as possible, introduces state-of-the-art technology
and widens the economic base among other criteria. We will
now look at some pieces of legislation and how they achieve
their predetermined goals.
and Asset Protection
in Belize trusts is clearly on asset protection. Belize offers
immunity from court action by creditors challenging the settlor's
disposition of funds to the trust. Belizean trust laws are
considered the best in the world. The trust may be created
for 120 years and income may be accumulated for a similar
first pronouncement in a landmark decision back in 1995
came from the Supreme Court of Belize. The Court protected
the files of Swiss Trade and Commerce Trust Ltd. from
the Securities Exchange Commission. The ruling signaled
the independence of the court and the "protection"
the country seeks to guarantee its clients. The trust
law states that a Belizean Court cannot vary or set aside
a trust or recognize a claim against trust property, pursuant
to the law of another country in respect of marriage,
divorce, succession or claims of creditors.
The Supreme Court Building
protection is extensive and several volumes could be written
on this subject. Protecting your assets by intelligent planning
cannot be over-emphasized and is the best defense you can
have against creditors and hostile parties. If you have your
assets unprotected, they are out there for the taking. Start
putting your assets offshore, so they are safe and out of
the reach of creditors. There is no limit to the layers of
protection you can use. Think like an army and set up strong
defenses, so even if they put a dent in your armour, it won't
the name suggests a trust agreement is one in which one party
(a settlor) depends on another (trustee) to reliably carry
out his or her wishes for the benefit of yet another (the
beneficiary). That is really saying it in a nutshell but as
you will see that basic formula holds through. The concept
of a trust is well-known and well-established in common law
countries such as the United Kingdom where it originally developed
and the United States. A trust is a collection of legal rights
brought into being by a legal process under English law. In
legal terms, a trust is an equitable obligation, normally
established by a written document, binding a person to deal
with property over which control has been passed to him for
the benefit of one or more beneficiaries. Although it can
be an elaborate document, there is no convention that says
it has to be in that form and can be hand written just on
a piece of paper.
are created by a deed of trust (the trust deed) recording
the creation of such a trust, which may or may not be signed
by the settlor, but is signed by the trustees. The essence
of a trust is a concept of separation of control from ownership,
and in some cases, influence over the same assets to which
rights were ceded. The person who establishes the trust no
longer thereafter owns the assets, which he has put into the
trust. A trustee is a separate legal entity and can be either
an individual or a company, which accepts the responsibility
of holding rights or property so that the value accrues to
the beneficiaries. The obligations of the trustee concerning
the property of the trust will be regulated according to the
terms of the deed constituting the trust, and the law of the
trust. The trustee is personally liable for his/her/its actions
as a trustee and has the power and the duty (in respect of
which he is accountable in law) to manage, employ or dispose
of the assets in accordance with the terms of the trust document
and the special duties imposed upon him by law. Trust property
can include cash, securities, real estate, etc., situated
anywhere in the world providing the trustee can obtain a legitimate
title to the property. You can also make yourself a beneficiary
of a trust and receive income from the trust without the consequence
of an 'income producing' trust. Specialist trust providers
can act as your trustees and for a yearly fee manage the affairs
of the trust.
a will can achieve some of the objectives one wishes, a trust
involving the legal transfer of ownership of assets to trustees
with defined objectives as to how and for whose benefit the
assets are to be held and administered is probably the ideal
medium. Where the death of a person, particularly a wealthy
individual takes place in the absence of a trust, it will
be necessary to obtain probate of any will or wills, or in
the case of intestacy, a grant or grants of letters of administration.
This is a bureaucratic process, which normally involves considerable
delay, expense and publicity. The problems of obtaining a
grant, or several grants, of either probate or letters of
administration can be overcome by the use of a trust. The
trust can therefore achieve continuity without the long public
process of obtaining a grant and the expense so often associated
with that procedure.
is a sophisticated vehicle for long-term estate planning and
preservation and protection of assets and wealth. It also
protects one's assets from succession duties, inheritance
taxes and estate tax. It can provide for the education of
children by setting aside funds for their future benefit.
A settlor may also desire to protect and preserve assets from
threats of expropriation, regulation, exchange controls, creditors,
taxation, former spouses, family members or forced-heirship
laws. A discretionary trust can also be used as a means to
control imprudent beneficiaries who may squander and waste
prudent to invest in an offshore trust and so distance yourself
from your assets. Some people though find the concept of "giving
up" ownership of assets rather revolting. But, if it
can be proven that as a settlor, you exercised control over
a trust, a court of law may declare your trust null and void
and all the tax liabilities will fall flat in your lap.
Offshore trusts often work hand in hand in association with
offshore asset holding companies. A corporate structure can
be used to give a settlor a measure of control over trust
property without affecting the validity of the disposition.
An underlying company is often utilized to hold trust assets.
The settlor establishing a trust and an offshore company achieves
this. The settlor then makes a disposition of assets to the
trust, which in turn capitalizes the company with the assets
in exchange for 100% of the shares of the company. The trustee
thus becomes a 100% shareholder in the company and appoints
the settlor as the sole director of the company. This maximizes
flexibility and enables the settlor to exercise a greater
degree of control over the administration of the assets and
does not require the settlor to rely wholly upon the fiduciary
duties of the trustee.
can be drawn through the company through arm's length transactions
such as salary or consulting fees. The use of a company and
a trust together forms a powerful combination of flexibility,
efficiency and financial privacy. A settlor can retain certain
powers, including the power to revoke a trust. A discretionary
trust can be accompanied by a letter of wishes from the settlor
to the trustees which, while not binding upon the trustees,
will guide them as to the settlor's wishes, and during the
lifetime of the settlor may be reviewed or changed depending
on circumstances. The advantage of the discretionary trust
is that the settlor can be a potential beneficiary of the
trust, without being legally entitled to the trust assets
thus avoiding any tax attributable to the settlor.
up an offshore trust properly, the advisor - or service provider
and client - the potential investor, must examine the present
circumstances and the future goals. One also needs to ensure
that the trust deed allows the types of investments contemplated
for the trust. A trust, unlike a corporation, is not a separate
and distinct legal entity. For that reason it is often in
combination with other entities. An IBC held by a trust can
easily set up a brokerage account in the jurisdiction of incorporation.
Any business conducted onshore will have a permanent record
there and sensitive information could fall into the wrong
hands. There is increasing co-operation between the tax police
in various high tax countries and authorities onshore. "Keep
every thing offshore" is a good policy. Its better to
deal with independent offshore brokers than the offshore affiliates
of large onshore brokerage houses. Check out the broker's
reputation, the size of the brokerage, whether the brokerage
is insured, and if the broker is audited.
using asset protection structures, it is possible to have
definitive protection structures against creditors, third
parties and nuisance claims. In light of the circumstances
surrounding the U.S. 9th Circuit Court appeals case of
June 1999, between FTC and Affordable Media, also known
as the Anderson case, the Court showed its strong dislike
for asset protection as a shield from actual creditors
when there is clearly 'trouble on the horizon'. As upsetting
as that decision may have been, it was a blessing in disguise.
The message it signaled was that providers of offshore
services would have to prudent and meticulous in structuring
clients' strategies. The misuse of trusts, companies or
other structures for questionable use would not be tolerated.
Think ahead and act in advance.
conventional wisdom with asset protection is that it is
not only what is secured but also where - asset allocation.
Deciding how to invest a pool of resources among a broad
array of assets is considered the single most important
aspect of managing a portfolio. Assets can be divided
into cash, income and equities. It is around these that
your strategies, short, medium or long term must be built.
The amount of money you invest in stocks or bonds should
be entirely up to you. Keep in mind that indeed you may
want to put some away for your heirs and some you will
spend on yourself. Be discreet and act wisely.
investing, especially when mixed with proper estate planning
and wealth transfer considerations is integral to wealth preservation
or maximization. Assets encompass many aspects of things and
cannot be seen from a limited perspective. Even after placing
assets into trusts or a combination of structures, you could
still take advantage of the many opportunities available to
increase growth and maximize profits. If you have a modest
investment strategy, financial growth may be incremental at
first but gradually the wealth accumulates. If you have a
more elaborate financial strategy with high risk, high yield
stocks or bonds for example, then of course your results will
be greater. Investing is not like a soccer match that is over
in 90 minutes; it's like gardening or planting. It takes time,
planning, planting, revising the plan and playing till you
reach the goal.
what you earn, but what you keep. The adage is taking on new
meaning and investors in Belize are taking advantage of the
country's Mutual Funds Act. Capital, the lifeblood of investment
companies and courage to take the risk of putting your own
money on the line, is the creative process that drives economies,
produce growth and propels a nation forward.
have also shown over the last three decades, that nations
that have created a good investment climate have grown and
prospered while countries that set up barriers have withered.
Governments play a vital role in helping investors make a
path of prosperity by implementing policies and laws that
create the right environment and support programs. For countries
newly embarking upon the path of market oriented reforms,
the task is the same. The right elements must be in place
before sustained growth can be achieved.
of Belize, in a continuing policy to expand the offshore finance
industry, even amidst tightening regulations of the OECD countries,
passed its Mutual Fund bill into law. It's a move that will
make investing for long term capital appreciation more tax-advantaged
than investing for interest, dividends and short-term profits.
specialists, who were calling for this move for several years
now and government officials alike are optimistic that this
new initiative will stimulate new growth in another sector
of the Belizean economy. A mutual fund is a company that invests
most of its money in publicly traded securities - stocks and
bonds of business corporations. It obtains capital by issuing
and selling its shares (common stock) to investors, who are
the company shareholders. Mutual funds are also called open-end
investment companies, because they offer shares for sale each
day. These companies are not restricted to a fixed number
of shares. The shares are not traded through stock exchanges
or over the counter markets; instead the fund itself sells
shares whenever investors want to buy them and repurchases
shares at any time at their current market value. The market
value of a mutual fund usually is based on the overall value
of the fund's portfolio of securities and fluctuates as the
value of the securities fluctuate.
are designed primarily to provide growth of capital or income,
while others are designed to preserve capital. Often the same
company has a family of funds, allowing the investor to switch
from one to another as his investment goal changes. In the
70's and 80's the money-market mutual funds became the most
widely used and most popular form of investment vehicles.
A money-market fund uses its shareholders' money to purchase
short-term high-yield money-market instruments, such as bank
certificates of deposits, treasury bills and government securities.
Individual investors own mutual fund shares for several reasons.
First, professional managers manage their money on a continuous
basis. Second, the investments are spread out over many different
corporations and industries, thereby spreading the risk of
loss. Third, mutual funds provide several services to their
shareholders, including managing records of securities transactions
and collecting and disbursing investment income. Mutual funds
are one of the most important forms of investment in the capital
market. Because they are new in Belize, fund managers need
to work hard to make them a more widely accepted form of investment.
The number of investors the regulatory commission envisions
is not known, but, as these bits of information become available,
it will create ingenious new ways of achieving one's goals.
Investors will also have to be educated on the benefits and
risks of these instruments. The banking industry may also
have to join in the process as some of their customers who
want to invest in the capital market, may choose to use mutual
funds. The potential for mutual funds is very good as license
fees are low and investors will not need a huge amount of
capital for investments.
are three fund categories: private, professional and public.
A private fund is a mutual fund, which has less than fifty
investors and a constitutional document prohibiting the offering
of its shares to the public, whereas a professional fund is
a mutual fund offered only to professional investors, with
the initial investment of each investor not less than US$100,000
or its equivalent in any other currency. A public fund is
a mutual fund, which offers shares for subscription or purchase
to any member of the public and is not considered a private
fund or a professional fund under the Act.
deduction of expenses for management services, interest and
dividend income is declared as an income dividend and paid
to shareholders, usually four times a year or within a specified
period after demand is made. When a fund sells its investment
at appreciated prices, the profit is declared as capital gain
dividend and paid, usually once a year, to shareholders.
of Mutual Funds is appointed whose duty is to supervise the
mutual funds, managers and administrators in accordance with
the Act and prepare and deliver a yearly report (on or before
the 30th of March). This report is primarily a summary of
the nature and number of filings made under the Act, the registrations,
recognition and licenses granted under the Act, as well as
any enforcement proceedings or disciplinary measures taken
under the Act and the development of the industry up to that
A public fund is not allowed to carry on its business, manage
or administer its affairs in or from within Belize unless
it is registered under the Act. It may apply to the Registrar
in the prescribed form as specified in the Mutual Fund Act.
It must be accompanied by a "consent" of the Minister
under whose portfolio the Act falls as well as a statement
setting out the nature and scope of the business to be carried
good companies, every public fund must maintain adequate accounting
records and financial statements in respect of each financial
year, in accordance with generally accepted principles of
accounting. These records or copies thereof should be kept
at the principal place of business or registered office in
a company is registered to operate in Belize, before it can
offer shares to the public it must still publish in writing
a prospectus. This must be signed by or on behalf of its board
of directors of the fund, stating it has approved the contents
of the prospectus, authorized its publication and filed a
copy with the Registrar. Every prospectus provides full and
accurate disclosure of all information investors would reasonably
need and expect to find for making an informed investment
decision. It must also include a statement of the investor's
rights and a reference as to the availability of the financial
statements and the auditor's report of the last financial
year (if the fund has completed a financial year in operation).
The prospectus should be in the English language.
fund can be set up at a cost of US$15,000 and a prospectus
can be prepared at costs ranging between US$1,500 and US$2,000.
Consultants are available to advise you on the most prudent
ways you can go about structuring a fund.
A public fund registered under the provisions of the Act or
a private or a professional fund recognized under the Act,
and investors in any registered public fund or recognized
private or professional fund who are not residents in Belize
are in all respects EXEMPT from all the provisions of the
Income and Business Tax Act, Stamp Duties Act and the Exchange
Control Regulation Act, with respect to investment in any
such fund. A companies incorporated outside Belize but which
establishes a place of business within Belize in accordance
with the provisions of the Act as public fund, recognized
private or professional fund or manager or administrator is
also exempt from the paying of taxes as mentioned before.
institutions are opening up for service in the country. Besides
The Provident Bank and Trust of Belize Limited, The Alliance
Bank now serves the public. The Caribbean Building Society
(CBS) and St. James Building Society are two of the newest
building societies in operation. These command a fair share
of the local financial market. Building societies can also
facilitate certain types of investment and operate as effective
offshore investment tools. Building societies may be somewhat
similar to banks but don't offer the wide range of services
a bank does. The one product they offer that all clients or
investors really want is higher rates of interest than offshore
banks. Their main business is in deposit accounts, either
in instant access or notice accounts. The latter offer a better
rate of interest but demands you give a notice period before
you can access your cash, generally 60 or 90 days.
of the Internet revolution, not all businesses were swift
to get on line. Insurance companies fall in that category.
This is a traditional industry and it did little to be more
efficient in recent years. The pressure from new dot-com competitors
is forcing the industry to search itself from within in order
to better utilize Internet technologies. What is not traditional
is that in January of 1999 Belize joined the privileged offshore
jurisdictions that have enacted international insurance laws.
Like its trust laws seven years earlier, the insurance law
is very flexible, offering the investor much room to work
in. The captive insurance company makes for an awesome investment
tool with huge benefits.
insurance concept is one that has stood the test of time.
It has grown to over 10,000 captive insurance companies worldwide.
The insurance industry is heavily regulated in most of the
developed nations, by high minimum capital and surplus requirements,
solvency margins, specific ratios of premiums written to net
assets and in most cases, restrictions on investments. In
addition, many multinational businesses often experience difficulties
in the international transfer of funds through dividend payments
due to national exchange control restrictions.
location for a captive insurance company can provide a smoother
regulatory environment, expand investment opportunities, and
facilitate legitimate international movement of funds.
Report resulted in the re-examining and re-formulation of
financial policies in British Dependent Territories particularly,
in Bermuda, Anguilla, the Cayman Islands, Montserrat, Turks
& Caicos, British Virgin Islands and Gibraltar. It was
the green light for Belize to enter the insurance arena. Being
an independent nation and not subject to the regulations of
the BDTs, investors began to reconsider making Belize the
domicile for their Insurance operations. The most enduring
things Belize had to offer were the essence of what offshore
structuring entails: confidentiality and tax exemption.
company has traditionally relied upon high investment income
to supplement modest or even negative underwriting results.
Such investment income is generated primarily from funds represented
by unearned premiums and unpaid losses, since premiums are
usually paid in advance, often annually, while claims tend
to be paid out over a much longer period, depending on the
type of business insured. The captive and its parent company,
rather than the conventional insurer can therefore derive
the benefit from investment income, which can be substantial.
Moreover, for an offshore captive established in Belize, there
may be the added advantage of generating untaxed investment
insurance companies were initially incorporated to underwrite
the risks of their parent or affiliated companies; the industry
has since grown in scope, and includes but is not limited
to the following:
captives, underwriting risks only of related-group companies.
or diversified captives, underwriting risks of unrelated
companies in addition to group business.
captives, formed by members of a common industry or trade
association in order to share the risks of that industry
or association among its members.
captives, sponsored by one or more independent agents to
write high-quality risks that they control. These programs
may be both agent-responsive and insured-responsive; that
is, both the agents and the insured may benefit from profits
based on their contribution.
pools, formed for the exchange of insurance business among
captives in order to spread their risks and enhance their
participation in non-related business.
of loss or maxi-captives, formed to provide capacity where
insurance cover is unavailable or no longer available, in
the commercial insurance market at a reasonable price. These
captives are providing mainly excess cover and are strongly
factor should also be considered. The incorporation of a captive
in Belize can be achieved with US$15,000 plus a paid up capital
of US$100,000. The costs in certain British Dependent Territories
can be as high as US$80,000 and the paid up capital required
in the region of US$600,000.
Another possibility is to incorporate the company in Belize
and have a physical office somewhere else. This immediately
reduces your overhead costs.
that most captives are based in BDTs and Great Britain is
indicative of the rule of Common Law as the legal basis for
captives. Belize's judicial system is based on British Common
Law; therefore, captives incorporated there have the same
legal structuring as those more expensive jurisdictions.
are a potentially significant benefit. The benefits may vary
depending upon the form, operation and ownership of the company.
Some of the potential tax advantages are:
an offshore captive, depending on the source of the underwriting
income and the residence of all or some of the shareholders
of the captive, the underwriting and investment income may
be accumulated free of income tax.
premium paid to the captive may be tax deductible as an
expense by the insured.
captive may avoid paying U.S. State premium taxes.
captive may establish tax deductible loss reserves.
considerations in a decision to form a captive depend on the
domicile of both the parent company and the captive. Therefore,
if we consider the irrevocable threat by the White Paper review
as well as the Edwards Report, there are no doubts that Belize
fits in as one of the best options for the domicile of such
entities. For instance, a UK company may be subject to taxation
on the undistributed profits of certain UK-controlled, but
non-resident companies in which it has a 10% or greater interest.
This rule generally applies to captive insurance companies
that are UK-controlled (BDTs), unless the captive pays a dividend
to U.K. residents of 90% of the profits available. Therefore,
moving a BDTs captive to Belize is prudent.
of a captive as part of an international tax planning strategy
is a complex subject. Therefore, companies considering formation
of a captive should obtain professional legal and tax advice
in both the parent and the captive companies.
To sum up, here are the points that favour Belize:
stringent regulatory requirements.
onerous capital requirements.
of investment management.
from various state regulations.
and economic stability.
established and flexible legal and regulatory system.
absence of exchange controls, and the opportunity to transact
business in a major currency (US$).
availability of competent insurance managers, lawyers, bankers
of income or other taxes.
communication and frequent air service.
these aspects in mind, Belize is destined to become the best
option for the domicile of any type of offshore structure.
Especially with this newly implemented act supporting the
captives as a sophisticated offshore tool, ready to by utilized
by those who are astute.
Economic Citizenship Investment Policy (BECIP)
citizenship programs offer a new concept to achieve financial
independence and freedom for people around the world. There
are several programs to choose from. These include citizenship,
permanent residency, and non-resident passports.
insurance policy - A second citizenship (immigration program)
can be an insurance policy against negative political or
economic developments and future unpleasant scenarios in
any hot spot in the world.
travel - For many nationals, it is extremely difficult to
travel to another country; their nation has almost no visa
free treaties and the application for and issuance of a
visa can take months. For those people, it is more convenient
to adopt a second passport, which entitles them to visa
free entry or easier issuance of visas.
break feature - Many countries have become areas of high
taxation, therefore, an increasing amount of high-income
earners look for an alternative citizenship low tax centers.
horizons - In many countries the prospect of wealth and
peace seems more and more limited. The possibility of exploring
new business opportunities in a friendly climate is probably
the biggest advantage a citizenship program can offer.
Belize Passport is an excellent travel document allowing
visa free entry to over 80 destinations including Bolivia,
Chile, Denmark, Ecuador, Egypt, Finland, Hong Kong, Norway,
Panama, Singapore, South Africa, Sweden, Thailand, Turkey,
Uruguay, United Kingdom and Venezuela. Under the Schengen
program from the European Union, a visa now permits travel
within Belgium, France, Germany, Luxembourg, Netherlands,
Portugal and Spain, Austria, Italy and Scandinavia. A
visa for countries like the United States can be obtained
within a few days.
an amendment to the Country's Constitution, it was possible
for citizenship to be granted to newcomers who made a "substantial
contribution to the economy and or well-being of Belize".
In January of 1995 the Government of Belize, led by the then
Prime Minister Rt. Hon. Dr. Manuel Esquivel published a document
entitled "Policy on Economic Citizenship Program"
in an attempt to stimulate foreign investment into the country.
who qualify in terms of good character, good health and financial
standing could apply for Belizean Citizenship, and subsequently,
upon acceptance, contribute to the Belize Economic Citizenship
applicable registration fees and contribution to the fund
are used in the following ways:
of all money collected is transferred by the Central Bank
into a consolidated fund. This fund is used exclusively
by the Ministry of Finance to service the Government's external
of the sum raised is transferred by the Central Bank into
a special Economic Development Fund. This money is used
solely to finance Capital Projects in the country.
remaining 30% of the money collected is transferred by the
Central Bank to an account administered by the Reconstruction
and Development Corporation. This is then used to provide
low interest financing to entrepreneurs in the Agriculture,
Tourism, Construction and other productive sectors of the
Economy, to support the work of Religious, Charitable, Benevolent
and non governmental organizations.
of US$10,000 is charged for processing an application for
Belizean citizenship regardless of the family status of the
applicant. In addition, the applicant is required to make
a total investment of US$50,000.
application form must be accompanied with a battery of documents:
certified copy of birth certificate or passport of the applicant
and each family member;
certified/official police or criminal record from country
of residence for the applicant and each family member over
18 years, and eight passport size photo of each family member
of the family duly endorsed by a Justice of the Peace;
- A Belize
Passport application form duly filled out and signed;
- A certified
copy of a medical report including HIV test result of applicant
and each family member and a VDRL for each member of the
family as well;
- A cashier's
cheque for the appropriate sum payable to the "Central
Bank of Belize" and two character reference letters.
in a language other than English must be accompanied by a
duly certified English translation. Assuming all documentation
and forms are in order the estimated time of processing is
approximately 30 to 90 days.
Residency program is a much swifter process but unlike BECIP
requires applicants to have spent at least one year in the
country. A Security Deposit (varying according to nationality)
is necessary along with a work permit.
class of 'residents' bringing foreign capital into the Belize
is offered tax exemptions and other incentives: "Qualified
Retired Persons" (QRP). Like your usual immigration program,
it has an air of flamboyance and is being run by the Ministry
of Tourism targeting European and North American nationals.
It is hoped that they would maintain residence and spend their
money in Belize.
people to the program, certain incentives are offered. Provision
for a one-time allowance of a QRP to import a car and personal
household effects duty-free. Five years later, another vehicle
can be imported as long as the first one is sold, re-exported
or disposed of in some approved manner. The program allows
the importation of light aircraft, boats and other forms of
transportation without duty as well.
to the tax-exempt status of International Business Companies,
QRPs pay no taxes or levies on all income or receipts that
accrue to them from sources outside Belize. It does not matter
if such income is earned or passive income and whether or
not such income is remitted to the QRP in Belize. Just like
an offshore entity, QRP cannot do business in the local economy
with Belizean nationals, but can direct foreign business activities
from within Belize and still maintain their tax-free status.
It is good to note here that if your assets and ongoing business
activities are placed under proper corporate structures, it
may minimize your US taxes when you live a requisite number
of days outside the United States.
being limited to just retired persons the law caters for those
who are Qualified as Retired Persons and wish to lead a tax-free
life. If you are a perpetual traveler who spends the year
in several locations Belize's retiree law is ideal. You need
not make large investments as in other permanent residence
programs or buy expensive condos. The United States for example,
only grants the green card status to foreigners who invest
$1,000,000 into a US business that creates 10 jobs. As a QRP
in Belize, you must show a monthly income of US$2,000 or make
arrangements to deposit US$24,000 on or before April 1 deadline
each year. This figure is coverage reflecting your general
maintenance and support.
should be at least 45 years old and you should plan to set
up an address in Belize. (All children under the age of 18
years automatically qualify). There is no legislation stipulating
a minimum time retirees must stay in the country each year,
but it is generally believed that a two-week stay is good.
presence in Belize is necessary. If you are not ready to drive
down pegs in the soil, you can still have a "virtual
address" for as low as US$150 a month. Your application
can be processed and since the law to date does not stipulate
a minimum number of days a 'retiree' must spend in Belize
to keep the QRP status, it makes for easier sailing. You could
seek professional help in completing the application and finding
other helpful tips about your new tax status. Your virtual
residence can have all the services you need including phone
fax, e-mail and mail forwarding.
Free Zone (CFZ) Act 1994
Belize's free zone is not nearly as large as others in the
region, it has steadily grown in recent years and what once
seemed like a little parking lot is now a sprawling 50-acre
business center. The CFZ Act established a commercial free
zone in Corozal again to attract foreign investment/capital.
In the zone facilities are provided for manufacturing, processing,
packaging activities, as well as warehousing and distribution
of goods and services. Several benefits and incentives including
duty exemptions and tax holidays are available to investors
in the Zone as mentioned.
merchandise, article, or goods entering a CFZ for commercial
purposes shall be exempt from import duties, stamps and
revenue replacement duties.
fuel and goods including buildings materials, furniture,
equipment, supplies and parts required for the proper functioning
of a CFZ business shall likewise be exempt form all duties
quotas upon any article, item, or goods shall apply to imports
or exports license.
or exports of a CFZ business shall not require an import
or export license.
anything contained in the Income Tax Act, there shall be levied
on the chargeable income of every developer and CFZ business
within a CFZ, an income tax at the following rates:
to BZ$15,000.00 of total income...2%;
BZ$15,000.00 up to BZ$30,000 of total chargeable income...4%;
BZ$30,000 and up to $100,000 of total chargeable income...6%;
BZ100,000.00 of total chargeable income...8%.
computation of income tax under this section, there shall
be given tax credits in accordance with the number of Belizean
workers employed on a continuing basis to every CVZ developer
or business in accordance with the following scale:
10 to 30 Belizean workers employed ...1% of taxable income;
30 and up to 50 Belizean workers employed ...1.5% of taxable
50 Belizean workers employed ...2% of taxable income.
the first five years of its operation, a CFZ business shall
be exempt from income tax or capital gains tax or any new
corporate tax levied by the Government of Belize after the
commencement of the Act. Any dividends paid by a CFZ business
shall exempt from such tax for the first twenty years of its
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
from the sale of stocks or other partial or complete ownership
interest in a CFZ business shall be exempt from tax.
fee equal to the sum of five percent of the tax collected
by the Commissioner of Income Tax in any year of assessment
shall be placed to the credit of the CFZMA.
warehoused in the CFZ may be wholesaled or retailed for:
to diplomats of other countries who under customary and
conventional international law are exempt from payment of
to ships that docks at ports in Belize and are detained
for other foreign port.
for direct export whether by sea, air or land, provided
that such merchandise arrive at port of exit under customs
to 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
may be sold inside a CFZ from one business to another, provided
a proper record is kept of such transactions.
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 business; there are no
Government charges and taxes on the use of foreign currency
within a CFZ.
are allowed to open an account in any currency with a duly
registered bank of its choice, which is located in the CFZ.
Restriction Act does not apply to a CFZ business or rental
of property within a CFZ.
Processing Zones (EPZ)
Processing Zone (EPZ) Program is also intended to attract
investment both local and foreign to boost exports of non-traditional
manufactured goods. An EPZ is a designated area outside national
customs territory and restricted by controlled access to the
advantage of a complex of industries. Besides promoting new
exports, the program is designed to facilitate technology
transfer, high quality production, and improvement of managerial
technical skills and generation of employment opportunities
in the country.
program has been considered advantageous to investors as Belize
has a preferential market in CARICOM under the treaty of Chaguaramas,
in the European Union under the Lome convention, in Canada
under the CARIBCAN and in the USA under the Caribbean Basin
Initiative (CBI) and the Generalized System of Preferences
and regulations governing the EPZ Program are contained in
the EPZ Act 1990 and Export Processing Zone Regulations 1992.
An EPZ business is only allowed to sell, lease or transfer
articles, goods or services in an EPZ or outside Belize to
other EPZ businesses, foreign individuals or foreign businesses.
Facilities are provided for activities in manufacturing, processing,
packaging, warehousing and distribution of goods and services.
The EPZ Committee consists of representatives of various Government
ministries, the Chamber of Commerce, small businesses, EPZ
developers and the Industrial sector. In special cases the
committee grants waivers to the regulations for businesses
applying for same.
Andres EPZ, covering just over 28 acres in northern Belize
is 8 miles away from the Belize /Mexico border and adjacent
to the largest free zone in the hemisphere - NAFTA. Two more
EPZs are located near Belize City.
incentives to investors under the EPZ Act are ensured. These
import and export duty exemptions. Import duty exemptions
extend to capital, equipment, intermediate goods, spare
parts and service vehicles utilized inside the EPZ.
from capital gains, property and land tax, excise sales
and consumption tax, trade turnover, foreign exchange and
guaranteed income tax holiday of 20 years with an option
to extend and deduct losses from profits following the tax
tax exemption in perpetuity.
to open foreign currency bank accounts in Belize and abroad.
to sell, lease or transfer items, goods and services within
inspection at the Zone for expediency.
permits at no cost for all professionals and technical staff.
raw materials import restrictions.
foreign exchange restrictions.
import or export-licensing requirements.
trade licensing for business to operate.
licensing requirement for domestic suppliers who sell to
and Free Zone Solutions
arena of international financial transactions it is now the
given that for any business institution or offshore service
provider to survive and prosper, it must have a viable e-commerce
strategy. In June of 2000 the United States Congress approved
a bill that allowed consumers and businesses in the US to
sign contracts electronically over the Internet. The law came
into effect in October 2000 and since then many more digital
doors and windows have opened. What are the implications of
these new legislations? What are the risks associated with
these businesses? How secure can transactions be? These and
many other issues will be answered in the future as society's
needs and expectations along with the development of technology
and the decisions of courts help forge this new dimension
in the business world.
has secure servers with industrial standard telecommunications
and a tax-favorable atmosphere. Additionally there is a comprehensive
support service including website design, software and hardware
suppliers' e-commerce solution suppliers, internet payment
gateway facilities and international legal and tax advisors.
The country is now getting much more technologically intensive
and the government has ordered a large number of computers
to be installed in the nation's schools, to ensure that new
students are computer literate and Internet trained.
revolution being initially a tool for breaking border limitations
and expanding personal freedom, is being controlled and regulated
somewhat by various governments. Certain types of activities
are now restricted on the Internet. Because the technology
is new and not many legal precedents are on file, many experiments
are taking place, testing the boundaries and limitations of
such successful venture is the export processing zone
(epz) located at the Datapro compound 13 ½ miles
north of Belize City. This zone provides clients with
terms for hosting
list of activities permitted
a license for special activities fast and simple
rates among offshore e-com zones
range of bandwidths available from one channel up to T3
with satellite access
up an e-business structure an action plan as set out below
should be followed:
the project: You
must decide what type of e-business you wish to pursue,
the character of operations and location of the main target.
Once that is clear projections should be made for the anticipated
volume per one transaction and the anticipated turnover
per month or year. This should also incorporate an anticipated
number of visitors to of the web pager at once per month.
up the legal and financial background: The draft and registration
of a Trust or Foundation in consort with an IBC can then
be effected. Open
a bank account, a merchant account with credit cards if
needed and a license if necessary.
up on the technical side: The registration of the domain
name and your trademark should be done at this stage. Your
web page should be designed and constructed, and your server
installed in the Free Zone. Once you choose the bandwidth
and get the server connected and you are ready to roll.
fee for the second stage will be in area of US$8, 000 but
can be less or higher depending to the structure: certain
items can be added as well as excluded. License when required
costs extra depending to the type of web page.
stage requires preliminary study as well. Clients can design
their own web-site or have professional designers do it for
them. The bandwidth available begins at US$950/month for a
line of 64kbps but can be upgraded, at an extra charge. It
is recommended to start with a general drafting according
to your needs and then finalize it later. Costs range between
US$7,000 and US$10,000 to set up.
Choosing the right location for a server is of great importance
to the structure of the whole E-business.
Belize's trust legislation as stated elsewhere in this article,
gives this jurisdiction immunity from court actions of creditors
challenging the settlor's disposition of funds to a trust.
Tax planning, licensing special types of activity (casino,
wagering, adult entertainment), and protecting IP and other
assets from any legal pursuit are especially well-protected.