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Belize's Budget Broadens GST, Excise Taxes

by Mike Godfrey, Lowtax.net, Washington
16 March, 2018

Belize's Prime Minister and Minister of Finance, Dean Barrow, has signaled a broadening of the country's indirect tax base in the country's recent 2018 Budget, and reiterated his government's commitment to complying with global standards of good tax governance.

The main tax measures in the budget include imposing goods and services tax (GST) of 12.5 percent on the purchase of internet data. This is intended to address a fall in revenue from the telecoms sector, which has resulted from a shift in how people are communicating. Internet services provided to schools will continue to be provided free of cost and will be unaffected.

Exemptions for the broad categories of land clearing, crop dusting, and harvesting, which were intended to provide an incentive to the agriculture sector, will be abolished due to abuse.

GST will be applied to contracts, imports, and purchases to which the Government of Belize is a party (currently exempt).

The GST applied to Belize's business processing outsourcing sector will be harmonized, with operating expenses becoming ineligible for classification as inputs. This policy will apply to all processors ensuring a level playing field across this sector.

Excise tax rates will be aligned between kerosene imports and jet fuel, and between fuel oils and diesel. This change is intended to prevent mislabeling and abuse.

The free zone social fee applied to goods (excluding cigarettes, liquor, and fuel) imported into the country's economic zones will be increased to three percent (currently two percent), and a social fee will apply to inbound duty-free merchandise at Belize's Philip S.W. Goldson International Airport. These changes are intended to prevent revenue slippage, promote equity, and minimize incentives for corruption and abuse by collectors and payees alike.

Belize's International Business Companies (IBCs) Regime, which creates a preferential low-tax regime for a class of companies, will be amended by October 2018. This will fulfill the country's commitment to the OECD's Forum on Harmful Tax Practices, as well as its undertaking to implement the OECD's anti-Base Erosion and Profit Shifting (BEPS) measures.

The budget also includes an announcement that Belize is in the process of establishing an Automatic Exchange of Information (AEOI) Unit in its Income Tax Department to comply with OECD and Global Forum initiatives to automatically share tax information with tax authorities in other jurisdictions.

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