Legal System

 

Belize’s legal system is based on English Common Law supplemented by local legislation.

 

Generally speaking common law, as opposed to civil or socialist law, is a type of legal system where legislation is continually evolving. Courts refine and create laws on a case-by-case basis. When resolving a legal dispute, in the ideal world, a common law court looks to precedents set by other courts. What this means is that when a court is resolving a dispute, it must look to see if a similar dispute was resolved in the past. If one has, then the present day court is obligated to following the same reasoning used in the prior case; this principle is called stare decisis. On the other hand, if the dispute is totally unique, the court may resolve the matter itself using general guidelines. This new decision then becomes the precedent to which all future cases are bound. Over the years, the precedents created by past decisions coalesce into a complicated set of rules that apply to a wide array of case; this collection of rules is known as “common law”. Of course, common law systems are much more complex in practice, nevertheless the principle of stare decisis as described above, is the foundation of all common law systems.

 

 

Offshore Legal and Tax Regimes

 

Please be aware that the following is simply a brief summary of some of the more important aspects of Belizean tax law and should be considered only general information. Please do not substitute this for professional tax advice.

 

General Information

 

Offshore entities in Belize may take the form of an international business Corporation (IBC), a trust, or an international bank.

 

Only financial institutions are required to obtain licenses. Corporations are not compelled to disclose beneficial ownership nor do trusts have to disclose the names of their beneficiaries.

 

 

Taxation of International Business Companies (IBCs)

 

International Business Companies (IBCs) are exempt from most types of taxation in Belize. This includes the following exemptions:

 

• any IBC income;

• any dividends paid by an IBC to residents of Belize and elsewhere;

• any interests, rent, royalties, compensations and other amounts paid by an IBC to persons who are not residents in Belize;

• capital gains realized on any shares, debt obligations or other securities of an IBC by persons who are not residents in Belize.

• the payment of stamp duty on:

  • all instruments relating to transfer of any property to or by an IBC;

  • all instruments relating to transactions in respect of the shares, debt obligations or other securities of an IBC;

  • all instruments relating in any way to the assets or activities of an IBC.

 

International Business Companies (IBCs) Activities

 

IBCs are prohibited from:

 

* Doing business with persons resident in Belize;

* Owning any interest in real property situated in Belize, except lease property for office purposes;

* Carrying out banking business;

* Carrying out insurance or reinsurance business;

* Providing registered agents/offices for companies.

 

With the exception of the above mentioned activities, a Belizean IBC may engage in any activity that is not unlawful in Belize.

 

Taxation of Trusts

 

As long as the settlor is not resident in Belize during a tax year, that none of the beneficiaries are resident in Belize during that year, and that the trust property does not include any land situated in Belize, the following exemptions are offered:

 

• the income of the trust for that year from all provisions of the Income Tax Act;

• no estate, inheritance, succession or gift tax or duty is due with respect to the trust property by reason of any death occurring during that year; and

• no stamp duty is due on all instruments executed in that year and relating to the trust property or to transactions carried out by the trustee on behalf of the trust.

 

As related to Exchange Control Regulations, 1976, in the case of trust property and to any transactions carried out by a trustee on behalf of a trust, any trustee of an exempt trust is considered non-resident.

 

Taxation of International Banks

 

Any international bank in Belize is exempt from all forms of taxation on its profits or gains as well as upon any interest or dividends earned in respect of banking business carried on from within Belize. Moreover, there is no stamp duty on Bills of Exchange or promissory notes or any other document, instrument or certificate executed by or in connection with an offshore banking business.

 

The annual license fee for a Class A (Unrestricted) Banking License is $20,000 and the annual license fee for a Class B (Restricted) Banking License is $15,000.

 

Belizean International Bank Activities

 

Belizean International Banks are permitted to carry-out the following activities in Belize:

 

• launch, maintain, and operate a business office in Belize;

• transact international banking business through its business office in Belize without restrictions;

• transact international banking business with a local entity in Belize licensed under the Banks and Financial Institutions Act, 1995.

 

Taxation of Foreign Employees of Offshore Operations

 

The Belizean government does not distinguish distinction between foreign and Belizean employees or whether or not the business is “offshore” where personal income tax is concerned. Tax is deducted under the \'PAYE\' system as are compulsory social insurance contributions.

 

Exchange Control

 

Authorized dealers and authorized depositories are allowed deal in foreign currency once in possession of a foreign exchange permit, which must be obtained from an authorized dealer or the Central Bank. The Central Bank’s permission is also required in order to secure a loan from outside Belize that involves a foreign currency and to service repayment of foreign debt.

 

It is generally easy to obtain the necessary approvals in the case of genuine, approved enterprises. Foreign investors are obligated to register any investments made in Belize with the Central Bank to facilitate the repatriation of profits, dividends, etc.