Belize Company Formation

Belize Company Formation – Offshore Company Formation

• Tax planning via a network of international tax advisers and attorneys
• Why form a company in a foreign country with a tax accountant specialized in international tax law?
• Basic Considerations regarding the Formation of Companies in „Zero-Tax Havens“ i.e. in countries that have not entered into Double Taxation Agreements with other countries
• Offshore Company Formation: Tax haven rankings
• Examples for the legal reduction of corporate taxes
• DTA permanent establishment concept – Our services and fees
• Parent companies and their subsidiaries in the European Union
• Beware of cheap founders!

Company Formation Belize- Offshore Company Formation:

Belize is a Central South American Country which borders the Caribbean Sea between Guatemala and Mexico. Formerly known as The British Honduras the official name was changed to Belize in 1973 with full independence granted within the Commonwealth on 21 September 1981, although this was not accepted by Guatemala until 1992 because of its historical disputes over the territory with the United Kingdom.

As with many former British colonies, Belize has adopted English law and its traditions and models for business formations, which take the form of: sole proprietor, partnerships, limited liability partnerships, Trust Funds, private companies, limited life companies, investment companies, Joint Venture and Cooperatives partnerships and International Business Companies (IBC).

Company Formation Belize- Services provided by our Law Firm – or our Partner Network:

• Formation of the company, Apostille, upon request certified translation of the formation documents
• Certificate of Incorporation: The certificate of incorporation is an official document that confirms the name of a registered company, as well as the registration number.
• Certificate of Good Standing
• Ranging from Registered Office to maintaining a business office
• Upon request: Nominee Director (attorney acts as a trustee and acts as the Director of the company during the formation phase) and / or Nominee Shareholder (natural person or legal entity – Law firm acts as a trustee in the form of the shareholder of the company)
• Upon request:  Permanent Nominee Director (Attorney acts as trustee in the capacity of Director of the company during the entire term of the agreement)

Clarification:

A production site, a site for the exploitation of mineral resources or construction works whose duration is greater than 12 months always constitutes the establishment of a place of business in the country of the company’s seat (for example: Belize, BVI, Cayman Islands, Nevis etc….), independent „of the place of managerial supervision” (analogous to Article 5 OECD_Model Convention). Otherwise the taxable permanent establishment is defined via the „place of managerial supervision”.  As a rule this implies, that a person who maintains his ordinary residence in the country of the company’s seat must act as the Director of the company. Either the client or an agent relocates his ordinary residence to the country of the company’s seat and he, himself, acts as the Director of the company or our Law Firm in the country of the company’s seat provides a Nominee Director. Alternative: For example: The Danish client / founder acts as the Director of the company and establishes credibility that he is present in the country of the company’s seat within the course of carrying out the required managerial supervision. Due to the fact that as a rule tax havens (Belize, BVI Cayman Islands, Nevis etc…) do not maintain a public commercial register, the installation of a “Nominee Director in the formation phase” is possible and not necessarily a “permanently present Nominee Director”.

– Upon request: Bearer shares

– Upon request: Liechtenstein Institute as the shareholder of the company

Clarification:

The shareholder or the shareholders are the „Owner” of the company. It can be individuals or companies.  Bearer shares, nominee shareholder or for example a Liechtenstein Institute as a shareholder serve to conceal the true ownership relationships.  Which constellation is best suited, is dependent upon different prerequisites. We would welcome the opportunity to discuss this with you in a personal setting.

– Opening of an account in the name of the company, incl. Online banking and VisaCard (in the case of bearer shares the opening of an account is often only possible, if the client / founder is not present at the opening of the account)

– Upon request: Investment account in Switzerland (Minimum deposit 10,000 CHF)

– To the extent it is a requirement of domestic law: Provision of proof of the exempt status to the authorities (most tax havens differentiate between offshore and onshore companies. Onshore companies are taxed normally, offshore companies – i.e. companies which transact business outside of the country are not taxed. The Cayman Islands is the exception: Real zero-tax haven)

There are over 25,000 international business companies registered in Belize, many of which have been formed to hold legal title to real property in jurisdictions outside Belize or to create securities trading accounts in Europe, Canada or the United States. One of the major advantages of the Belizean IBC is the exemption from income tax, capital gains or transaction tax.

The jurisdiction is highly rated for its banking secrecy; corporations do not have to disclose beneficial ownership;, and Trusts need not disclose the names of their beneficiaries. The regulatory restrictions are minimal and foreign investment is actively encouraged and facilitated by the Commercial Free Zone Act 1994 which provides for the development of designated commercial free Zones and Export Processing Zones which allow trading in areas such as manufacturing, processing, and the distribution of goods and services. These zones are exempted from foreign exchange restrictions and have other attractive benefits.

The IBC formation costs are very competitive, the Belizean IBC Registry is modern and computerized and incorporation can be completed within one hour

Offshore Company Formation Formalities

Belize offshore entities can take one of three forms: the International Business Corporation, the Trust and the Offshore Bank.

The International Business Corporation is the most common offshore company formation and as with most jurisdictions the trading activities of a Belizean IBC are restricted by statute.

The international Business Act 1990 specifically prohibits an IBC from:

• Conducting local business activities;
• Owning any interest in Belizean real property: an IBC can only lease property for office purposes;
• Undertaking business in banking; insurance or re-insurance, company management or registered facilities for Belizean incorporated companies;
• The legal requirements are not overly onerous and secrecy is guaranteed;
• A registered office and registered agent must be maintained in Belize and the registered agent appropriately licensed with the necessary professional qualifications. The information about the office and agent are the only details that will appear on the public record. Details of shares and beneficial ownership are protected from public scrutiny;
• There are no minimum capitalization requirements, the nominal authorized share capital is usually US$50,000.00 divided into shares with or without par value but capital can be expressed in any currency;
• Bearer shares can be issued with or without par value. Registered shares, preference shares with or without voting rights can also be issued;
• Only one director and share holder are required and a company secretary is optional. There are no nationality requirements;
• The company name must end in: Limited, Ltd, Corporation, Inc, Sociedade Anonima, SA or a similar ending which will identify it as having limited liability;
• Transfer of Jurisdiction: IBC legislation permits foreign companies to be re-domiciled in Belize;
• There are no requirement for meeting of members and Directors;
• There is no requirement to file annual returns with the exception of franchise tax;
• Company Incorporation formalities can be completed within 24 hours.

Trusts

Belizean Trusts are regulated by the Trusts Act 1992. The intention of the statute was to integrate both modern and flexible asset protection provisions. Trusts can be created (other than a unit trust) by oral declaration or by a written document including a will or codicil. A unit Trust can only be created by a document.

A Trust other than a constructive Trust over land situated in Belize is not enforceable unless evidenced in writing.

Registration of Trusts is optional. The maximum duration of a Trust other than charitable Trust is 120 years from the date of its creation.

Once validly created, a Belizean Trust is impenetrable and cannot be set aside or varied by a Belizean Court; nor can a court adjudicate in favour of any claim against Trust property arising from the Order of a foreign court in Divorce or Insolvency/Bankruptcy proceedings. It is a common feature that the Trust is used in conjunction with an IBC to facilitate the anonymity of beneficiaries from IBC’s officers.

Taxation

Incorporated Belizean local businesses pay Corporation Tax of up 25% on turnover and employees pay up to 45% tax on income in addition to social contributions. There is also Sales Tax up to 12% on the production of goods and services, stamp duty, Inheritance and Capital Gains taxes.

IBC’s, offshore Banks and Trusts (provided that the Settlor and Beneficiaries are not resident during the tax year and Trust property does not include any land situated in Belize) are exempt from income tax, taxation on the payment of dividends and interest, gifts, stamp duty, Inheritance and Capital Gains taxes.

However, Withholding tax of 25% is levied against non resident companies and individuals in relation to management fee, mortgage and debenture interest, insurance premiums and rental of plant and machinery.

Banking

The major local banks provide a full range of international banking services including foreign currency savings and checking accounts earning tax-free interest and operated for the purpose of exchange control on a non-resident basis.

Belizean Offshore Bank can establish, maintain and operate a business office in Belize; transact offshore banking business through its business office in Belize without restrictions; and transact offshore banking business with a local entity in Belize licensed under the Banks and Financial Institutions Act, 1995.

Belize Offshore Banks are not subject to exchange control regulations.

The Central Bank of Belize was established pursuant to the Central Bank Act of 1982, the Bank Act. The Central Bank has a statutory obligation under the Bank Act to foster monetary stability and promote credit and exchange conditions conducive to economic growth within the context of the government’s economic policy. One of the most favourable benefits, subject to references, is that all Belizean companies can open up a bank account with the Bank of Belize without additional verification making it one of the most competitive jurisdictions.

Employment law

Under Belizean law employees are entitled to a minimum wage. Contractually the first two weeks of employment is the probation period. Between 2 weeks and 6 months, three days notice of termination must be given; between 6 months and one year, one weeks notice; and after that 2 weeks notice. Employees are entitled to 2 working weeks annual leave, and to 16 days sick leave at their basic rate of pay providing they have worked an aggregate period of not less than 60 days within the previous 12 months.

The Labour Department is responsible for the regulation of trade unions, personnel management and policies, the security of workers, management responsibilities including the collective bargaining process and grievance and disciplinary procedures. Industrial and employment disputes are handled by the Labour Commissioner who will instruct a Labour Officer to apply conciliation procedures.

The Constitution prohibits antiunion discrimination both before and after a union is registered.

Geography, people and culture

Belize is the most sparsely populated nation in Central America. Slightly more than half of the population lives in rural areas. About 25% live in Belize City, the principal port, commercial centre, and former capital.

Most Belizeans are of multiracial descent. About 46.4% of the population is of mixed Mayan and European descent (Mestizo); 27.7% are of African and Afro-European (Creole) ancestry; about 10% are Mayan; and about 6.4% are Afro-Amerindian (Garifuna). The remainder, about 9.5%, includes European, East Indian, Chinese, Middle Eastern, and North American groups.

English, the official language, is spoken by virtually all except the refugees who arrived during the past decade. Spanish is the native tongue of about 50% of the people and is spoken as a second language by another 20%. The various Mayan groups still speak their indigenous languages, and an English Creole dialect (or “Kriol” in the new orthography), similar to the Creole dialects of the English-speaking Caribbean Islands, is spoken by most.

The rate of functional literacy is 76%. About 60% of the population is Roman Catholic; the Anglican Church and other Protestant Christian groups account for most of the remaining 40%. Mennonite settlers number about 7,160.

Immigration and Residency

An application for permanent residence can be made after one year of legal residence in Belize on a continuous basis. To acquire nationality status an applicant should have permanent residence or have resided legally in Belize for at least 5 years.

There are also incentives for permanent residence for Investors and Belizeans living overseas.

Legal and Political System

Belize is a parliamentary democracy based on the Westminster model and Queen Elizabeth II is head of state and is represented by a Governor General. The primary executive organ of government is the cabinet, led by a Prime Minister (head of government). Cabinet ministers are members of the majority political party in parliament and usually hold elected seats in the National Assembly concurrently with their cabinet positions.

The National Assembly consists of a House of Representatives and a Senate of 12 members. The 29 members of the House are elected to a maximum 5 year term. The Governor General appoints the Senate. Six are appointed on the recommendation of the Prime Minister, and 3 with the advice of the leader of the opposition. The Belize Council of Churches and the Evangelical Association of Churches, the Belize Chamber of Commerce and Industry and the Belize Business Bureau, and the National Trade Union Congress and the Civil Society Steering Committee each advise the Governor General on the appointment of one senator each. The Senate is headed by a president, who is a non voting member appointed by the governing party.

Members of the independent judiciary are appointed. The judicial system includes local magistrates, the Supreme Court, and the Court of Appeal. Cases may, under certain circumstances, be appealed to the Privy Council in London

The current Belizean Government is headed by the People’s United Party (PUP), which was elected to a second consecutive term in office on March 5, 2003. The opposition party is the United Democratic Party.

Economy

The currency is the Belizean dollar, fixed at BZ$2 = US$1.

Forestry was the only economic activity of any consequence in Belize until well into the 20th century when the supply of accessible timber began to dwindle. Cane sugar then became the principal export. Exports have recently been augmented by expanded production of citrus, bananas, seafood, and apparel.

Domestic industry is limited, constrained by relatively high-cost labour and energy and a small domestic market.

A major constraint on the economic development of Belize continues to be the scarcity of infrastructure investments. Although electricity, telephone, and water utilities are all relatively good, Belize has the most expensive electricity in the region, despite recent cuts in commercial and industrial rates.

Belize continues to rely heavily on foreign trade, with the United States as its number-one trading partner. Other partners include the United Kingdom, European Union, Canada, Mexico, and Caribbean Common Market (CARICOM) member states.

Legislation affecting offshore and non resident business

If you require more information on any aspect of company formations please contact us.

Belizean Nationality Act 1981
Commercial Free Zone (CFZ) Act 1994
Computer Wagering Licensing Act 1995
Exchange Control Regulations 1980
Export Processing Zone (EPZ) Act 1990
Fiscal Incentive Act No 6 Of 1990
IBC Act, 1990
Income Tax Amendment Act 1998
International Insurance Act, 1999
Limited Liability Partnerships Act, 1999
Limited Life Companies Act, 1999
Money Laundering (Prevention) Act, 1996
Mutual Funds Act, 1999
Offshore Banking Act, 1996
Protected Cell Companies Act, 1999
Registration Of Merchants Ships Act 1989
Retired Persons Incentive Act 1999
Trade Unions and Employers Organizations Act of 2000
Trust Act 1992