There has been an increasing trend of starting business offshore as many are beginning to understand the full potential of working offshore. You may be one of them who are seeking to find the best jurisdiction. Whilst the plethora of choices, to open a company in Belize is undeniably a popular choice. Here are 5 things to know in starting a business in Belize once you decide to register company in Belize.
Economic and political outlook:
Located on the eastern coast of Central America, Belize possesses economic stability. With its economy primarily based on tourism, agriculture and other services, the offshore services industry has also significantly contributed to Belize’s GDP. In Central Americas, Belize holds the second-highest per capita income. In addition, Belize has political and currency stability with its government actively seeking foreign direct investment (FDI).
Belize holds an attractive market for exports to the United States due to its proximity as it is easily accessible via air, land and sea. In comparison to the rest of Central American neighbours, Belize also possesses a higher-skilled labour force and a higher cost of living.
Even though Belize has a higher cost of living compared to its neighbours in Central America, the operating expenses in Belize are relatively affordable with respect to other countries around the world. Hence, to open a company in Belize, it helps to reduce operating costs as well.
However, according to the World Bank, Belize is ranked 135 out of 190 for the ease of starting business index. Despite that, Belize is constantly making efforts to improve its act, developing a business-friendly environment to attract foreign investors.
International Business Company (IBC):
The most popular incorporation in Belize is the International Business Company (IBC). IBC Act was established in 1990 and was mainly based on the British Virgin Island’s model which allows for Belize company formation. It was then expanded and modified in 2000 and updated in 2011.
IBC is a company with limited liability that can be quickly incorporated in the span of 2 days. It is preferred by many investors due to its easy implementation and full exemption from taxes in Belize. In addition, there is no minimum paid-up capital required. The filing of annual returns or public disclosure of directors, shareholders, charges, loans or agreements is also not required. This allows companies to have more privacy which acts as a layer of protection to individual assets and financial security.
A question that you may wonder would be what’s the difference between Limited Liability Company (LLC) and International Business Company (IBC) in Belize? In fact, both are relatively similar with the main difference in the ownership and management regulations.
IBC can be owned by a board of directors and have shareholder ownership. Whereas LLC is a hybrid between a limited liability company and a partnership, which only includes members and managers who oversee the company control, not shareholders.
Belize is known as a tax-haven jurisdiction where all local taxes are waived legally as per the IBC act enactment in 1990. The tax exclusion applies for taxes such as capital gains tax, stamp duty, and dividend and income taxes.
IBCs are required to file monthly business tax returns. Tax exemptions are available for companies with income under US$37,500. However, if otherwise, the tax rate would be between 1.75% to 19%, where the exact tax rate is dependent on the specific nature of your business.
Tax exemption is not available if your company’s directors comprise of a person residing in Belize or your company is engaging in a trade, business or profession with the bulk of revenue or income derived from Belize.
Qualifying for tax exemption requires an offshore business in Belize to fulfill certain criteria. This includes not conducting business with locals or earning profits within the jurisdiction and the requirement of a registered address for the business located within the jurisdiction.
With tax exemption or lower tax rate, Belize would undoubtedly entice foreign investors. Since businesses would not have to pay a significant amount of taxes annually, it, in turn, allows a higher profit and reduces the risk of liquidation.
Facilitates foreign investments:
Apart from the favourable tax benefits in place, Belize’s business-friendly environment also has supportive policies to help new offshore businesses. One would be the Belize Trade and Investment Development Service (BELTRAIDE). It is a statutory body of the Government of Belize mandated to provide assistance to new offshore businesses by promoting and facilitating foreign investment. This will undoubtedly attract foreign investors. On top of the BELTRAIDE, there also exist incentives such as Export Processing Zones (EPZ) Program, Fiscal Incentives Program, Commercial-Free Zones, Repatriation of Profits and Dividends, and more which would appeal to foreign investors.
Registering company in Belize:
Once you have considered and decided to open a business in Belize, you may proceed with the preparation. The steps to open business in Belize are as follows:
Step 1: Planning of your business idea
- Think of a business idea that is unique and feasible.
Step 2: Choosing a suitable corporate entity
- There exist many types of business entities but the most popular Belize company formation would be IBC.
Step 3: Reserving of the company name with Belize Companies & Corporate Affairs Registry
Step 4: Obtaining business licenses and permits
Step 5: Corporate bank account opening
Step 6: Register with the Belize Social Security Board.
Step 7: Staying compliant
The information of what you need to know before you open a company in Belize may seem excessive. With Tetra Consultants by your side, the registration process of your business in Canada will be smooth and hassle-free. Our comprehensive service package includes planning and strategizing with our clients to select a suitable business entity, completing the registration process, obtaining required licenses, opening a corporate bank account, trade license application and financial reporting and taxation obligations.
Contact us to find out more about how to register business in Belize and our dedicated and experienced team will revert within the next 24 hours.