Belize Free Trade Zones
Belize Free Trade Zones, a class of special economic zone, can be broadly divided into two types of free trade zones – the Export Processing Zone (EPS) and the Commercial Free Zone (CFZ). Both types of free trade zones cater to manufacturing, commercial, office and warehousing activities. Generally, business owners that set up in an EPS focuses mainly on manufacturing and exporting activities while business owners that set up in a CFZ conduct a much wider variety of trade and commercial activities.
Businesses that set up within the Belize free zone are able to enjoy multiple tax benefits such as exemption from custom duties and excise duties for goods and services. Although there is no need to obtain a trading license for a Belize company operating in a Belize free trade zones, the company will be required to procure import and export licenses if it wishes to sell goods to consumers within Belize but also outside the free trade zone. Tetra Consultants recommends clients who are engaging in international commerce adopt the available foreign trade zone in Belize free trade zone.
Belize Free Trade Zones – Export Processing Zone (EPZ)
- There are 3 EPZs in Belize, namely the San Andres EPZ, the Philip Goldson International Airport EPZ and the Price Barracks EPZ.
- Besides providing facilities for activities such as manufacturing, processing, packaging, warehousing and the distribution of goods and services, a Belize EPZ also provides investors with an additional option of building their own facilities such as utility installations within the Free Zone.
- Generally, business that operate in a Belize EPZ engage in processing, manufacturing, assembly, data processing and other non-tourism services that mainly target the export market.
San Andres EPZ
- Established in 1992, the San Andres EPZ was the first EPZ formed in Belize, together with the Corozal CFZ.
- The EPZ is located in the Village of San Andres and occupies approximately 28.5 acres of land in the northern region of the country. The area is situated only 8 miles away from the Mexican border.
Philip Goldson International Airport EPZ
- Located next to the Philip Goldson International Airport, the EPZ occupies around 4 acres of land.
- The Philip Goldson International Airport is the busiest airport in Belize and is only 14.5km away from Belize’s largest city, Belize City.
Price Barracks EPZ
- Also situated near Philip Goldson International Airport and Belize City, the Price Barracks EPZ occupies approximately 14 acres of land.
Belize Free Trade Zones – Commercial Free Zone (CFZ)
- There are 2 CFZs in Belize, namely the Corozal Free Zone and the Benque Viejo del Carmen Free Zone.
- Generally, companies incorporate in a CFZ can engage in wholesale, retail, services, trade, investment, commercial, office, warehouse, tourism, hotel and manufacturing activities as long as they are carried out within the CFZ.
- Banking, foreign exchange and other financial services can be provided to businesses in the CFZ but must be subjected to regulatory approval.
- Situated in northern Belize on the Belize/Mexico border, the Corozal CFZ was the first commercial free zone established in Belize to encourage foreign investment and generate employment in the country.
- Main activities taking place in the Corozal CFZ include manufacturing, retail and wholesale of merchandise in the food and agribusiness sectors, light manufacturing sectors, as well as the provision of travel and tourism services and business services.
- Every year, the total value of imports and exports in the Corozal free trade zone reaches around 400 million US dollars. The Corozal CFZ is the most prominent and economically significant Free Zone in Belize.
- The Corozal free trade zone mainly import goods from the US and re-export them to Mexico.
- With a well-developed management information system, businesses in the Corozal free trade zone one are able to collect, manage and utilise data effectively, allowing them to make more informed business decisions.
Benque Viejo CFZ
- Located on the western border with Guatemala, the Benque Viejo CFZ is much smaller and less significant in terms of trade volume compared to the Corozal CFZ.
Features of a Belize Free Trade Zones Company
Export Processing Zone (EPZ)
- Generally, only companies that engage in mainly export-related businesses are allowed to set up in a Belize EPZ. However, the authority in charge of the development of the EPZ may choose to lease properties to non-exporting firms if they have received approval from the Export Processing Zone Committee (EPZC). Typically, the EPZC will grant approval to companies that can prove that their services are complementary to and enhance the business activities within the Free Zone.
- Business activities of a company operating in a Belize EPZ must be conducted within the EPZ free trade area or in foreign countries. Activities in Belize outside of the Belize free zone are limited to transportation, distribution and business meetings.
- An EPZ business is not allowed to sell, lease or transfer any good or service in Belize outside of an EPZ, or to a Belize resident or a domestic Belize company. As such, no trading license is required for a company operating in an EPZ. In the case that a business operating in the EPZ wishes to sell, lease or transfer good and services in Belize, it will have to apply for waiver of trade restrictions with the EPZC. This will allow the EPZ business to trade within Belize after it has obtained the relevant import and export license.
Commercial Free Zone (CFZ)
- Companies that conduct trade and investment activities such as a commercial office, warehouse, manufacturing, insurance services, financial services, banking services, offshore financial services and other professional, or related activities can choose to set up in the Belize CFZ.
- Sales from a CFZ company to individuals residing in Belize outside the Free Zone will be required to receive approval from the Ministry of Finance. Once approval is granted, the company’s sales to Belize residents cannot exceed 25% of its imports or goods produced within the CFZ. The sale transaction will also be subjected to the relevant import and export duties.
- All CFZ businesses must submit audited financial statements to the Free Zone Authority annually and file a monthly report of transactions that take place in its foreign currency accounts.
Advantages of a Belize Free Trade Zones Company
A Belize company operating in Belize free trade zone benefits from the following advantages:
Export Processing Zone (EPZ)
- A business operating in a Belize EPZ will be granted tax holiday of 20 years which includes exemption from income tax, withholding tax and capital gains tax. There is also an option for business owners to carry forward losses incurred during the tax holiday to deduct against future profits.
- All dividends paid by a company operating in an EPZ are exempted from tax.
- Purchase and sale of foreign currency will be exempted from foreign exchange taxes.
- Businesses that set up in an EPZ in Belize do not have to pay customs duties, sales taxes, excise taxes, trade turnover taxes, tonnage taxes, consumption taxes or other taxes for all imports and exports.
- Businesses also do not have to pay property tax, land tax or property transfer tax, unless the property is located in the EPZ.
Commercial Free Zone (CFZ)
- A business operating in a Belize CFZ will be exempted from income tax and capital gains for the first 10 years. Afterwards, the CFZ business shall pay corporate tax of up to 2%, based on the number of Belizean workers employed.
- There is also an option for business owners to carry forward losses incurred during the 10-year tax holiday to deduct against profits in the next 3 years after the tax holiday has ended.
- All dividends paid by a company operating in an EPZ are exempted from tax for the first 25 years.
- Businesses that set up in a CFZ enjoy duty exemptions on merchandize and goods entering a CFZ for commercial purpose, as well as duty and tax exemptions on fuel and production goods such as building materials, furniture, equipment, supplies and parts required for business operation.
- Generally, imports and exports of a CFZ are exempted from all customs duties, consumption taxes, excise taxes, export duties, in transit taxes or export taxes, except those entering areas subject to the national customs territory.
- There is no government charges and taxes on the use of foreign currency within a CFZ.
Lower trade barriers
- There are no import licenses or export licenses required if the good or material is imported from or exported to a foreign country.
- Quotas and import prohibitions do not apply to goods and raw materials imported from foreign countries into the Free Zone, with the exception of firearms, military equipment, illegal drugs and merchandise not approved by the authority managing the Free Zone. Such items shall not be imported into a Belize Free Zone.
High levels of confidentiality
- There is no requirement to file information about beneficial owners, shareholders and directors on a public record. The only information available to the public are the Memorandum and Articles of Association, as well as information about the company’s resident agent.
- Hence, business owners can set up a Belize company with complete anonymity.
- A Belize International Business Company (IBC) can be incorporated remotely with just one director and one shareholder who can be the same person.
- There is no requirement for a resident director or a minimum share capital requirement for a Belize IBC.
Disdvantages of a Belize Free Trade Zones Company
- Illicit trade is rampant in the Corozal CFZ due to the lack of enforcement of regulations and insufficient monitoring processes. Specifically, the purchase and sale of illegal products and counterfeits frequently take place between the Free Trade Zone of Colon in Panama, the Corozal Free Zone in Belize and the Maicao Special Customs Zone in Colombia.
- In 2019, the Free Zone Act replaced the Commercial Free Zone Act, introducing more regulations and reporting requirements for companies operating in a commercial free zone.
How to proceed with registering a company in Belize Free Trade Zones?
How many Free Trade Zones does Belize have?
- Currently, there are a total of five Free Zones in Belize, including 3 Export Processing Zones (EPZs) and 2 Commercial Free Zones (CFZs). The most popular Free Zone in Belize is the Corozal CFZ where many businesses have chosen to set up in the Free Zone to enjoy reduced taxation and operating costs. The Corozal CFZ has played an integral role in alleviating poverty and creating employment opportunities for individuals living in the northern districts.
What are the benefits of setting up in Belize Free Zone?
- Generally, a Free Zone in Belize is attractive due to its tax benefits and lower trade barriers. Businesses that set up in a Belize Free Zone can enjoy corporate tax exemption of 10 or 20 year, depending on whether they incorporate in an EPZ or a CFZ. There are also no import or export duties required for a Free Zone company in Belize, unless the company is trading with individuals residing in Belize outside of the Free Zone.
- Since no trading license is required for a Belize company, it is generally recommendable for a company that engages in international commerce to set up in a Belize Free Zone due to the monetary benefits and ease of incorporation.
Can a company in a Free Trade Zone be wholly foreign owned?
- Yes, all companies in Belize can be wholly foreign owned and this includes companies in a Free Trade Zone in Belize. This is because there are no nationality or residence requirements for a director or shareholder of a Belize company. Business owners that choose to set up in a Free Zone can incorporate any Belize business entity such as a limited liability company or a branch office.
What is the purpose of a Free Trade Zone?
- The main purpose of a Free Trade Zone is to allow goods and commodities to be transported to and from the Free Trade Zone without being subjected to tariffs or customs regulations. This will simplify and fasten the transfer of goods and services between the Free Zone and other regions or countries. As the Free Trade Zone’s main aim is to facilitate the distribution, storage and transport of goods, it will typically have the relevant distribution and storage facilities.
Is Belize safe to visit?
- Petty crimes, such as pickpocketing and robbery, are rampant in Belize and violent crimes, including murder, armed robbery and sexual assaults are common problems there, especially in the southern side of Belize City. The local police force lacks the ability and training to handle serious criminal incidents efficiently.
- As such, it is recommended that you travel to Belize after doing careful research and taking the necessary precautions. It is generally safe to travel to Belize as long as you are careful and do not visit the south part of Belize City. Most tourists travelling to the Caribbean islands off the coast of Belize have not encountered any criminal activities reported in the news.
Is Belize a tax haven?
- Yes, Belize is considered a tax haven because it allows foreign business owners to legally reduce their tax liabilities. By setting up an International Business Company in Belize, business owners can enjoy corporate tax exemption as long as they do not conduct business activities within Belize. There are also minimal reporting requirements in Belize and the Belize government does not share information with international tax authorities. However, US residents will still be required to report their earnings to the Inland Revenue Service (IRS) unless the company only conducts business activities within Belize.