Belize: More than just another
offshore financial center
Belize is an independent English speaking Caribbean country in Central America, belonging to the British Commonwealth. As such, the domestic legal system has its foundation in the English common law. Due to its geographic location, the country is a member of the Caribbean Community, the Community of Latin American and Caribbean States and the Central American Integration System. The economy mainly relies on agriculture, tourism, oil and gas, and a non-resident corporate service sector. The latter expressively promotes company formation for foreigners and (offshore) banking and other financial services. The linkage with the US Dollar stabilizes the local Belize Dollar and draws the attention of international players, both legitimate and obscure. As a result, Belize is heavily monitored as an offshore financial center by regulatory watchdogs and organizations such as the FATF and the Security Council of the United Nations.
Belize company law allows foreigners to incorporate in Belize, granting offshore status where activities take place outside the jurisdiction. Chapter 270 of the law discusses the rules for these International Business Companies (IBCs). To comply with national and foreign regulations, substance and presence in the form of a registered office of the IBC must be in Belize, while the business activities take place outside the territory. Advantages of the Belize IBC include maximum flexibility, privacy protection and (corporate) asset protection. Yet, this secluded corporate position makes payments between the offshore entity and the beneficiary difficult when executed without care.
Since the incorporation of a Belize company deserves diligence and care, Equation CS and Legal Floris LLC use this website to deliver appropriate information to professionals willing to incorporate in Belize. Furthermore, entrepreneurs who want to discuss their professional needs and consider Belize for company formation purposes, are invited to contact us for an initial consult. Alongside company formation, we provide our clients with additional corporate services such as administration, asset and fund recovery, and bank account opening.
In 2015 correspondent banks resumed service to Belize banks for USD clearance. Ever since, Belize companies hold bank accounts in foreign jurisdictions. Even though this flexibility ensures enhanced protection, (offshore) banks do not always comply with international standards. When banks are closed and deposits disappear, Legal Floris LLC helps creditors to regain access to their assets. Asset recovery relates to both Belize companies risking their investment, as well as to investors losing funds to a Belize company.
Belize companies need bank accounts to conduct business. The structure of the traditional Belize IBC triggers questions for financial institutions. Most queries are straightforward and easy to answer and can avoid a cumbersome relationship with the bank. However, certain queries require special attention and care. The preparation for bank account opening for offshore companies therefore calls for a competent introducer with insider knowledge of banking and the offshore financial industry. The choice for appropriate financial partners is crucial and must be handled accordingly.
The corporate tax residency of an international company in principle decides where taxation takes place (apart from tax liabilities that may arise in third countries due to sources of income owned by the company in such countries such as real estate, branches etc.). Beneficiaries of a Belize IBC and other offshore entities give preference to taxation in the offshore jurisdiction for its tax neutral status. The Belize IBC therewith permits global market players to build and protect their wealth offshore. National tax laws in the country of residence of the beneficial owner determine the personal tax liability upon withdrawal of funds from the offshore entity. To avoid local scrutiny (and adverse local tax consequences) this must be planned and prepared with utmost care, with assistance of tax experts in the country of residence.
The Belize IBC is an interesting option to act as a holding company for a subsidiary in a high tax jurisdiction. The double tax treaty between the country of residence of the subsidiary and the holding company decides on the qualifications for exemptions of withholding tax. Holding companies act as parents for their subsidiaries. This relationship is justified by share ownership of the parent in the subsidiary. The legitimacy of a tax free inter-company transfer of wealth derives from the ownership and property rights held by the holding.
Belize is known for its efficient incorporation regime that allows registration of an offshore company within a day. The International Business Companies Act reviews the corporate environment and the rules for Belize company formation. Incorporation involves the choice for the company name, the appointment of the director(s) and shareholder(s), and the formation of the memorandum and articles of association. Once the company is established, annual fees and accounting records are necessary to maintain the good standing of the company.
A nominee is legally appointed by the owner of a company to execute predefined duties. These duties improve the local substance and presence of the company, which is often times needed to comply with tax regulations in both the home as well as the host country. As such, most beneficiaries choose to appoint a professional nominee, often a legal resident in Belize. Yet, a nominee service to act as director or shareholder in the company is not mandatory, but it is a way to optimize its corporate safeguards.