Belize IBC - withholding tax on Dividends?

[Jock]

As the 100% owner of a Belize IBC, would the dividends my company pays me‌ be subject to a 15% withholding tax?

It "seems" that there is no withholding tax‍ if dividends are paid to a "related party".

Seeking clarity. Regulations a mess. Thought I`d⁠ try asking the wiseheads here. Thanks in advance!
FYI - I am not a resident⁤ of Belize.

 

[KDX]

What are your citizenships, residences? You know about⁣ terms like UBO CRS AEOI FATCA right?

 

[Jock]

Thanks KDX.
I am a British citizen and a Philippines resident.
The company is not‌ tax resident in the Philippines (or other locale) and therefore now has to pay tax‍ in Belize (as it does not pay tax anywhere else).
Yes familiar with the terms.⁠

Question is regarding a potential withholding tax requirement in Belize. There seems to be a⁤ 15% withholding tax on dividends paid out BUT a possible exception for dividend paid to⁣ "related parties". I can`t find the specific legislation. Must file tax return and financials next⁢ week. Any ideas?

 

[KDX]

Not sure. Maybe contact a local tax︀ advisor? If its that urgent I mean.

 

[Sols]

Belize IBCs are not subject to any domestic taxes in Belize. That's the whole point‌ of IBCs.

Your company is probably tax resident in The Philippines, though, if you are‍ effectively exercising control and management over it from there.

 

[Jock]

Sols - not the case anymore unfortunately. An IBC has to pay tax in Belize‌ (if it does not pay tax anywhere else).

As for Philippines residency - it is‍ not PH resident but don`t want to get into that here. Just want to focus⁠ on the withholding tax question thanks.

 

[Soundpeats]

It would be very⁤ useful for others (maybe for yourself too) If you could briefly explain why the company⁣ being an IBCs need to pay taxes in Belize (It does seem there has been⁢ changes there)

Why is it not a PH resident if you are managing it from︀ the Philippines are you employing local staff and leasing physical office ?

Is the entire︁ company owned by you ? I could see the related parties applying with minority shareholders/subsidiaries︂

 

[Sols]

That's what I get for dismissing Belize for so long and not paying attention to‌ the jurisdiction. My bad.

From a quick glance, it seem the new system is primarily‍ a territorial system. And getting around the 15% might be doable in a first step⁠ but you'd just be shifting the money into another company, still not solving the part⁤ where the money hits your own personal bank account.

But I'll defer to someone else⁣ for a more detailed answer. You might want a Belize based attorney or tax adviser⁢ to help you with this, as it's still quite new.

 

[Jock]

Soundpeats -

1st question - it is new legislation. My IBC established in 2010 must‌ now pay tax starting 1st July 2021. No doubt on this matter.

2nd question -‍ as mentioned don`t want to get into it, but basically the PH does not apply⁠ the CMC test, only the incorporation test. Yes it is debatable. It is a grey⁤ area in PH law. Thanks.

 

[Soundpeats]

Very interesting, I am going⁤ to give it a read and get back to you here if I find something⁣

 

[Jock]

Sols -

Thanks. There is , it seems, a 15% witholding tax on dividends paid‌ out. The question is regarding an exemption for any "related party". This related party can‍ be a human, a majority shareholder according to one doc I found.

Belize tax office⁠ (via my Belize agent) referred to SI 12 of 2021 but I can not find⁤ the existence of No. 21 on the internet. Am pushing various Belize people for a⁣ copy.

I did find another doc which mention exemptions but there have been so many⁢ amendments to the original law that everything is a mess.

It is quite a clusterfuck.︀ I could understand it better if they are employing Filipino staff but perhaps they are︁ able to reach these intellectual heights of their own accord.

Yes, come Monday, if no︂ progress, I will take your advice . Thanks.

I am surprised I don`t see any discussion of the 15% dividend︅ withholding tax on the internet. I think most people with Belize IBC`s are not aware︆ of it. Information dissemination has been very poor.

As for the PH it is territorial︇ taxation with no CMC laws and the country is not part of CRS / OECD︈ nonsense. The local laws are not recognisant of the permanent establishment concept as their antiquated︉ incorporation laws take precedence. God bless the country for being so backwards. Women are getting︊ a bit fat though.

 

[Don]

Have you thought about redomiciling the company or registering the PE somewhere?
For example register‌ PE in Estonia where all undistributed corporate profits are tax exempt.

Not 100% sure if‍ its still relevant but Belize IBC should be discharged from business tax if it is⁠ tax resident in other countries not named in EU annex I for tax purposes and⁤ not have a PE (permanent establishment) in Belize. The company has to provide sufficient evidence⁣ of its tax residency abroad to claim this tax exemption. In addition, foreign sources’ income⁢ has to come from a Permanent Establishment (PE) of the source state (country where the︀ income is derived) to be eligible for the benefit.

I know it has worked well︁ last year.

 

[Jock]

Don - I need to look at the︁ redomiciling option. The important thing to me is keeping the HSBC bank account. The Belize︂ tax is just 1.75% of sales, audited accounts are not required, and Im not sure︃ if they have access to view all company income routes (Bank, Paypal, Wise). Yes your︄ second paragragh is still true.