there is a crucial difference between the 'is' status and the 'planned' one. In the furure, you have to prove, that you pay taxes elsewhere, if you can not, you have to pay taxes in Belize - see page 160 here http://www.ibcbelize.com/wp-content/uploads/2019/01/IBCAmendment_24_of_2018.pdf
Belize introduce corporate tax of 1,75% to please the banks.
- Thread starter happyjohn
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It seems indeed that Belize is lining up for a tax dance which they will lose badly. There are still places around which allow 0% tax on corporate tax they will be the winner for now. There is another discussion about it here on the forum but can't find the thread right now.
Just been reading about these 2019 changes and what you put is what I understand. Unless that is just for sure and proving is them asking you "do you pay taxes" you saying "yes" and they tick the box and things carry on.
unfortunately Belize also introduced the Economic Substance Act: The Economic Substance Act came into force on 11 October 2019. The purpose of the Economic Substance Act is to ensure that Belize does not facilitate the use of corporate structures which attract profits, but which do not reflect real economic activity that is being undertaken in Belize. More details, including a flow chart are here: Economic Substance Flowchart - For the attention of all the Commission’s Licensees: - International Financial Services Commission
It's still possible to setup a Belize company if you consult an agency, can't see what this Substance Act will change.
did you had a look at the flow chart ?
From the flow chart I see following outcomes:
a) you provide a proof that the company is controlled and managed outside of Belize and is tax resident in a jurisdiction other than Belize
b) the activity of the company is directed and managed in Belize and there are adequate employees, expenditure and appropriate premises in Belize
c) the entity is not engaged in a relevant activity
d) Entity is subject to sanctions
I have no idea what is 'relevant activity', but in my understanding this means, you can no longer use it as a cheap︀ shell - or at least not so easy and not so cheap
From the flow chart I see following outcomes:
a) you provide a proof that the company is controlled and managed outside of Belize and is tax resident in a jurisdiction other than Belize
b) the activity of the company is directed and managed in Belize and there are adequate employees, expenditure and appropriate premises in Belize
c) the entity is not engaged in a relevant activity
d) Entity is subject to sanctions
I have no idea what is 'relevant activity', but in my understanding this means, you can no longer use it as a cheap︀ shell - or at least not so easy and not so cheap
Are you referring to LLC or IBC. I don't really understand but IIRC, to do business in Belize you need an LLC with substantive proof business is run / controlled / performed in country. For an ILC things are (pretty much) business as usual with some caveats
Some people around here are going strict by the rules. I can't figure out if this is just to explain to the noobs what the official rules & terms are or if it is to expose how wise and knowledgeable they are!
One thing is sure if you setup the Belize company right then even in 2030 there will be no problem to get a Belize company setup remote and without troubles. The question is, why would you go with Belize at all after all the changes in the banking sector you already see and which you will see even more in the future!?!
One thing is sure if you setup the Belize company right then even in 2030 there will be no problem to get a Belize company setup remote and without troubles. The question is, why would you go with Belize at all after all the changes in the banking sector you already see and which you will see even more in the future!?!
According to that law any commercial entity on Belize (except tax resident in a jurisdiction other than Belize controlled and managed outside of Belize) has to report its own type of report:
(a)in the case of an included entity (entity prescribed to have ECONOMIC SUBSTANCE ) , Form B prescribed in the Schedule is to be completed by the included entity;
(b) in the case of an included entity that is a holding company , Form C prescribed in the Schedule is to be completed by the holding company;
(c) in the case of a non-included entity, Form D prescribed the Schedule is to be completed by the non-included entity
And what's happened with those reports after:
12.-( 1) The︀ competent authority (Belize Financial Regulator) shall upon the receipt of a form filed by an︁ included entity spontaneously exchange the same with the competent authority of a jurisdiction of the︂ legal or beneficial owner of such included entity where there is any non-compliance with the︃ substantial economic presence requirements of this Act by the included entity.
(2) The competent authority︄ shall upon the receipt of a form filed by a non-included entity pursuant to section︅ I 0(2)(c), spontaneously exchange the same with the appropriate authority of a jurisdiction of the︆ legal or beneficial owner of such non-included entity and also to the appropriate authority of︇ the jurisdiction of its claimed tax residence.
This sounds worse than CRS
(a)in the case of an included entity (entity prescribed to have ECONOMIC SUBSTANCE ) , Form B prescribed in the Schedule is to be completed by the included entity;
(b) in the case of an included entity that is a holding company , Form C prescribed in the Schedule is to be completed by the holding company;
(c) in the case of a non-included entity, Form D prescribed the Schedule is to be completed by the non-included entity
And what's happened with those reports after:
12.-( 1) The︀ competent authority (Belize Financial Regulator) shall upon the receipt of a form filed by an︁ included entity spontaneously exchange the same with the competent authority of a jurisdiction of the︂ legal or beneficial owner of such included entity where there is any non-compliance with the︃ substantial economic presence requirements of this Act by the included entity.
(2) The competent authority︄ shall upon the receipt of a form filed by a non-included entity pursuant to section︅ I 0(2)(c), spontaneously exchange the same with the appropriate authority of a jurisdiction of the︆ legal or beneficial owner of such non-included entity and also to the appropriate authority of︇ the jurisdiction of its claimed tax residence.
This sounds worse than CRS
There is no one any longer that really want to setup a company in Belize. I know from back 10 years and more it was the best package one could buy. Belize company setup with darks and a Cyprus bank account - BANG - total freedom for less than 1000 euro!
That's over and it will never come again.
That's over and it will never come again.
Basically they had to sign agreements that say that any taxman from OEDC countries can claim "bulk information" (meaning asking ALL the financial information of ANY IBC in Belize) whereas before they could only ask specific questions about specific companies (and then Belize did not reply or very slowly or "forgetting" info) now + all IBC's must transfer their quasi total accounting to a Belize based bank on a monthly basis.
So the taxes etc. have not really changed, BUT all money going in and out a Belize IBC is now known by all tax men, and those companies without physical presence will be taxed︀ on it in their country of tax residency.
As the Belize government didn't really cooperate,︁ they put the burden to collect financial info with the banks. And the Belize banks︂ are NOT equipped to handle monthly verifications of all accounting of thousands of IBC's. So︃ these banks, logically, will start refusing IBC's - EVEN Belize banks, which have been made︄ mandatory.
These measures will destroy the already very poor economy of this country as most︅ IBC owners will relocate. And this, imposed by countries claiming "free trade" ... That is︆ not "free trade" if you dictate a country how to make its tax laws ...︇ it's colonialism but on a financial level.
Details on relevant activities : Belize: changes in︈ legislation on International Business Companies
https://www.oecd.org/tax/automatic-...assistance/tax-residency/Belize-Residency.pdf
So the taxes etc. have not really changed, BUT all money going in and out a Belize IBC is now known by all tax men, and those companies without physical presence will be taxed︀ on it in their country of tax residency.
As the Belize government didn't really cooperate,︁ they put the burden to collect financial info with the banks. And the Belize banks︂ are NOT equipped to handle monthly verifications of all accounting of thousands of IBC's. So︃ these banks, logically, will start refusing IBC's - EVEN Belize banks, which have been made︄ mandatory.
These measures will destroy the already very poor economy of this country as most︅ IBC owners will relocate. And this, imposed by countries claiming "free trade" ... That is︆ not "free trade" if you dictate a country how to make its tax laws ...︇ it's colonialism but on a financial level.
Details on relevant activities : Belize: changes in︈ legislation on International Business Companies
https://www.oecd.org/tax/automatic-...assistance/tax-residency/Belize-Residency.pdf
come on now, lets not pretend Belize as a previous popular offshore IBC location benefitted the locals in anyway shape or form. Any money the country took from fees did not trickle down a single cent
https://www.ifsc.gov.bz/announcement-economic-substance-act/
https://www.ifsc.gov.bz/wp-content/...c-Substance-Flow-Chart-note-for-posting-3.pdf
https://ifsc.gov.bz/wp-content/uploads/2019/11/Economic-Substance-Act.pdf
According to the flow chart...
"Is the legal entity a commercial entity?" Yes
"Is the entity regulated?" No
"Is the entity engaged in a relevant activity?" No (consultation services)
"Substance requirements not applicable"
What is the problem? Paying 1.75% tax could actually be good? Then the company at least gets a tax assessment letter. Then one has real money for AML purposes? Can satisfy AML requirements by banks? Any transaction to buy real estate, any big transfer to a private bank account, one could always pull the tax assessment letter form Belize?
I am living in a country with territorial tax system︀ without CFC.
Am I overlooking something?
"(2) This Act shall not apply to a commercial︁ entity that is controlled and managed outside of Belize and is tax resident in a︂ jurisdiction other than Belize."
The Belize entity would be controlled from outside Belize. But is︃ it tax resident in my country without CFC? I guess no? So it's tax resident︄ in Belize?
https://www.ifsc.gov.bz/wp-content/...c-Substance-Flow-Chart-note-for-posting-3.pdf
https://ifsc.gov.bz/wp-content/uploads/2019/11/Economic-Substance-Act.pdf
According to the flow chart...
"Is the legal entity a commercial entity?" Yes
"Is the entity regulated?" No
"Is the entity engaged in a relevant activity?" No (consultation services)
"Substance requirements not applicable"
What is the problem? Paying 1.75% tax could actually be good? Then the company at least gets a tax assessment letter. Then one has real money for AML purposes? Can satisfy AML requirements by banks? Any transaction to buy real estate, any big transfer to a private bank account, one could always pull the tax assessment letter form Belize?
I am living in a country with territorial tax system︀ without CFC.
Am I overlooking something?
"(2) This Act shall not apply to a commercial︁ entity that is controlled and managed outside of Belize and is tax resident in a︂ jurisdiction other than Belize."
The Belize entity would be controlled from outside Belize. But is︃ it tax resident in my country without CFC? I guess no? So it's tax resident︄ in Belize?
Right. However, I need to consider it all. The full package. Personal tax residency, corporate tax residency, CFC, bank accounts, documents...
They'd tax the foreign company and on incoming arising in my country. Basically, they don't care and for that I am eternally grateful. They would not even tax the foreign company if I wanted to. So from perspective of my country, the︀ Belize company isn't tax corporate tax resident in my country.
But from perspective of Belize,︁ where would the Belize company be tax resident?
They'd tax the foreign company and on incoming arising in my country. Basically, they don't care and for that I am eternally grateful. They would not even tax the foreign company if I wanted to. So from perspective of my country, the︀ Belize company isn't tax corporate tax resident in my country.
But from perspective of Belize,︁ where would the Belize company be tax resident?
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