Belize is not only known for its beautiful beaches, landscapes, and its friendly and welcoming people, it’s also commonly known as a tax haven for foreigners since it has a favorable regimen on its fiscal system for citizens and residents.
Belize´s tax system is based on indirect taxation through three main sources of income: trade related taxes, a tax on sales, and rates. Furthermore, it has direct taxation through the Income and Business Tax.
As for tax administration, there are several entities in charge of collection based on tax, which may lead to certain duplicities. The entity in charge of coordinating the tax policy is the Ministry of Finances.
For the companies which operate in the Free Trade Zones and Industries as well as International Commercial Companies (IBCs) specific legislation is contemplated.
State, Regional, And Local
Belize´s local tax system is divided into two: state and local.
In the case of local authorities, its principal sources of financing are:
- Property tax;
- Commerce licenses for liquor trade and licenses on motor vehicles;
- Sub and transferences on part of the central government.
Types of Taxes
Income Taxation On Natural Persons
The basic legislation applicable to income tax is settled in the Income and Business Tax Act, and it’s supervised by the Income Tax Department.
The general income tax rate is 25%, plus a US$50 general deduction is applied to all taxpayers after the application of the rate.
Additionally, there´s the possibility of applying deductions when calculating the tax base such as:
- Personal relief;
- Charitable relief;
- Education relief.
The deadline for taxpayers is March 31. Those earning less than US$13,000 in income per year are exempt from paying the income tax.
The general tax on sales is regulated by the General Sales Act and is supervised by the Department of General Sales Tax. It taxes the value added to imports and other goods and services supplied by one company to another one or to a final consumer.
The general tax rate is 12.5%. Tax registration is an obligation if it’s a taxable activity with annual business volume above US$37,500.
Sales tax is calculated and charged on transactions in production and in the delivery chain but the consumer pays general sales tax solely in the final sale price. In any case, the tax paid at the entrance by the registered person is compensated with the tax received on departure, and only the difference is paid. When the cost of the departure tax exceeds the entry tax, the person may solicit the difference as a credit against future responsibilities.
There are exemptions on the tax, for example, in the case of financial services, some medicines, or certain products related to agricultural services. Also, there is a series of products which no tax rate such as rice, bread, eggs, sugar, fruits and fresh vegetables produced locally, etc.
The basic legislation applicable to corporate taxation is also established in the Income and Business Tax Act.
In addition to income tax, self-employed workers and companies must pay the Commercial Tax. Employees are exempt from paying it.
Companies must pay a tax on economic activities which is levied on all income above the following thresholds: US$37,500 for a company or commercial activity and US$10,000 for those who are self-employed.
The tax on economic activities depends on the type of company and ranges between 0.75% to 25% withheld from management rights and some other charges paid by nonresidents.
Companies can also file an income tax return, set at 25% of profits above BZ$20,000 (there is no threshold for nonresidents). If the income tax is higher than the tax on economic activities, the excess income tax is exempted. In the event that the company has losses, these can be converted into a tax credit for the purpose of tax on economic activities and the losses can be carried over to a new account for five years (seven in the case of farmers).
The tax on companies involved in petroleum production has a tax rate of 40%, payable quarterly.
Other Taxes And Fees
- Environmental Tax: A 2% tax rate on the CIF value on all goods imported to Belize. Exemptions apply to medicines and some basic foods.
- Hotel Tax: It’s a 9% hotel occupancy tax imposed on all accommodation charges and paid monthly to the Belize Tourism Board.
- Land Tax: It’s a 1% tax rate applied to the value of the land on unconditioned land. It is paid to the Department of Lands.
- Property Tax: The tax rate varies according to the municipality where it is applied. In the case of Belmopan, the rate is 2% of the property’s cadastral value while in Belize City the rate is 2.5%.
- Stamp Duty/Transfer Tax: It’s a 5% tax rate applied to transactions on property worth more than US$10,000.
- Excise Tax: Applicable to locally produced alcohol, beer, cigarettes, and soft drinks.
- Import Duty and Revenue Replacement Duty: Tax rates vary from 0% to 40%, with the common rate being 20%, depending on the products being imported. Products that are engaging RRD have a 5% to 40% tax rate. More information is here.
Fiscal Treatment Of Foreign Investments
With the exception of specific incentives, the tax treatment of foreign investments is the same as for any local company. In the case of external double taxation, it is subject to the agreements and treaties that Belize signs with other countries on the matter.
Qualified Retired Person (QRP) Program
Belize’s Qualified Retired Person Program (QRP) is a great program for retirees and entrepreneurs alike. It’s an incentive to facilitate those who meet certain requirements, to permanently live, retire, and relax in Belize.
The application must be done through the Belize Board of Tourism in their website they outline the following criteria:
- Any Retired Person 45 years or older.
- Dependents only include spouse and children under 18 years (children under 23 years can be allowed providing a school enrollment certificate).
- Must be a beneficial recipient of a pension or annuity of USD $2,000 monthly or USD $24,000 annually from a source outside of Belize.
- Must be able to provide a written undertaking to deposit the amount in a bank, credit union, or a licensed financial institution in Belize.
- Must pass the security clearance by the Ministry of National Security in Belize.
- Must be able to remain in Belize for a minimum of 30 consecutive days annually.