A look at three of Belize’s most successful business vehicles; the Belize International Business Company, the Belize International Trust and Belize mutual funds.
Independence from Britain in 1981 gave Belize the opportunity to exploit three of its key strategic advantages; its legal system (rooted firmly in English common law), its Central American location, and English, the nation’s (and conveniently the world’s) official language of business.
Traction in the growth of Belize’s international financial services began to gain momentum from 1990, with the passing of the International Companies Act, which was further extended, and most recently amended in 2017. Since 1990, Belize has substantially grown its investor product offerings to include: international trusts, mutual funds, international foundations, protected cell companies, international insurance, international banking, and an open ships registry.
Here, we hone our attention on three of Belize’s most successful business vehicles; the Belize International Business Company (IBC), the Belize International Trust and Belize mutual funds.
Companies: Incorporation and Formation
Incorporation of a Belize offshore company can occur in the form of a Belize International Business Company (Belize IBC) or a Belize corporation. Liability of shareholders is limited to the nominal value of the shares, but with respect to the minimal nominal value of shares, there are no set requirements. The company is allowed to issue both bearer and registered shares. Incorporation can be completed within 24 hours, though additional time should be allowed for the delivery of the required documents.
The basic requirements needed to incorporate a company in Belize are as follows:
• The registered address of the company must be provided and the registered agent must be on the territory of Belize.
• The company must have at least one shareholder and one director (they can be both individuals and legal entities).
• Offshore companies must pay an annual registration maintenance fee of approx.US$300.00, with a one-time setup fee of US$400.00. Failure to pay the fee will result in the company’s data being removed from the IBC registry of Belize.
• The company is required to follow the legislation of Belize. This being the case the company cannot, for example, execute commercial activities with Belizean residents, have property rights to real estate in the country, provide trustee services, or act as a bank or insurance company.
The Main Advantages of Forming a Company in Belize
• Belize offers an advantageous tax regime which includes exemption from all local taxes and duties, including (not exclusively); income and corporation taxes, capital gains tax, stamp duties, taxes upon the transfer of assets, rent and royalties. A company registered in Belize is not subject to any currency controls.
• Submission of any financial statements or tax returns at the end of each fiscal year are not mandatory since no taxes are expected to be paid by the Belize company. Neither is a financial audit expected to be filed.
• The company in Belize may be incorporated with at least one shareholder and one director, and does not require a secretary. As there is no need for audited accounts, no annual returns, no minimum capital requirements, no requirement for a local director or secretary and no requirement for an annual general meeting, the annual operating costs for a Belize IBC are low – usually less than US $400.
• Because there is no public access to information on beneficial shareholders and directors of the company, forming a company in Belize benefits from a strict confidentiality regime. Shareholder information may be disclosed solely on the basis of the company’s discretion. No third parties can gain access to the shareholders’ register.
• While a Belize IBC is required to conduct all its profit earning ventures outside the country, it may lease a local office, obtain the services of local professionals, maintain company records and hold meetings in country. It can also operate an account with national banks, hold shares in other local IBCs and own vessels including marine vessels and aircraft registered in Belize.
The Belize Trust
The Belize Trusts (Amendment) Act, 2007 incorporates the best features of similar laws prevailing in other major offshore jurisdictions such as Cayman and Bermuda.
As defined by the Belize Trusts Act, an ‘International Trust’ is a trust where:
• the settlor is not a resident in Belize;
• none of the beneficiaries are resident in Belize;
• the trust property does not include any land in Belize;
• the law of Belize is selected as the proper law of the trust; and
• in case of a purpose trust, the purpose or object of the trust is to be pursued or performed outside of Belize.
A Belize International Trust and its trust property are permanently exempt from business and income tax, succession, inheritance, estate or gift tax and all instruments relating to the trust property. All transactions carried out by the trustee on behalf of the trust are exempt from stamp duty. In addition, the trustee of a Belize International Trust will not be regarded as a resident in Belize and will therefore be exempt from exchange control with regard to the trust property and to all transactions carried out by the Trustee on behalf of the Trust.
Offshore Trusts formed under Belize law are highly secure since a local court cannot set aside or vary a Belizean trust, nor can they entertain a claim against the trust originating from a foreign court regarding marriage or divorce, or succession or claims by creditors in the case of insolvency.
The following information is registered and maintained by the Belize Registrar of International Trusts in respect to every International Trust:
• name of the trust;
• date of settlement of the trust;
• date of registration of the trust;
• name of the trustee;
• name of the protector (if any); and
• name and address of the trust agent.
The Belize Trusts Act provides for substantial confidentiality provisions in respect to all trusts registered in Belize. At the same time the Act provides a number of provisions under which the settlor, the beneficiaries and the protector may obtain the information they require to manage the Trust.
The Belize Mutual Funds Act 2000 provides the regulatory environment for the three main types of funds in Belize, which include; public funds, private funds and professional funds.
The Act defines a mutual fund as a company incorporated, a unit trust organised or other similar body formed under the laws of Belize, or that of any other country or jurisdiction which:
• collects and pools funds for the purpose of collective investment; and
• issues shares that entitle the holder to receive on demand, or within a specified period after demand an amount computed by reference to the value of a proportionate interest in the whole or in a part of the net assets of the company, the partnership or the unit trust, as the case may be.
A public fund offers any shares it issues for subscription or purpose to any member of the public, and is registered as a public find under the Belize Mutual Funds Act. Public Funds attract the highest degree of regulation and must publish a prospectus including the information stipulated by the Act, and must also produce and distribute audited annual financial statements.
A private fund is defined as having less than 50 investors. At application, a proposed private fund will be expected to demonstrate the ‘private bases’ of offering its shares. It is also necessary to define what criteria will enable any particular investors to qualify as ‘private’. It remains with the Registrar of Mutual Funds to either accept or reject any such explanation.
A professional fund offers its shares to professional investors only. The initial investment, in respect of each investor, should be no less than US$100,000. The ‘professional investor’ is, either an investment professional (and therefore should be aware of the inherent risks of investing), or a person who has expressly declared and acknowledged the investment risks, in addition to declaring that his net worth is substantial (in excess of US$1 million). As with the private fund, application
The Advantages of Establishing a Mutual Fund in Belize
The benefits of establishing a mutual fund in Belize are:
• There is minimum or zero tax on capital gains, incomes, profits and dividends earned by the fund.
• There is minimum or zero tax on fees, commissions and profits earned by the fund managers, advisors and administrators.
• There is greater operational flexibility, in terms of both the choice and structuring of the investment portfolio, and in relation to the internal structuring of the fund itself. This largely owes to the fact that less formal regulation is generally allowed by mutual fund legislation in offshore jurisdictions, as compared to the creation of mutual investment vehicles in most high-tax countries.
• The establishment process of a Belize investment fund is also relatively straightforward and fast. Running and administration costs are also typically lower. Modern legislation additionally allows for multiple funds to be set up easily, if supervised by the same managers and administration. The fund administration, management, investment advisory and investor-relations functions can be subcontracted to reputable service providers elsewhere.
Today Belize offers global investors a full and sophisticated menu of business vehicles, only three of which could be summarised in simple terms here. Aside from being a tax-free jurisdiction, Belize also offers ‘ease of business’ and the assurance that it adheres to existing international regulations and standards. Moreover, wealth management professionals in Belize have now accumulated decades of experience working in the sector and can therefore offer fine-tuned expertise, a boon to any potential client considering where to invest next.
Group President and Managing Director