Offshore Jurisdiction Changes to LLCs
Since the tyrannical economic substance requirements swept the offshore world in 2019 (and has been tightened since), the Belize IBC has been effectively a no-go. It had mandated tax, presence, hiring of staff on-the-ground & many other regulations that made it no longer a feasible corporate structure for international portfolios. Belize has always been the cheapest, fastest, lowest tax offshore jurisdiction to start (notwithstanding the near impossibility of acquiring a bank account but thats a different article to read–speaking of reading other articles, check out our pages here!)
However, some have figured out that the Belize LLC has literally dodged a bullet by being exempt from the requirements–but that too, is off the list unfortunately.
Before
–Belize LLC is exempt form all local taxes (income tax, business tax, withholding tax, asset tax, gift tax, capital gains tax, distributions tax, inheritance tax) on income generated outside Belize.
–Belize LLC can be registered without any personal information about the members of the LLC becoming public. All personal information about the beneficial owners of the LLC is kept absolutely confidential
–No minimum share capital: a Belize company can only issue and pay up one share
–LLCs are not required to report any financial information to any institution or authority. LLCs are not required to prepare annual accounts or to appoint an auditor, however, simple annual return as specified by Regulations must be filed with the Registrar, confirming name of the LLC and the address of its Registered Agent
–Belize LLC Act contains various very strong asset protection provisions making it extremely difficult for any creditor to pursue the assets transferred to a Belize LLC. Any creditor willing to pursue such assets will be confronted with legal complexity of procedure, excessive costs (the creditor will have to deposit USD 50,000 or more to secure the costs) and he will have to prove that the intention of the asset transfer was a fraud (Not CHANGED)
–[Belize LLCs were not stringently enforced with] Relevant accounts and returns that are sufficient to show the offshore company’s transactions and financial position to be determined with reasonable accuracy; A written record of the physical address of the location outside Belize where the accounting records are kept
–Most importantly, all the economic substance requirements pertaining to shipping, banking, fund management, IP holding, pure equity holding, insurance, headquarters & distribution/service centers (otherwise known as relevant activities) whereby the main income generation, presence and economic substance requirement was exempt for Belize LLCs.
Now
Economic substance requirements are applicable to Belize LLCs just like Belize IBCs.
Belize companies engaged in relevant activities must i) conduct income-generating activities in Belize ii) rent physical office space in Belize iii) hire staff in Belize and iv) have active directors in Belize.
–The penalties for prohibited actions have transitioned from “summary conviction to a fine not exceeding five thousand dollars” (USD) to a more stringent “indictment to a fine not exceeding five hundred thousand dollars” (BZ). (Why risk it?)
—Tax Identification Number (TIN): Depending on specific circumstances, LLCs may need to obtain a Tax Identification Number (TIN), ensuring full compliance with Belize’s evolving tax framework
—Tax exemptions once granted to LLCs are removed. The tax exemption privileges that were previously extended to LLCs have been removed, placing them squarely under the purview of Belize’s comprehensive tax laws.
–Annual filings are now mandatory & revealing information about all owners & managers.
–The currency for these fees has been changed from USD to Belizean Dollars (BZ) (this forces you to enter the Belizean financial system where a scam occurs every other year).
Quote from the government, “The Amendment Act has ushered in a paradigm shift by removing this residency restriction. This substantial alteration serves as a powerful catalyst for local entrepreneurship and underscores Belize’s unwavering dedication to nurturing a vibrant and inclusive business ecosystem” Nothing but jargon.
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Would you look at that… a reliable, punctual corporate service provider pulls out. Actions have consequences and governments never realize this.
Foolishly they state, “Belize proudly unveils the International Limited Liability Companies (Amendment) Act, 2023. This legislative transformation heralds a new era of adaptability, versatility, and modernization for businesses in Belize” <–Yea by destroying it completely. They should deal with the extreme violence rates first and foremost.
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