BELIZE
Table of Contents
ECONOMIC OVERVIEW
Belize, situated in Central America with strong ties to the Caribbean, is classified as an upper middle-income nation. With a population of 405,000 and a GDP of $2.5 billion in 2022, it boasted a per capita GDP of $6049. Being part of CARICOM, Belize benefits from trade agreements with fellow member states, tapping into their markets. The country’s export-focused economy thrives due to its proximity to the sizable markets of the United States and Mexico. Notably, Belize stands out as the sole English-speaking nation in Central America, preserving its distinct cultural identity. Tourism ranks as the primary source of foreign revenue, closely followed by agricultural exports, while remittances play a significant role in supporting consumption.
Personal Tax
Individuals earning over $26,000 annually in Belize are subject to a flat tax rate of 25%. However, those earning below $26,000 per year are exempt from income tax. Workers earning between $26,001 and $29,000 qualify for intermediary reliefs: earners between $26,001 and $27,000 receive a relief of $24,600, while those earning between $27,001 and $29,000 receive a relief of $22,600. Employees earning more than $29,000 receive a personal relief of $19,600. Exemptions are available for certain types of income, such as income from agriculture, scholarships, and pensions. Non-taxable income thresholds are periodically updated, and there is no distinct tax on capital gains.
The deadline for filing the Income Tax Return is March 31st, unless approved otherwise by the Commissioner of Income Tax.
Late filings incur penalties of 3% of the tax due per month or part thereof, with a minimum of $10.
Interest charges of 1.5% per month apply to outstanding tax balances after March 31st until payment is complete.
A refund is issued when the tax owed is less than the tax deducted from income or if tax was deducted but total income falls below the $26,000 threshold.
Additional reliefs include charitable donations (up to $250) and educational expenses (up to $400 per child, excluding one’s own).
Business Tax
Every business operation conducted in Belize must pay business tax. The following table lists the types of businesses subject to this tax.
Tax rates
Tax rates vary depending on the type of business activity in Belize:
Revenue from radio, television, newspapers, domestic airlines, and service stations (fuel and
lubricants): 1.75%
Real-time voice telecommunication services: 19%
Other trade and business activities: 1.75%
Rent, royalties, and real property income: 3%
Professional income: 6%
Insurance company earnings: 1.75%
Financial institution receipts (under Banks and Financial Institutions Act): 15%
Financial institutions within a PIC group now pay 8% (previously 4%)
Gaming establishments and casinos: 15%
Real estate agents commissions: 15%
Electricity service providers: 6.5%
Exemptions as prescribed by the Income and Business Tax Act:
Revenue received by local authorities not involved in trade or business management.
Earnings of ecclesiastical, charitable, or educational institutions.
Pensions paid by foreign entities to retired individuals residing in Belize.
Payments from social security schemes, subject to Commissioner approval.
Interest from government-issued securities.
Interest on capital invested in specific development projects.
Interest paid by the government on foreign borrowings.
Earnings below $75,000 annually for trades or businesses, and $25,600 for professions, if these
earnings are the individual’s sole livelihood.
Income from scholarships, exhibitions, or similar educational awards for full-time students at
educational institutions.
Deductions applicable under the Business Tax regulations are as follows:
General Sales Tax collected on sales/receipts.
Charitable contributions range from $500.00 to $30,000.00 annually.
Earnings Replacement Duty on imported fuel.
Excise duty.
Sales of fuel by one quantity fuel importer to another quantity fuel supplier.
Funds received in the capacity of an agent.
Accommodation Tax specified in the Hotels & Accommodation Act.
Business Tax returns and associated taxes must be submitted by the 15th of each month, covering
the previous month’s receipts.
Penalties are imposed for non-compliance, including:
Late or non-filing incurs a 10% monthly charge on the outstanding tax, with a minimum of $10.00, up to a maximum of twenty-four months.
Late or non-payment accrues a 1.5% monthly charge on the unpaid balance from submission to payment.
Failure to file a return may result in a fine of at least $10,000 or a two-year imprisonment term.
Taxation to Non-Residents
Non-CARICOM residents earning taxable income from Belize or providing services within Belize are obligated to pay business taxes.
General Sales Tax
The Department of General Sales Tax oversees the implementation of the General Sales Tax Act #8 of 2005. Its key responsibilities include revenue collection, agent registration, and auditing to ensure compliance and protect revenue.
The Government of Belize introduced the General Sales Tax (GST) on July 1st, 2006. GST is characterized as a tax on consumer spending, collected at different stages such as importation and business transactions involving the exchange of goods or services.
Registration:
Businesses with taxable supplies exceeding $75,000 annually must register for GST. If a business operates for less than 12 months and averages taxable sales of $6,250 or more per month over four months, it must also register for GST.
Scope and Coverage:
GST generally applies to most goods and services within Belize, except for those that are exempt or zero-rated. Exempt supplies include financial services, certain medicines, and agricultural supplies. Zero-rated supplies include basic food items like rice, flour, and fresh produce.
Input Tax:
GST is charged on imports and purchases for business purposes, known as input tax. This tax can be reclaimed from the Department of GST when filing a GST return.
Output Tax:
When a business sells goods or provides taxable services to consumers, the final selling price must include GST, known as output tax.
Land Tax
The Department of Lands is responsible for collecting this tax, which is calculated based on the unimproved value of land. The tax rate is 1% of the land’s value, with values varying by district as outlined in the table below, denominated in Belize Dollars ($BZD).
Stamp Duty
The Land Tax, Stamp Duty, or Transfer Tax is regulated by the Stamp Duties Act, Chamber 64 of the Laws of Belize. This tax is collected by the Department of Lands and is determined based on the unimproved value of the land. Both Belizean nationals and foreigners are obliged to pay 5% of the land’s value. However, land valued below US$10,000 is exempt from taxation.
Property Tax
Property tax is managed by the city councils in each district. In Belmopan, the tax rate is 2% of the site value determined by the Belmopan City Council. In Belize City, the rate is set at 2.5% of the assessed value by the Belize City Council.
Corporation Tax:
Until recently, Belize operated under a preferential tax system for international business companies, later transitioning to a territorial tax system which has since been amended. In 2020, significant changes were made to corporate taxation, with only the oil sector subject to corporate income tax. Other companies are subject to business tax based on revenue, with potential additional deductions if the business tax exceeds the corporate income tax calculated at a 25% rate or if the company experiences losses. The rate of this turnover-based business tax varies depending on income type, ranging from 0.75% to 19%. Overseas passive income, including dividends, interest, royalties, and net capital gains, is taxed at a 5% rate, with a foreign tax credit available for these payments. Companies may be exempt from business tax on passive income if they can demonstrate tax residency in a country not on the EU blacklist and lack a permanent establishment in Belize.
Withholding Tax:
The withholding tax rate for dividends and interest is 15%, while for certain other payments like technical and management service fees, as well as rental payments, it is set at 25%.
International tax treaties:
Belize has established 14 Double Tax Treaties (DTC) and 14 Tax Information Exchange Agreements (TIEA) with various jurisdictions. The DTCs include agreements with Antigua and Barbuda, Austria, Barbados, Dominica, Grenada, Guyana, Jamaica, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Switzerland, Trinidad and Tobago, the United Arab Emirates, and the United Kingdom. The TIEAs involve Australia, Belgium, France, the Netherlands, the United Kingdom, Finland, Sweden, Denmark, Norway, Iceland, Ireland, Greenland, the Faroe Islands, and Portugal. Additionally, Belize has ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI), which came into effect for Belize on August 1, 2022.
Sales Tax:
The General Sales Tax (GST) has been set at 12.5 percent since 2010 and is applied to all goods and services. Certain essential food items are exempt from GST, while other goods and services like internet data, government contracts, and Business Processing Outsourcing are subject to this tax. Imported products are also subject to various tariffs, including Import Duties, General Sales Tax, and an Environmental Tax. The rates for Import Duties vary depending on the type of product, with some items having a zero percent tax and others ranging up to 45 percent. Luxury items and goods that compete with domestic industries may face higher tax rates. Additionally, an Environmental Tax is imposed on most imports, with exceptions for certain essential items. In response to the COVID-19 pandemic, certain products like bleach, hand sanitizers, and face masks are exempt from import taxes and GST.