The 1990 International Business Companies Act, established Belize as one of the leading offshore jurisdictions worldwide, incorporating the most secure features of offshore instruments extant in traditional jurisdictions such as Hong Kong, Panama and the Cayman Islands.
Along with the companion Trust Act, the Belize IBC Act is recognized as one of the most modern and attractive legislations of its kind in the Anglophone Caribbean, and is specifically designed to meet the needs of the global investor (but read on to the end for recent legislative changes that have affected this offshore jurisdiction).
A keystone feature of an International Business Company (IBC) is that the enabling act in law was specifically designed to have a low start up and maintenance cost. The rational was to have the local I.B.C. registration fees be competitive with other offshore jurisdictions.
The license fee for a standard company having an authorized share capital of US $50,000 with a par value is US$100.00. The registered agent/office fee is about US$300.00 with a one-time setup fee of about US $400.00.
As there are no minimum capital requirements, no need for audited accounts, no annual returns, 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 under US $400.
An IBC can open an offshore account in any jurisdiction. The minimum deposit required by banks to open an offshore account is usually US $1,000.
A Belize IBC is required to conduct all its profit earning ventures outside the country. However, it may lease a local office, obtain the services of national professionals and trust companies, maintain company records and hold meetings in country, operate an account with national banking institutions, hold shares in another local IBC and own vessels including aircraft and marine vessels registered in Belize.
Tax-Free – No income tax, stamp duty, estate taxes, capital gains or withholding tax.
Having Only One Shareholder/Subscriber Permitted – Share May Be Held By Corporations Or Trusts
A Single Director Allowed Which May Be A Corporation Or Trust
An IBC’s register of Shareholders is available for inspection only by shareholders or by order of the Belize Courts at the request of a shareholder.
Non-Disclosure Of Beneficial Owners
Bearer Shares Permitted – Shares may be issued without par value.
IBC’s can be used for financial management, investment holding, ship or property ownership, share ownership of other companies, leasing of assets, copyrighting and/or licensing as well as general commercial trading.
No foreign exchange control.
No Minimum Capital Requirements
Cannot Carry On Business With Residents. Cannot Own Real Estate In Country. Cannot Operate As A Bank Or An Insurance Company unless an Offshore Banking License is granted. Cannot Provide Registered Office Or Serve As Registered Agent for offshore entities.
An IBC must maintain a Registered Agent and a Registered Office in Belize.
Belize established a modern Trust Act in 1992 generally regarded as incorporating the best features of similar laws prevailing in other major offshore jurisdictions such as Cayman, Panama and Bermuda. With the benefit of hindsight, this Trust Act represents the ultimate refinement of this type of legislation and is thus regarded as one of the most advanced instruments of its kind in the world.
Trusts can be established either by oral declaration or by written instruments without any cumbersome requirements or legal expressions. However, unit trusts must be formal written documents and trusts that pertain to property in Belize are unenforceable unless they are written instruments.
An advantage of the Trusts Act is that the original is prepared in English and drafted in conformance with English common law which is the foundation of all laws in Belize. Other jurisdictions need to prepare the trust in their official language, and then undergo potential pitfalls in translation.
Benefits of a trust include: Shield from creditors and other litigants. Wealth enhancement by creating trade advantages through the avoidance of capital gains and income taxes. Preservation of wealth by ensuring that heirs are well provided and facilitating the continuity of business activities, and the avoidance of probate, estate taxes and forced heirship provisions.
Structure Of An Offshore Trust
There are three basic structures in a trust – the Settlor, the Trustee and the Beneficiary.
The Settlor creates the trust and can be an individual, a corporation or another legal entity. The Settlor creates a trust by transferring title to assets which he or she owns to another person or entity with instructions that the assets be held for the use and enjoyment of a third party.
The entity to which legal title to the assets is transferred and who holds those assets for the benefit of the third party is the Trustee.
The third party for whose use and enjoyment the assets are held and managed by the trustee is the Beneficiary.
Protection of Assets
Offshore Trusts formed under our law are highly secure since a local court cannot set aside or vary a Belizean trust. No Belize Trust has ever been compromised. A court cannot entertain any claim against the trust property emanating from the order of a foreign court regarding marriage or divorce, or succession or claims by creditors in an insolvency.
This is one of the strongest pillars upholding the Belize Trust and serves to shield the assets of the trust despite any laws relating to fraudulent transfers, bankruptcies or reciprocal enforcement of judgments laws which litigation-happy attorneys would otherwise use in an attempt to attach assets.
New rules came into effect in 2018 regulating Belize Offshore products following increased pressure from the U.S.A. and the U.K. trying to remain dominant players in the offshore financial industry. The new laws prohibit the issuance of bearer shares. They provide for a one year period to convert from Bearer shares to Registered shares if your company has bearer shares issued. If your Memorandum of Association & Articles of Association (M &A) have mentioned to bearer shares you may choose to repeal & replace all mention to Bearer shares or otherwise after the prescribed time; all mention to bearer shares in any M & A will simply be null & void.
Settlors and Beneficiaries
The settlor of a trust can be any individual capable of owning and transferring property. The settlor may also be the trustee or protector of the trust. The law provides for the creation of spendthrift trusts and abolishes the rule that a settlor may not be the beneficiary of a spendthrift trust. This is an important element that is lacking in much weaker trusts existing in other jurisdictions, for example the U.S.A, where spendthrift trusts are not possible. Settlors and beneficiaries may give to trustees memoranda of wishes to guide the trustees.
Recent Changes In Belize’s Banking Laws
In February 2014 Belize changed its laws for domestic and offshore banking institutions to more bring them into conformity with rules and recommendations defined by the Caribbean Financial Action Task Force. The recommendations are touted by developed countries as combating global money laundering and government corruption. The laws introduced by Belize make for a wide range of provisions that have made this offshore banking jurisdiction, less attractive for individuals and companies seeking secure offshore accounts. One provision makes it compulsory for offshore companies to provide verifiable information on where their up-to-date accounting and company records are maintained. Another introduces the Politically Exposed Person, PEP, as a definition for individuals whose financial transactions need to be more closely scrutinized by banking institutions. The structure of rules introduced by the Financial Action Task Force can be seen here (PDF file).
The laws amended to comply with the CFTA are : Companies (Amendment) Bill, 2014; the Domestic Banks and Financial Institutions (Amendment) Bill, 2014; the Financial Intelligence Unit (Amendment) Bill, 2014; the Money Laundering and Terrorism (Prevention) (Amendment) Bill, 2014; and the Mutual Legal Assistance and International Co-Operation Bill, 2014.
For North American residents, one of the critical and new requirements, is that for individuals applying to open an offshore account in Belize, the offshore bank is required to inquire if the individual(s) are foreign nationals, and must keep records of the customer’s nationality and address in his or her home country. And of more significance, the Belize banking institution, shall, on official inquiry through the requisite Financial Intelligence Unit channels in Belize, divulge whether a particular foreign national operates an offshore account in Belize.
Despite all the above changes, Belize remains an attractive offshore jurisdiction for Trusts and Asset Protection. But those individuals and corporations looking for offshore options need to exercise greater care and due diligence in structuring their offshore strategies. The best way to do this is to visit Belize and consult with qualified offshore professionals. Yes, this will be more expensive. The days of filling out an online application to get a cheap offshore structure in one day are behind us.
Article updated 23 March 2017.