Belize is one of a select few countries that offer non-resident legal entities, officially known as International Business Companies (IBC). These entities differ from conventional entities in the sense that they are always considered non-resident for tax purposes and as such, cannot have a tax liability in their country of registration (for this reason, they are often barred from doing business locally). Other differences include better privacy protection and fewer compliance requirements. While IBCs have typically been used as holding entities for real assets, they have become increasingly popular with location independent business owners in recent years. In this article, I cover how to register a Belize IBC, how to open a business bank account for it, process payments, how the taxation system works, how to dissolve a company and offer insights into the future of doing business with an IBC.
Belize IBCs were created for one single purpose: to help grow the local economy. How can a tax-exempt company contribute to the local economy? Via fees and the mandatory use of local service providers. Those fees are the main reason why registering an IBC in Belize is a lot more expensive than it is to register a company in a country like the US or the UK. It is also more of a hassle because you need to hire a local registered agent to do so. Because there is no transparent business registry, you will also need to hire a local attorney to apostille all your business documents before they can be used. In most cases, all these layers of fees add up to between 700-1000 USD at the moment of registration and a further 500-600 USD annually. Document-wise, you will need a certified proof of ID, a certified proof of address and ideally, some reference letter. Most registered agents will complete the registration process within a week once they have your documents. You will then be courried the company documents and will be able to bring them to a bank to open an account.
Privacy-wise, Belize is fairly decent. Unless you commit a major crime, your information will never be made public or shared with the authorities in your home country. With that said, to open a bank account for your company you will need to provide the bank with your real information (even if using a nominee director / shareholder). This means that in practice, true privacy is only possible if you do not open any bank accounts. This is true even if you bank locally as Belize is a CRS country.
For owners of Belize IBCs, banking is where things will often get complicated. Real complicated. It used to be easy to open bank accounts for IBCs but not anymore. Basically, you have the choice of either going with a crappy Belize-based bank or a better one in a foreign country. In both cases, opening an account will involve gathering a ton of documents, having them certified, having to visit the bank in person (not necessary in Belize) and then waiting for weeks (sometimes months) to learn whether the bank wants to do business with you or not. In many cases (Hong Kong and Singapore especially), you will need to pay a company search fee which can go as high as 2000 USD with no guarantee that the account will be opened.
I have personally gone through the process for my Belize IBC and managed to open accounts with OCBC and DBS in Singapore. I had to deposit 30000 USD for the OCBC account and 50000 USD for the DBS account. Between the two, I strongly prefer OCBC as they have better card products, a better brokerage product and superior customer service. Opening those accounts was not easy though and that was a few years ago.
Speaking of easy, there are a few countries where opening a bank account for a Belize IBC is “easy”. They are Latvia, Cyprus and a number of African countries (Mauritius and Seychelles especially). I would only recommend those countries as an ultimate last resort though.
Another problem you will encounter is payment processing. To protect themselves against money laundering, most payment processing companies will only deposit funds to a bank account in the country where the company is registered. Because using a Belize bank essentially means being ripped off, you are left with only a few payment processing options, those who will deposit to a bank in a third country. Such options include PayPal (ridiculously high fees for Belize companies), Cybersource (pretty good, owned by Visa) and Alipay (for China-focused businesses).
While Belize IBCs are tax exempted in Belize, they are not tax exempted elsewhere. Unless you have taken care of your personal tax situation already, your Belize IBC is likely to fit within one of two scenarios.
Scenario one: CFC rules
If your country of personal tax residence has CFC rules and you use your Belize IBC as a holding entity, it will likely fall under those rules. This will result in your Belize company being subject to some form of taxation there negating most of the benefits of using such a type of entity. You can learn more about how CFC rules work here.
Scenario two: permanent establishment rules
If you run an active business using your Belize IBC, it will likely be considered resident in the country where you are based for taxation purposes. This means that it will have the same tax liabilities as a locally-registered company although without many of the benefits. A way around that is to move your personal tax residency to a true tax haven. You can learn more about how tax residency works here.
While dissolving a Belize IBC is usually simple, one should not underestimate the cost of doing so (it starts from around 1000 USD). To initiate the process, simply send the request to your registered agent. They will handle everything and notify you when the company has officially been struck off. Please note that from the moment the process is initiated, it becomes illegal to continue using the IBC.
A word of warning (2021)
I know that Belize sounds great on paper and that its IBC structure offers many benefits worth having. The problem, as I hope my article has made clear, is that in practice most of those benefits will not be available for various technical and legal reasons. What will be available is plenty of red tape and complications.
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