The time has finally come to cover one of the most requested jurisdictions: Belize.
This former British territory, previously known as British Honduras, is one of the cheapest and most popular offshore jurisdictions in the world today. Belize is one of the most heavily marketed jurisdictions on message boards, online communities, and social media.
It is also one of the least reputable.
Belize has major problems and shortcomings when it comes to anti-money laundering and the efforts to combat tax evasion are almost nil.
The US, which is Belize’s most important trading partner and financial supporter, has declared Belize a country of primary concern for money laundering. While the full list of long and takes a rather capricious approach to defining risk of money laundering, Belize is criticized harshly and the criticism is well-deserved.
This puts Belize in the awkward position of being criticized by its biggest benefactor, on whom it is extremely reliant for financial support and trade.
Money laundering is likely rampant in Belize; both physically on Belize soil and remotely through its loosely regulated and barely supervised international banks – many of which struggle to maintain correspondent accounts, being thrown out by large international banks for failing to ensure international standards of due diligence and for failing to provide enough revenue to justify the risk they pose.
Despite being rated Largely Compliant by the OECD, it has a problematic history and present with narcotics, human trafficking, and money laundering. The OECD rating is largely based on the jurisdiction’s eagerness to – on paper at least – be internationally compliant on tax matters.
In its 8th follow-up report published in May 2015, CFATF (the Caribbean offshoot of FATF) recognized Belize’s efforts to improve its AML laws but real enforcement and success of these laws remain to be seen.
Belize borders Mexico and Guatemala. While it enjoys favourable relations with Mexico, the relations with Guatemala are hostile as Guatemala claims Belize as its own territory since 1940. Belize is a major transit point for drugs from Mexican drug cartels and there is small-scale production of narcotics in Belize.
Culturally and politically, Belize is closer to the Caribbean than it is either Mexico or Guatemala, especially the English-speaking Caribbean islands.
Belize is a poor country with underdeveloped infrastructure, relatively high crime rates, rampant corruption, and its economy is in a very shaky state. Although the economy may appear diversified at a glance, this is merely because the economy is so small that even small industries have a big impact. It is however politically and socially mostly stable.
Tourism, specifically eco-tourism, is an important source of income. Belize is popular for being English-speaking and relatively easy to get to.
Geography and Demography
Other major languages:;Belizean Creole, German
Type of government:;Unitary parliamentary
GDP per capita:;5,000 USD
Currency:;Belize Dollar (BZD), pegged at 1 USD = 2 BZD[/table]
Incorporation and Business
As mentioned, Belize has a dreadful reputation. Not so much because of its secrecy but because of the lack of adherence to international standards of compliance.
Prices are low. Scraping the bottom of the barrel, it’s possible to set up an LLC for as little as 500 USD and 300 USD renewal. Even higher-quality service providers tend to charge comparatively little for a Belize IBC.
Oversight – such as it is – is provided by the International Financial Services Commission of Belize (IFSC).
International Business Company (IBC)
IBCs are formed under the International Companies Act 1981-82. As of 2014, 1,090 ICs were registered and still active.
- One director required. Corporate directors permitted.
- One shareholder required. Corporate shareholders permitted.
- No paid up share capital required (usually 50,000 USD authorized).
- Registered address in Belize required.
- Bearer shares are permitted but must be deposited with a custodian.
Limited Liability Company (LLC)
Belize LLCs offer the full flexibilities expected under an LLC.
- One member required. Corporate members are permitted.
- Registered address in Belize required.
None. Pass-through entity.
Company name only.
Belize enacted a revised version of Trusts Act in 2007.
There are two types of trusts in Belize: domestic and international (offshore trust).
As expected, Belize offshore trusts are subject to no tax in Belize.
International trusts must be registered. The trusts registrar is to receive the following for all international trusts:
- Trustee name;
- Name of the trust;
- Date of settlement and registration;
- Protector name;
- Trustee registered address.
The trust deed itself need not be filed.
There are 55 licensed trustees in Belize.
Grasping at every straw to mimic successful legislation in more reputable jurisdiction, Belize has made an attempt at foundations.
Aside from costs, there is nothing noteworthy that sets Belize apart from other jurisdictions when it comes to foundations.
As always, this is not a recommendation.
- Atlantic International Services (L) – an off-shoot of Atlantic Bank
- Belize Corporate Services (L) – an off-shoot of Belize Bank
- Choice Trust (L) – an off-shoot of Choice Bank
- Fidelity International (L)
- Icaza Law (L)
- Morgan & Morgan (L)
- Mossack & Fonseca (L)
There are over 100 registered agents in Belize.
Banking in Belize is generally of poor quality. The banks are small and provide unimpressive services at a relatively high cost. Because of increased spending on compliance, minimum deposits are going up with most banks.
As mentioned in the introduction, banks in Belize are struggling to maintain correspondent accounts. Large correspondent banks in the US and Europe are putting increasingly tougher requirements on offshore banks and Belize being an irreputable jurisdiction with great AML and KYC/DD challenges, times are tough for banks in Belize.
Bank account opening in Belize with an international bank is easy. It can always be done remotely and there is usually no need for an intermediary.
Domestic banks and credit unions are not interested in non-residents.
It’s the same as all other IBA jurisdictions:
In theory, the secrecy is rigorous.
In reality, Belize lacks any tradition of secrecy and privacy.
Belize authorities are empowered to compel banks to disclose information without a court order, and share this information with foreign authorities.
Banks in Belize
There are two types of banks in Belize: domestic and international.
There are six international banks:
- Atlantic International Bank
- Belize Bank International
- Caye International Bank
- Choice Bank
- Heritage International Bank
- Market Street International (restricted license)
There are six domestic banks:
- Atlantic Bank
- Belize Bank
- First Caribbean International Bank
- Heritage Bank
- National Bank of Belize
Living in Belize
You probably don’t want to.
There are no tax advantages to living in Belize, crime in a problem, corruption is pervasive, and short of living out in the jungle somewhere or among the wealthy out on the cayes, Belize is not an attractive jurisdiction for relocation.
If Belize manages to fix its reputation, it could become an attractive jurisdiction for incorporation and even trusts.
With an improved jurisdiction and heavy investment in its banking sector, it could even become an attractive banking centre again.
However, as it stands, Belize’s only advantage is its low cost. And if you are looking at saving one or a few hundred dollars when forming an offshore company, it is very likely that an offshore company is not the right solution for you.
- OECD Peer Review of Belize (also has a list of TIEA and DTA)
- Financial Secrecy Index Belize
- FATF documents on Belize
- CFATF documents on Belize