Over the past few decades, the government of Belize has been working hard to attract foreign investment, especially now that tourism is exploding in popularity and drawing international attention to the country. With a variety of incentives, low business taxes and the option of full foreign ownership of a company, Belize has some great opportunities for the adventurous entrepreneur.
While the system is set up to encourage foreign investment, there are challenges facing foreign entrepreneurs in Belize. Some industries are unofficially reserved for Belizean citizens. Foreigners will find it almost impossible to start a business in several sectors, including the fishing, sugar cane and retail industries. The trade license approval process lacks transparency and government corruption is often a problem, especially when entering a highly competitive or monopolized market.
On the other hand, the government encourages foreign investment in the tourism, agriculture, furniture and garment manufacturing and infrastructure sectors. These industries are often much easier to enter. In fact most of the larger and more luxurious hotels are owned and operated by foreigners.
If your dream is to start a business in Belize, do some serious market research first and, if at all possible, hire a local lawyer and accountant for specific details and current advice.
Starting a Business
If you're setting up a business in Belize, one of the first things you should do is look into Belize's various investment incentives, which means getting in touch with the Belize Trade and Investment Development Service (BELTRAIDE). Beltraide is a governmental organization designed to encourage and facilitate investment in all businesses as they set up in Belize. Any business that will benefit the economy and create jobs for Belizeans is eligible to apply for various investment incentives, and Beltraide offers tax holidays and duty exemptions for the first few years of operation. The four most popular incentives:
- Fiscal Incentives Act - Duty exemptions for up to 15 years and tax holidays are granted to encourage investment. Duty exemptions apply to supplies like building materials, office equipment, agricultural machinery and utility and transport vehicles.
- Export Processing Zones (EPZ) - Areas of Belize where businesses are exempt from import and export duty, as well as most taxes. Focused on promoting the export of manufactured goods.
- Commercial Free Zones (CFZ) - Areas of Belize where businesses are exempt from various duties, as well as many taxes, with fewer government restrictions. Focused on various activities like manufacturing, packaging, warehousing and distribution of goods and services.
- International Business Companies (IBC) - These are basically offshore companies. IBC's are not permitted to own land or conduct business in Belize, but aren't subject to Belizean taxes as well as many other requirements for Belizean companies.
Starting a company in Belize is pretty straightforward, though the process can take longer than in most other Central American countries. Corporations in Belize are known as Limited Liability Companies and can be formed by anyone, even tourists. Two directors are required to start a business and the Belize government allows for 100 percent foreign ownership of a company, though it encourages joint ventures with Belizeans. Here are the steps for setting up a Limited Liability Company:
- Once you've got your business location and name, head to Belmopan to the Companies' Registry to perform a name search. This computerized search will determine if the name is available. The service is also available over the phone or by fax for a USD$25 fee.
- If the name is available, you can register your company immediately after you perform the search. They will require identification for each director and any representatives, as well as the company statutes, memorandum of association and articles of association. Registration fees are approximately USD$300 and can be paid directly to the Companies' Registry, after which you will receive a Certificate of Compliance.
- You can now apply for a trade license. You'll need to have a trade license in order to qualify for a work permit, which any foreigner who intends to operate a business must have. Submit an application along with your Certificate of Compliance and proof of residency to the City or Town Council for the municipality in which your business is located. After a day or so, City Council will send someone to inspect your business premises. The inspector will assess the annual rental income of the site and submit his report to the Trade License Board, which meets every two or three weeks. A few days after the meeting, the board will send you a determination and assessment notice. Trade licenses cost 25 percent of the annual rental income of the business premises. When you get your assessment notice, take it to City Council to pay for your trade license.
- Applications for Temporary Self-Employment Permits are accepted and processed at the Immigration Department. Application packages should include the trade license, a banker's statement with proof of financial stability, three notarized passport size photos and sometimes a reference letter from the city or village council and any local organizations relevant to the nature of the business. You may also need to attend an interview with Immigration. Work permits vary greatly in cost, so check with the Immigration department for current rates and any extra documents you may require. Processing can take several weeks, though work permits are often much quicker and easier to get for business owners than they are for employees.
- Next, you must make a company seal, either rubber or embossed. You can do this at any stationery store for USD$25 to USD$100. Making the seal will take a day or two.
- Finally, head to the Income Tax Department to register your company for business tax, General Sales Tax (GST) and to register all employees with the Social Security Board. You will receive your Tax Identification Number (TIN) within one or two weeks. Registration with GST can take two to three weeks and employee registration with Social Security can take well over a month.
Depending on the nature of the business, you may be required to have other documents available, such as a banker's reference, environmental clearance, profit projections, land title or lease, etc. It's always recommended to work with an attorney when going through the process, as they can shed light on any extra required documents or new regulations.
How long it takes to start a business in Belize will vary, but it averages about 44 days and will cost roughly USD$400 to USD$475 plus the cost of the trade license and attorney fees.
The tax codes for Belizean businesses are complex and change frequently. While Paradise Hunter aims to provide the most current and accurate information, it should not replace the expertise of a local attorney or accounting professional.
The fiscal year in Belize begins on April 1. All individuals, partnerships, corporations or self-employed consultants who are operating or conducting a business in Belize are required to pay business tax, which ranges from 0.75 percent to 25 percent of gross revenues, depending on the industry. Business tax is paid on total revenues without any deduction for expenses such as property taxes, insurance, rental costs and so forth. Business tax payments are made monthly, due on the 15th day of the following month. If rent is your only source of income, business tax payments are only necessary every six months.
Approximately 25 percent of your business profit goes to taxes. Business taxation begins if you gross BZD$75,000 or more a year from a business or BZD$20,000 or more a year from a profession or vocation. The basic thresholds only apply if this income is your only source of revenue and isn't applicable to every business or taxpayer. If you generate income from other sources, taxes are due on your total gross income. Non-residents of Belize sometimes face higher taxes on things like insurance premiums, management fees, royalties and commission.
Other taxes a business may have to pay include:
- 10 percent General Sales Tax
- 15 percent Business Tax on all dividends
- Property Tax, due annually
- Business License Tax, due annually
New businesses are required to register with the Income Tax Department, after which they will receive a Tax Identification Number (TIN). If you're purchasing an existing business, make sure all taxes have been paid by the previous owner by getting a Certificate of Clearance from the Commissioner, or you could be held liable for them. By law, all businesses must keep proper books and records of accounts and receipts, complete with all supporting documents. The Income Tax Department may request an inspection of records at any time. Records are to be kept in English, with all amounts in Belizean currency, for six years.
People who file business tax returns must also file income tax returns, which can be reviewed for any loss credits or expense allowances. If your income tax is greater than your business tax, the difference can be written off. All annual returns are due on or before March 31, with late returns suffering a penalty of 10 percent of the tax due for every month the return is overdue.
Some businesses and business activities qualify for tax breaks and tax exemptions. Taxes are exempt on income that are proceeds from the following types of companies:
- Credit Unions
- Charitable Institutions
- Educational Institutions
- Friendly Societies
- Local Authorities
- Religious Bodies
- Statutory Bodies
Other business tax exemptions include:
- Some charitable donations
- Accommodation Tax collected under the Hotels Act
- Excise duty
- Rental receipts of less than BZD$800 per month where rent is the only source of livelihood for the taxpayer.
- Interest on Savings and Term Deposits, provided it's not the income of a financial institution, investment company or any person whose business includes investment.
- Consultants who work for an employer for more than sixty days in the year. They are considered employees, so do not pay business tax.
The work force is comprised of roughly one third of the Belizean population, so there are a little over 100,000 workers in the country. Many of the skilled and educated workers in Belize leave to pursue a career in other countries, so the majority that remain are unskilled; most haven't completed secondary school. About 60 percent of the workforce is employed in the service industry and Belize has an unemployment rate of around 10 percent. Things are looking up, however, as the government is working hard to improve education and reduce the unemployment rate. So far, they have made considerable progress.
Belizeans have unions, which have the right to strike without notice, unless they provide an essential service. Employees are entitled to two weeks paid vacation per year and 16 days of sick leave. Pregnant women are also entitled to 30 days of sick leave for pregnancy-related illnesses.
When hiring, keep in mind that all employees must be registered with the Social Security Board and pay into Social Security. Every week, Social Security contributions are calculated from the employee's salary and are split between the employer and employee. The employee pays between 1.5 percent and 3 percent of his or her wages into Social Security, depending on weekly salary, and the employer contributes the rest for a total of 8 percent.
When hiring non-nationals, an employer is expected to advertise the position in the local newspaper for two to three weeks to ensure there are no qualified Belizeans for the job. After the ad has run, the employer may apply with the non-national employee for a work permit. Work permits cost anywhere from USD$25 to USD$750, depending on the industry, and it's expected that the employer will usually foot the bill.
Belize has very few laws when it comes to firing and those laws that do exist are sometimes difficult to enforce. Firing employees due to redundancy is legally authorized. Notice for termination, whether coming from the employer or employee, varies depending on employment length:
- The first six months - three days notice or equivalent wages
- From six months to a year - one week notice or equivalent wages
- From one to two years - two weeks notice or equivalent wages
- After two years - four weeks notice or equivalent wages
Life moves more slowly in Belize and the business world is no exception. Punctuality, though appreciated, isn't expected. Making a decision is a long process and often involves several meetings. Dress is semi-casual, with long khaki pants and collared or knit shirts being the norm for men and long pants or skirts for women. Sandals, but not flip-flops, are perfectly acceptable.
In formal situations, Belizeans address each other with Mr., Mrs., or Ms., followed by their surname, and business greetings usually involve a gentle handshake. Small talk is considered polite before getting right down to business, but avoid topics such as politics or religion. Gifts aren't usually expected. For more details, check out our Etiquette article.
Belizeans generally work eight hour days from Monday to Friday and five hours on Saturday. Sunday is a rest day and anyone working on a Sunday is usually entitled to overtime pay. Work hours vary by industry, but the accepted standard hours are from 8 a.m. to 5 p.m. with an hour for lunch at noon. Overtime pay is time-and-a-half, or double-time on holidays.
- Total Business Taxes: Approximately 25 percent of profit
- Average Time to Start Up a Business: 44 days
- Minimum Wage: BZD$2.50 or BZD$3.00 an hour, depending on the industry
- Average Work Week: 45 hours over six days
- Average Daily Work Hours: Eight hours, from 8 a.m. to 5 p.m. with an hour for lunch. Five hours on Saturdays
- Typical Yearly Vacation: Two weeks
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