Offshore banking in Belize began when the outdated 1977 Banking Act, which did not adequately provide for a sound regulatory and supervisory authority, was repealed and replaced by the enactment of the Banks and Financial Institutions Act, 1995, and the introduction of the Offshore Banking Act, 1996, and the Money Laundering (Prevention) Act, 1996, which incorporated the best features of offshore banking legislation in Panama, Cayman and the British Virgin Islands.
A Belize Offshore Bank can carry on the following activities within Belize:
* establish, maintain, and operate a business office in Belize;
* transact offshore banking business through its business office in Belize without restrictions;
* transact offshore banking business with a local entity in Belize licenced under the Banks and Financial Institutions Act, 1995.
The major local banks offer a full range of international banking services including foreign currency savings and checking accounts earning tax-free interest and operated for the purpose of exchange control on a non-resident basis. Such accounts are offered to IBCs, individuals and trustees. Credit card services are also available.
Belize Offshore Banks are not subject to exchange control regulations.
The Central Bank of Belize was established pursuant to the Central Bank Act of 1982, the Bank Act. The Central Bank has a statutory obligation under the Bank Act to foster monetary stability and promote credit and exchange conditions conducive to economic growth within the context of the government’s economic policy. The Bank Act provides the Central Bank with the statutory authority for regulating the activities of the Belizean banking system. Besides the Central Bank of Belize, in 2003 there were five commercial banks; eight offshore banks; seventeen domestic and one offshore insurance companies. In addition there was one government-owned development bank (the DFC); fifteen credit unions; three building societies; one government-owned savings bank; one government-owned small farmers and business bank; and eleven casas de cambio as of 2002.
Two categories of Belize Offshore Banks are currently available, “A” Class - Unrestricted and “B” Class - Restricted. A “B” Class bank is restricted to carrying on such business as is specified in its license. Both types of bank need to have local offices, but a “B” Class bank is not allowed to solicit deposits from local residents.
THE COMMERCIAL FREE ZONE
The Commercial Free Zone Act 1994 established a Commercial Free Zone at Corozal to attract foreign investment. The Zone provides facilities for various activities including manufacturing, processing, packaging, warehousing and distribution of goods and services.
Businesses established in the Free Zone are free of foreign exchange restrictions and receive a range of other benefits including duty exemptions and tax holidays.
Goods and supplies entering and leaving the Free Zone for commercial purposes are exempt from import or export duties, quotas, stamp duties and revenue replacement duties. A ‘Social Fee’ of 1.5% is charged on all goods and services imported into the CFZ, except for fuel which is charged at 10%.
There is exemption from business tax, income tax and any new corporate tax levied by the government during the first ten years of a CFZ business operation. Dividends paid by a business in the CFZ are also exempt from tax for the first 25 years of operation. Thereafter income tax is charged at between 2% and 8% on Free Zone businesses, but these rates can be reduced by up to 2% through tax credits earned by the employment of Belizean workers. In addition, CFZ businesses incurring a net loss over the 10 year tax holiday may deduct the loss against profits in the 3 years following the tax holiday period.
Three locations have been designated as EPZs under the Export Processing Zone Act. The San Andres EPZ occupies 28.5 acres of land in the northern section of the country, only 8 miles away from the Mexican border, right next door to NAFTA. The other two Zones are both located approximately 9 miles from Belize City, the country’s commercial capital. The EPZ adjacent to the Philip Goldson International Airport covers 4 acres, while the Price Barracks EPZ covers 14 acres.
In the EPZ, facilities are provided for activities in manufacturing, processing, packaging, warehousing and the distribution of goods and services. In fact, amendments made to the legislation in 1994, provide investors with the added option of constructing their own facilities and developing infrastructure within an EPZ, including independent utility installations. This option enables an EPZ to enhance its economic development, since it does not necessarily have to use the electricity or telephone facilities provided by the two local monopolies, The Belize Electricity Limited and The Belize Telecommunications Limited respectively.
Other benefits of locating in the EPZs include full import and export duty exemptions; exemptions from capital gains tax, property and land taxes, excise, sales and consumption taxes, taxes on trade turnover, on foreign exchange and transfer tax; tax holidays of 20 years with an option to extend and deduct loses from profits following the tax holiday period and; dividend tax exemption in perpetuity.
Internet Gambling Law
Belize is one of the few countries that has enacted legislation allowing for the establishment of online wagering. Its Computer Wagering Licensing Act, 1995, which came into force on May 28, 1996, provides for the proper conduct and regulation of gambling via the Internet.
Besides legalizing wagering by Computer Internet, the Act also provides for the licensing of computer services operators who provide Computer Internet users with the facility to wager against each other on sporting events or other games of chance.
The Belize Computer Wagering Licensing Board vets all applications for licenses to provide computer wagering services and, with the prior approval of the Minister of Home Affairs (Minister), can grant exclusive licenses. They are also responsible for the control and regulation of all persons who provide computer wagering services.
In October 2004, Prime Minister Said Musa, who is also the minister responsible for gaming control, signed a Statutory Instrument which adjusted the Online Gaming regime to make processing and monitoring more efficient while reducing the normal fees associated with licenses in Belize to US$15,000 from US$50,000. A license is required by International Business Companies conducting or intending to conduct gaming from within Belize with the exception that no business is conducted with residents of Belize.
According to the new rules, only persons with integrity and competence and with adequate financial means will be considered for a license, and only one license can be held at any one time.
Other regulatory requirements include the maintenance of a separate bank account for processing wager transactions. Licensees may charge a processing fee not exceeding 5% of each transaction, or the sum of US $20, whichever is greater.
There is a 15% withholding tax on payments of winnings or prizes made by holders of computer wagering licenses.
