Economic Substance Legislation

Background

Belize, like other Caribbean jurisdictions, has enacted a series of laws seeking to comply with international Economic Substance requirements. Please note that the issuance of the final Guidelines on the matter of Economic Substance in Belize is expected sometime before the end of this year. Therefore, this document may not be considered as the final interpretation as it may still vary in certain aspects.

What is the effect?

Accordingly, International Business Companies (IBC) engaged on what is defined as "relevant activities" will need to meet adequate economic substance in Belize. Take note that an IBC carrying on any relevant activity is thus classified as an Included Entity.

Included Entities are therefore:

IBCs licensed by the Belize International Financial Services Commission; or IBCs that carry out any of the following relevant activities, namely banking business; insurance business; fund management business; financing and leasing business; headquarters business; distribution and service centre business; shipping business; as a holding company, engaged, or where one or more of its subsidiaries is engaged in one of the activities listed under paragraphs (a) to (g) IBCs that are not Included Entities (Non-Included Entities) do not require substantial economic presence in Belize.

Pure Equity Holding Companies (PEHC) - Reduced Substance Requirements

IBCs that are Pure Equity Holding Companies (only holds equity participations and earn only dividends and capital gains or related incidental income) are subject to reduced substance requirements, as follows- (a) it shall comply with all applicable laws and regulations of Belize; and (b) it shall have adequate human resources and premises in Belize for holding equity participation in other entities and where it manages those equity...