The purpose of our article below is to inform you of the recent changes in Belize which introduce taxation on company profits and economic substance requirements
Based on the global standards on fair taxation and anti-money laundering promoted by the Financial Action Task Force (FATF), Caribbean Financial Action Task Force (CFATF), Organization of Economic Cooperation Development (OECD), and the European Union (EU), Belize has adopted the Economic Substance Act, 2019 (“ESA”) to ensure improved provisions for substantial economic presence to be fulfilled by certain commercial entities (‘entity’) that are registered and conduct business in Belize.
During the past few months, it was highly under discussion the matter raised by the Russian President, Vladimir Putin for the changes he is willing to make in the Russian Double Tax Treaties with various countries by increasing the withholding taxes on dividends and interests to 15%.
The international business environment has been changing rapidly over the past few years since there is a global movement towards transparency which leads to the introduction of the new stricter legislations and Anti Money Laundering procedures. The banking sector has become very strict, sceptical and reluctant in accepting foreign investors and raised barriers to many businesses that operate internationally. A significant factor considered by both banks and the tax authorities is the so-called substance. Many companies are struggling in establishing a business rational for setting up substance abroad and also the management and controlled is often questioned by the authorities and the banks. At the same time, in light to the economic crisis there is a need to look for alternative financing methods for the businesses.