Economic Substance

All IBCs must report their status in this regime on an annual basis through their Registered Agent to the Competent Authority, the Belize International Financial Services Commission (IFSC).

The Economic Substance Act, 2019 (ES Act) was enacted in Belize on October 12, 2019, and came into force on January 1st, 2019. This legislation was introduced to address the concerns expressed by the Council of the European Union (EU) with respect to the absence of Economic Substance requirements for companies doing business in and through Belize. The enactment of this legislation reinforces Belize's commitment to meet the international requirements on tax transparency.

WHAT NEEDS TO BE DONE?

To comply with Economic Substance reporting, all IBCs must obtain a Tax Identification Number ("TIN") from the Registry and complete the appropriate Economic Substance Form.

Forms must be signed either by a Director or by a majority Shareholder. The time frame for reporting to the ES Act is determined by the fiscal year-end of an IBC.

For companies incorporated before 1^st January 2020 the first fiscal year commenced on 30^th April 2020 up to 30^th April 2021. Fillings shall therefore be done within 9 months after the end of every fiscal year end. The first reporting deadline is 30^th January 2022.

For Companies incorporated after 1^st January 2020 the first fiscal year shall commence on the date of incorporation and end one year from that date. Thereafter, each period would run from the end of that first fiscal year. Fillings shall be done within 9 months after the end of every fiscal year end.

Sanctions

Failure to comply will result in penalties for non-compliance in:

1. Meeting substance requirements,
2. Failing to file the report on substance requirements, and/or
3. Failure to comply with any directive issued by the IFSC regarding any remedial actions the entity must take to comply with the ES Act.

Entities which incur in any of these violations under the ES Act may be subject to enforcement actions, which may consist of:

1. A suspension or revocation of license (if it is an entity licensed for regulated activities under the IFSC);
2. Administrative penalties;
3. Strike off from the Register of International Business Companies

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.