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After the introduction of the International Business
Companies Act in 1990, Belize has become one of the most competitive
centres for the incorporation of international business companies
(IBC's) which offer unparalleled advantages in terms of tax and
investment planning, business management and cost-effectiveness.
What can IBC's be used
for?
An IBC can be used for a wide range of applications, such as:
Estate and Financial Planning
Offshore companies are widely used in estate and financial
planning - particularly in conjunction with foreign trusts - as
vehicles to hold assets to replace individual personal ownership.
International Trading
Traditionally, this has been the most popular use for an offshore
company. By establishing an offshore company to purchase goods
from one country and then sell them to another country, the profits
from the transaction can be held in the offshore company in a
completely tax-fee free environment. The goods, however, are typically
shipped directly from the country of origin to the destination
country. An offshore company can also be used to achieve economies
of scale and reduced administrative costs by combining the purchasing
activities of a group of related or unrelated companies.
Significant tax exemptions and deferrals are available from some
countries to companies that perform export sales through offshore
countries: e.g. the US offers the Foreign Sales Corporation tax
exemption for US exporters who conform to those regulations.
Investment Holdings and Share Ownership
Offshore companies are often used effectively by individuals
and corporations alike as vehicles for the management of investment
funds. Offshore companies can maintain brokerage accounts and
hold stocks, bonds, cash and a wide variety of investment products
and offer the individual investor a high degree of anonymity.
As a foreign corporation, an IBC will usually be treated differently
to a resident individual or company and can therefore achieve
significant tax savings and accumulate all profits in a tax-free
environment.
Corporations with worldwide interests face a range of fiscal
regimes, exchange controls, currency and political risks, and
accounting policies. BOSL can assist corporations in establishing
a variety of holding and operating companies in a range of different
jurisdictions, thereby allowing them to structure their affairs
for maximum efficiency.
Ship and Property Ownership
Offshore companies can be used to own ships and organise shipping
operations thereby enabling ship owners and operators to reduce
both direct and indirect taxes on their shipping operations and
allow the increased profits to be accumulated for optimum growth
in a tax-free environment.
It is also possible to use an offshore company to hold real estate
and other types of properties all over the world. Such companies
are used as a means to avoid or reduce capital gains taxes, inheritance
taxes and property transfer taxes, and the sale of such property
can be achieved easily by transferring the shares in the company
with significant reductions in the acquisition costs to be borne
by the purchaser.
For rental property, by properly structuring the financing through
a back-to-back loan facility, an offshore company can be used
to effectively control the level of any withholding taxes applied
to any rental income.
Intellectual Property (patents, copyrights, royalties)
An offshore company can be formed to be the international
sub-licensee for important intellectual property rights such as
patents, copyrights and royalties. This offshore company can then
enter into sublicensing or franchise arrangements with companies
around the world interested in the exploitation of such rights.
The income will then accrue to the offshore company in a tax-free
environment.
Consultancy and Professional Services
Individuals who receive significant payments for their services
(such as consultants, writers, designers, directors, composers,
entertainers, engineers, etc.) may contract themselves through
an offshore company that pays the individual an agreed upon fee.
This is structured so as to minimise their tax liability and to
invest the profits in a tax-free environment, thus generating
optimum returns. Payments to the individual can then be structured
in such a way to minimise personal income tax.
Treasury Management
A corporation with a number of foreign subsidiaries often
needs a facility to balance various currency risks, capital flows
and income variations resulting from inter-group operations. To
establish such a facility in one's home country could have tax
or legal consequences. Establishing an offshore treasury management
company can serve to consolidate all of the various activities
in one place and provide the flexibility to cope with different
legal and fiscal regimes. In particular, the treasury management
company can hold profits for the foreign subsidiaries, control
the foreign exchange positions, and use accumulated cash positions
for future investment in whichever location is deemed appropriate.
Leasing Services
Offshore companies can be used in a variety of situations
to purchase capital equipment and then lease the equipment to
a company in a high-tax country. In this way, it is possible to
accumulate the funds offshore in a tax-free environment and the
lease payment will typically be considered a deductible expense
in the high-tax country.
Employment Services
Many organisations employ staff outside their home country.
In doing so, they may encounter complications concerning such
matters as exchange controls and taxation. The use of an offshore
company to employ the staff and pay their salaries can resolve
such difficulties and reduce the costs associated with payroll,
travel expenses and administration. This may also provide tax
and social security benefits for the employees.
Factoring and Transfer Pricing
By factoring the trading debts of a company in a high-tax
country through an offshore company, it is possible to accumulate
the discounted portion of the factored debt offshore in a tax-free
environment. In this way, it should be possible to treat the factoring
charge as a deductible expense in the high-tax country.
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Why Belize?
Although there are several offshore centres in which IBC's can
be incorporated, Belize ranks highly when applying all of the
relevant criteria:
- political stability
- modern legislation
- full exemption from taxes
- experienced professional support
- excellent telecommunications
- convenient time zone
- fast and efficient incorporation
- competitive fees
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Key features of a Belize IBC:
The Belize legislation offers some of the most flexible features
available today with very minimum requirements for incorporation.
These include:
- only one subscriber/ shareholder (which may be corporate)
- may have only one director (which may be corporate and reside
outside Belize)
- names of beneficial owners are not filed on public record
- registered or bearer shares
- shares can be issued with or without par value
- no statutory accounting or audit records need be kept or
filed in Belize
- no minimum paid-up capital requirements
- annual Government fee is only $100 (when authorised share
capital is $50,000 or less)
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Restrictions on IBC activities:
There are very few restrictions on the activities of a Belize
IBC. At present, an IBC may not:
- carry on business with residents of Belize.
- own real estate in Belize.
- carry business as a bank or insurance/re-insurance company,
agent or broker or operate as a mutual fund - without the appropriate
licence.
- provide a registered office for other companies.
Notes:
i) All IBC's must maintain a Registered Agent and a Registered
Office in Belize.
ii) The name of an IBC must contain one of the following words:
Limited, Corporation, Incorporated, Society Anonyme, Sociedad
Anonima or Aktiengesellschaft; or their usual abbreviations: Ltd.,
Corp., Inc., S.A., A.S. or AG.
iii) The name of an IBC cannot include any of the following words:
Assurance, Bank, Building Society, Chamber of Commerce, Chartered,
Cooperative, Imperial, Insurance, Municipal, Royal or Trust or
any word conveying a similar meaning or which suggests the patronage
of Her Majesty (or that of any member of the Royal Family) or
a connection with the Government of Belize - except with the written
approval of the Registrar.
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Nominee and Management Services
If required, BOSL can also provide ongoing nominee and management
services for an offshore company. As the beneficial owner of a
managed company, the client typically retains ultimate control
over the composition of the board of directors, which in turn
manages the underlying assets. Alternatively, ownership may be
placed into an offshore trust arrangement.
The main advantages of a managed company are confidentiality and
tax planning. Worldwide assets may be registered in, or held to
the order of the company, with your beneficial ownership of the
shares of the company held strictly as a private matter through
the use of nominees or Trustees.
Once a company has been established, it is important to manage
it properly so as to maintain its corporate integrity. BOSL can
provide a full range of management services, such as:
- Provision of directors, officers and nominee shareholders.
- Secretarial, clerical and communication facilities.
- Preparation and execution of contracts, cash and investment
management.
- Treasury and custodian services, maintenance and auditing
of accounting records, filing quarterly reports and annual returns
(where appropriate).
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