Belize vs BVI: Offshore Company Formation

Desfran - Belize vs BVI

Belize is an offshore island located on the eastern coast of Central America that uses English as its official language. In contrast, Belize is the more stable in terms of political among the countries in America, in terms of having a good record of peace and democracy. Also well known for setting up offshore companies and trusts thus a great country to start a business in.

When setting up offshore companies in Belize, one can find that the advantages of, quick incorporation procedures and no corporate tax applied to corporations, very favourable to them. Having your company set up in Belize, it will not disclose any of its banking or financial information, and there would also be no taxes levied on Business Companies except for annual government license fee.

Belize IBC, currently, is the most modern and user-friendly offshore jurisdictions available. With the design of this system that is leaning more towards the foreign investors, Belize IBC is ideal for any international financial transactions. And it is always an ideal jurisdiction for small or start-up international business because of its law that facilitates such fast and effective incorporation.

To set up a Belize IBC, it takes roughly about 5 working days for it to incorporate. It is also free from any reporting that is required from annual audits. It offers good privacy conditions where shareholders/director’s information will not be disclosed or published on public files, thus making Belize IBC one of the most secured and confidential offshore jurisdictions.

In summary the few advantages to setup in Belize

  • Belize’s set of friendly rules and easy access of registering makes it one of the fastest IBC registries in the world
  • With a peaceful and stable country, foreign businesses can find their growth assuring
  • exemption from taxes on income or dividends paid of an IBC
  • Meeting of shareholders/directors can be held in any other country.
  • No requirement of Annual Reports
  • No minimum capital requirement needed
  • All information relative to the company will be kept in discreet
  • Belize IBC can have access to open bank accounts in Belize and other parts of the world.

When it comes to setting up an offshore entity, we look at some of the most fundamental factors that can have a significant influence in deciding on the location of the setup.

Belize has a stable and healthy economy; they have the second-highest per capita income in Central Americas. Economy from this country is based mainly from tourism, agriculture, and services. And to no surprise, the offshore services industry provides a major contribution to its GDP. Belize is considered to be one of the top tax havens is because of the government efforts in changing its act and on developing its business-friendly environment for foreign investments.

Doing business in Belize can also bring offshore seekers various opportunities to grow their business. The force behind it is that the government strongly welcomes new investments to their country. In addition to a diversity of tax benefits for international business companies, there are also many supportive policies to give assistance to new offshore business. However, it is also noteworthy that those to establish a business in Belize will meet no restrictions on their investments, providing that their business operation is in accordance with the law of Belize. Belize IBC, for instance, is given free rein to conduct its trading activities but prohibited from doing business within the territory of Belize.

The workforce in Belize is estimated at roughly 180,000 as of late 2019. In contrast, the wage rate in Belize is relatively low with the lower standard of living compared to that of the US and other countries. Rental and properties are fairly low as well, comparing them to other countries. Though Belize not a wealthy country but the fact that they are doing well in enabling attractive and enterprise-friendly environment makes it one of the more recommended locations for investors to set up their prospective business there.

Belize IBC vs LLC

Belize being one of the popular locations to base an offshore company for those investors who wish to run an offshore banking business or an international trade company. Other popular uses include Forex trading and offshore e-businesses. Belize is also named the second-highest per capita income in Central America and has an exceptional status of peace, democracy and stability. Their legal system is based on the English Common Law, and their official language is English. They are also considered as one of the most secure and confidential offshore jurisdictions in the world, in terms of privacy and confidentiality of any information to foreign parties. It does not disclose any banking or financial data as there are no forms of any information exchange agreements with other jurisdictions. Its contemporary and advanced offshore corporate regulations offer the flexibility of the highest standards and efficient tax planning. Moreover, Belize has launched a highly attractive Offshore Banking Act, which reinforced its banking privacy regulations to attract international banking institutions.

Most of the offshore tax havens will provide two different types of companies to incorporate, mainly IBC (International Business Company) and LLC (Limited Liability Company). Both protect shareholder/directors from any personal liability incurred within the entity by having a legal separation between the owners and the company itself.

International Business Company (IBC) formed under the laws of jurisdiction is a tax-neutral offshore company. IBC is not allowed to conduct any business within the jurisdiction that it is formed and any of their profits made are free from any corporate taxes in the offshore jurisdiction. IBC provides complete privacy to the owner of the company as no personal information or details will be disclosed in any public files. As a legal entity, IBCs are free to engage in any businesses and activities, most commonly to conduct international trades and investment activities.

The main features of setting up a Belize IBC:

  • A minimum of one director or shareholder is required, who can be the same person.
  • The director and shareholder may be a legal entity or a natural person of any nationality.
  • Incorporation documents or any other public records do not disclose the name of any director or shareholder.
  • Director and shareholder nominee services are permitted to secure secrecy.
  • International Business Companies’ shares can be issued in any main currency.
  • International Business Companies’ are not subject to any taxes or stamp duties.
  • Bearer shares are permitted.
  • No exchange control regulations apply.
  • No restrictions apply for an IBC to undertake any lawful business and investment operations, except trust, banking and insurance activities which require a specialised license.
  • Good Standing Certificates can be attained from the Belizean Registrar.

Limited Liability Company (LLC) is a hybrid between a partnership and a corporation. It operates the same of a partnership where all sales and income of the company will go to the owners or investors, but it works like a corporation because of its limited liability and that owners are not personally liable for any debts of the company. LLC does not issue any shares, and its solely managed by its member only. Unlike IBC, LLC has no restriction on where it can conduct its business, which means they can do business within Belize as well! And because there are no shares distributed, all dividends are made to its member, and they are set in an operating agreement instead of the value of each member’s contribution shares.

Comparison between Belize and BVI

Both Belize and the British Virgin Islands are two key jurisdictions in terms of offshore company benefits and advantages for investors. The two locations share a series of characteristics customary to these types of legal entities, such as easy company formation and tax-exempt status.

When comparing offshore locations, it is usually best to refer to a set of key characteristics. As stated above, both Belize and the British Virgin Islands share some of the traits that are similar to all offshore jurisdictions, among which of key importance is the tax exemption for locally registered companies, or in this case the International Business Company. It is also useful for investors to remember that even though both of the jurisdictions grant the companies the official status of an International Business Company, the company laws are different and it is always preferable to work with a local specialised firm when opening a company and when selecting management services for an offshore company.

British Virgin Islands (BVI) 

The British Virgin Islands or BVI is one of the oldest and most well-renowned offshore tax havens in the world. With their stable and affluent economy comparing in the Caribbean. BVI is a British Overseas Territory with outstanding political solidity, maintaining a low international profile and a clean reputation. The main language spoken is English and official currency used are the US Dollars. There is an independent judicial system based on English Common Law and numerous tax treaties maintained with the EU and USA. BVI is tax-free on corporate legislation and a contemporary Companies Registry which encourage the growth of offshore activities.

The main features of forming a BVI IBC:

  • Only 1 director and shareholder are needed
  • The director and shareholder named can be of a company or individual of any nationality
  • No information of any incorporation documents will be disclosed, and no public records will be held
  • Board meetings can take place in any jurisdiction
  • International Business Companies are exempted from all taxes and stamp duties
  • No minimum share capital is required
  • Only registered bearer shares can be issued
  • Taxes are not imposed on any banking transactions
  • Directors will be able to transfer entities’ assets to other corporate bodies or trustee in order to safeguard them
  • Annual license fees are lower than many other jurisdictions

Below are some of the important traits from both Belize and BVI in summary: –

IncorporationFast and easy incorporation process, advantages to investors that cannot travel to Belize can always acquire a local representative there.To incorporate a company in BVI is fairly easy, and it is not required to be physically present in BVI during the whole process duration of the incorporation.
Tax exemptionEntities that are incorporated are granted tax-exempt status and no corporate income tax and other taxes on any company profits.Entities will benefit from their zero-tax regime, which means profits gained are not subject to any corporate income taxes or any other taxes on company gains.
Requirement for companiesWhen incorporating, company name check can be performed due to certain restricted words on the company name, and it is a requirement to have both a registered agent and office in Belize.Registering a local office and the registered agent is required in BVI, while companies are subject to observe a certain set of rules in their company name and to maintain certain suffix to their business type.
New/Shelf companiesInvestors will have the choice on either to incorporate a new company or to acquire an existing company that has all the documents completed, including business name and Articles of Association.Investors have the option to incorporate a new company with their fast and easy process, or they can buy and transfer the ownership of a ready-made company available.
Required number of shareholders and directorsAt least one shareholder and one director are needed to open a company.A company is incorporated with at least one shareholder and one director.
Accounts and PrivacyIt is not required to file or submit annual reports or to follow any statutory account requirementsNo requirements to submit annual company returns.
Governing lawThe International Business Companies ActThe Business Companies Act

As we can understand from the above, there are little differences between them both. BVI is a renowned and recognised tax haven while Belize is the upcoming and popular tax haven. Both have fast and simple incorporation process, and both are low in corporate taxes. However, choosing the suitable offshore jurisdiction should always be made by taking into consideration both the business entity advantages, the tax advantages as well as the geographical location and, perhaps most importantly, the future use of the offshore company.

With that, there are many offshore incorporation options out in the market, and they have their specific advantages for setting up an offshore business. It can be difficult to decide which is best suited for your company and intended activities. And due to the ever-changing economic substance, that are imposed on these countries, governments are constantly changing their regulations to upkeep the doctrine. Hence it is always important to consult with us to understand better, which are the more favourable offshore jurisdictions for your business and expansion.

In Desfran, we hope that the above article can assist you in having a better picture on how you can incorporate an offshore entity in Belize, either is your business to expand internationally or to go offshore with a new setup, Belize is relatively one of the preferred consideration for foreign investors and companies.

Therefore, it is advisable to engage with a business consultancy expert like Desfran that has a team of seasoned experts to assist you with your business growth by providing comprehensive business solutions. Contact us at [email protected] today to find out more information on Belize IBC and other offshore jurisdiction company formations.

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