BELMOPAN, Fri. June 4, 2021– Last Friday, among the other pieces of legislation reviewed by the Senate at its most recent meeting was the second reading of the Bill to amend the Income and Business Tax Act in order to “enhance Belize’s competitiveness and stimulate renewed [activity and investment]in the International Financial Services sector.”
The International Financial Services sector (i.e. offshore banking sector) has been said to be in a steady state of decline within the past five years due to regulations introduced by the EU and the OECD. The majority of the senators expressed their hope of seeing a restoration of the sector in order to provide a much-needed boost to the Belizean economy. One of the senators who expressed this hope, but who also voiced some concerns, was UDP senator, Khalid Belisle, who stated in his address to the Senate, “…The truth of the matter is our side really doesn’t have many qualms or misgivings about the proposed amendment bill. As noted last week by the Honorable Prime Minister in his introduction in the House, the IFS sector here in Belize has indisputably been in decline for roughly the last half decade or so, and that is across our local license service providers, new incorporations by companies as well as the annual license renewals by same said companies…. In speaking with players across the country the consensus seems to be that it is a combination of new regulatory requirements imposed by international bodies such as the EU in tandem with more attractive terms present in territories that offer the same services that have predominantly contributed to the current trajectory of this sector. In light of the looming expiration of the tax exemption period for these companies at the end of this very month compounded by the present economic circumstances prevailing in Belize, it’s clear that the amendments as proposed are indeed necessary.”
He then presented his concerns. “Before I close, two minor concerns and I’m hoping that either the Leader of Government Business or perhaps the Minister of State in the Ministry of Finance will be able to expound on them or clarify, explain. One is the effect on local businesses and what, if any, the removal of these taxes would have on them, and secondly in the arrangement of the clauses at item 8 it speaks to the repeal of subsection two…we talk to subsection two, but I noticed there wasn’t anything on subsection three and look forward to being enlightened as to why that is the case,” he said.
In response, Minister of State, Senator Chris Coye, explained, “This is an effort to save the International Financial Services Sector. It is in a sustained period of decline, principally over the last five years. However, there are various reasons for that decline. We believe certainly the fact of the adjustments or the evolution, if you will, of the mandates put on Belize by various international organizations, including the EU and the OECD. The effect on the sector has been dramatic. At the same time we believe that there is still a significant opportunity that remains for this sector and that it can restore to what it was and really go far beyond what it is or what it has been if the sector is embraced in the evolved form that it now finds itself in.”
Senator Coye further went on to say, “In effect, we no longer have an offshore sector. We have a hybrid, or it is we now have an onshore sector that connects to international business and international persons. And this is where we have to look at how we conduct our business and how we develop our laws. With respect to concerns over requirements or obligations put on us by these outside parties, that is a concern that we seek to ensure that we address as we look forward to the development of this sector, so, when we look at that bill, that bill accounts for that concern. Ringfencing in effect has been the mantra of some of these organizations, and the fact of Belize’s laws providing for ringfencing. Those amendments in the past couple of years in both the International Business Companies Act and the Income and Business Tax Act address those concerns specifically. This bill as well, takes account of that…On the matter of the effect on local business, because there is no ringfencing, the impact of this legislation once passed applies both to the international entity as well as the local entity. So it does in effect provide it for local holding companies, local businesses just the same as it would to a foreign business or foreign entity. And the overall context of it is, the beneficiaries include the persons who partake in this sector, the persons employed in the sector and the persons who are likely to continue to or to be newly employed by this sector.”