Making Payments To Belize-Based Companies: A Guide

Belize is a Central American country with a robust offshore environment, making it an attractive destination for businesses aiming to maximise profits and minimise tax liabilities. The country's economy is primarily based on tourism, agriculture, and services, with significant contributions from the banking and offshore sectors. Registering a company in Belize can be advantageous for businesses seeking to enter the American market, optimise their tax strategies, and protect their assets.

One of the key benefits of Belize is its tax-friendly jurisdiction, offering tax exemptions for International Business Companies (IBCs) and Limited Liability Companies (LLCs). Additionally, Belize provides maximum privacy, international banking access, asset protection, wealth-building opportunities, and tax-free investments. The country's legal system is based on English law, ensuring a stable and predictable environment for businesses.

In terms of company formation, Belize offers a fast and straightforward process, typically taking between one to fourteen days. The country requires only one director and one shareholder, with no mandatory meetings or minimum capital requirements. Belize also boasts robust privacy protection for shareholders, directors, and beneficial owners, as their names do not appear on any public documents.

Making payments to a Belize-based company can be facilitated through various payment methods offered by financial institutions in the country, such as the Belize Bank, which provides enhanced business payment services.

Payment methods and processes for Belize-based companies

When it comes to making payments to Belize-based companies, there are several methods and processes to consider. Belize is known for its favourable tax regime, including the absence of capital gains tax, which makes it an attractive destination for businesses aiming to maximise profits and minimise tax liabilities. Here are some key payment methods and processes to consider:

• Electronic Payments: Belize offers a range of electronic payment options for businesses. The Belize Bank, for instance, provides a Vendor Payment service that allows corporate customers to pay their local suppliers or business vendors electronically through a single file upload. This eliminates the need for multiple transfers or cheques. Other banks in Belize may offer similar services, providing efficient and secure ways to make payments.
• Online Banking: With the increasing digitalisation of financial services, many banks in Belize are likely to offer online banking platforms. These platforms enable businesses to manage their finances, transfer funds, and make payments from the convenience of their devices. This includes making local and international transfers to suppliers, employees, and other stakeholders.
• Credit and Debit Cards: Major credit and debit cards, such as Visa, Mastercard, and American Express, are widely accepted in Belize. Businesses can utilise these cards for various expenses, including supplier payments, operational costs, and other business-related purchases. Card payments often provide a convenient and secure way to make payments, both locally and internationally.
• Cheques: While electronic payments are becoming more prevalent, cheques may still be used for certain types of payments. However, it is important to note that the use of cheques may be less common in Belize compared to other payment methods.
• Cash Payments: For local transactions and smaller purchases, cash payments may be a viable option. The Belize Dollar (BZD) is the official currency, and it is pegged to the US Dollar at a rate of 2:1. US Dollars are also widely accepted in commercial establishments throughout the country.
• International Transfers: For international payments to Belize-based companies, businesses may need to use specialised services or correspond with banks that have relationships with Belizean financial institutions. It is worth noting that some banks may be reluctant to facilitate transactions with companies registered in certain offshore jurisdictions, including Belize.
• Compliance with Regulations: When making payments to Belize-based companies, it is essential to comply with local regulations and international norms. This includes adhering to anti-money laundering (AML) and know-your-customer (KYC) guidelines. Proper due diligence and documentation are crucial to ensure compliance and mitigate potential risks.
• Tax Considerations: Belize offers tax advantages for non-resident companies, including tax exemptions for International Business Companies (IBCs) that do not trade within the country or own real estate there. However, it is important to carefully review the tax regulations and ensure compliance with any applicable taxes, such as those related to payroll, imports, and sales.

In conclusion, making payments to Belize-based companies can be facilitated through a range of methods, including electronic payments, online banking, credit and debit cards, cash, and international transfers. It is important to familiarise yourself with the local financial landscape, comply with regulations, and consider the unique characteristics of doing business in Belize to ensure smooth and efficient payment processes.

The Belize Bank's Vendor Payment service

To use the Vendor Payment service, customers simply need to upload a single file containing the payment information for their vendors. The service then processes the payments electronically, transferring funds to each vendor's designated account. This can be particularly useful for payroll, where customers can upload a listing with employees' account information and salary amounts, and the bank will process the payments.

The Vendor Payment service can also be used for making Contributory payments to the Social Security Board and for paying taxes on items being imported into the country to the Customs and Excise Department. Additionally, the service can be used for submitting declarations and making tax payments to the General Sales Tax Department.

Payroll deposit service

The Belize Bank offers a Payroll Deposit Service that allows customers to process their payroll online by transferring funds into each employee's designated account. This service is available to companies of all sizes. To use the service, simply upload a list with employees' account information and salary amounts, and the bank will do the rest.

Step 1: Choose a Payroll Provider

First, decide whether you want to work with a bank or a payroll service provider. If you choose a bank, it will likely be the one that handles your business bank account. If you opt for a payroll service provider, ensure they have direct deposit capability.

Step 2: Complete Setup Paperwork

If you choose to work with a bank, they will usually ask you to sign the Automated Clearing House (ACH) terms and conditions and provide recent financial statements to prove you can cover the transactions. If you work with a payroll provider, you may need to supply details about your company and a bank account number.

Step 3: Gather Employee Information

Each employee will need to provide their bank name, account type (checking or savings), account number, and routing number. In some states or countries, employees may also be required to sign a consent form before enrolling in direct deposit.

Step 4: Upload Employee Data

If your payroll provider has self-service capability, employees may be able to enter their bank information themselves. Otherwise, the employer will be responsible for providing the financial institution with the necessary details. This can often be done efficiently by exporting a National Automated Clearinghouse Association (NACHA) file.

Step 5: Sync Payroll Schedule

Some banks and payroll providers require payroll to be run a certain number of days in advance of payday for direct deposit. Ensure that your payroll schedule is compatible with their requirements.

Step 6: Process Payroll

Once everything is set up, employees will automatically receive their wages in their bank accounts each time payroll is processed.

Benefits of Using a Payroll Deposit Service:

Using a payroll deposit service or direct deposit offers several advantages over traditional paper paycheck distribution:

• Speed: Funds are transferred quickly, providing minimal wait times and faster access to wages for employees.
• Security: Electronic transfers directly into employees' accounts eliminate the risk of lost or stolen checks.
• Convenience: Employees no longer need to make trips to the bank or ATM to deposit their paychecks, saving time.
• Accuracy: Electronic records and access to online banking make it easier to fix mistakes or locate missing funds.
• Flexibility: Payments can be divided into multiple accounts, such as a checking and savings account.
• Cost Savings: Direct deposit reduces payroll costs by eliminating the need for postage or printed paper.
• Time Savings: HR professionals spend less time processing paycheck paperwork and distributing paychecks.
• Record-Keeping: Going paperless simplifies bookkeeping and makes it easier to view transaction history.

Overall, a payroll deposit service can provide a more efficient, secure, and cost-effective way to process payroll for businesses of all sizes in Belize.

Compliance requirements for companies in Belize

Belize is a favourable location for businesses due to its stable currency, pro-investment government policies, and tax advantages. However, it is essential to understand the compliance requirements when establishing a company in the country. Here are the key compliance requirements for companies in Belize:

• Language and Law: Belize is a bilingual country, operating in both English and Spanish, and following English common law. This makes it attractive to foreign investors as it offers familiarity and ease of communication.
• Incorporation Process: The process of incorporating a company in Belize is straightforward and can be completed within two weeks. It involves drafting a Memorandum and Articles of Association, obtaining approval from the Central Bank, receiving a Certificate of Incorporation, appointing directors and officers, and obtaining a company seal.
• Registered Office and Agent: All companies in Belize must maintain a registered office and appoint a licensed registered agent within the country. This requirement ensures compliance with local regulations and provides a point of contact for official correspondence.
• Accounting Records: The new Accounting Records Maintenance Act in Belize mandates that companies provide annual accounting records. These records include financial statements, contracts, agreements, and any other documentation related to the company's transactions, assets, liabilities, and expenditures.
• Tax Compliance: While Belize offers tax advantages, such as exemptions from income tax, dividend tax, and capital gains tax for companies not trading in the country, there are still tax obligations to consider. Companies must comply with tax regulations, such as obtaining a Tax Identification Number (TIN) and meeting the requirements set out by the Tax Service Department.
• Economic Substance Act: To align with EU standards, Belize enacted the Economic Substance Act in 2019. This law ensures that companies demonstrate a substantial economic presence in the country by meeting requirements related to annual operating expenditures, local employees, physical offices, and board meetings.
• Anti-Money Laundering: Due to its history as an offshore jurisdiction, companies in Belize must comply with strict anti-money laundering regulations. This includes providing detailed due diligence documents for company officers and ensuring compliance with local and international regulations.
• Licensing Requirements: Depending on the nature of the business, companies in Belize may need to obtain specific licenses to operate. This is particularly relevant for industries such as insurance, finance, and forex services.
• Annual Renewal: To maintain good standing with the authorities in Belize, companies must renew their registration with the Registered Agent and local Authorities annually. This process incurs a yearly fee.
• Compliance with Central Bank Regulations: Obtaining approval from the Central Bank of Belize is crucial for compliance with foreign exchange regulations. It demonstrates the company's commitment to operating within the legal framework and validates its eligibility to conduct business activities within the country.
• Compliance with Social Security: Companies in Belize must also comply with social security regulations. This includes registering as a corporate employer with the Belize Social Security Board and meeting any applicable contributions or reporting requirements.

How to open a corporate bank account for a Belize-based company

Opening a corporate bank account for a Belize-based company can be challenging due to the country's offshore jurisdiction status. Many banks are reluctant to provide services to companies registered in Belize, and some may even refuse to do so without providing a clear reason. However, with the right approach and documentation, it is possible to successfully open a corporate bank account in Belize. Here are the steps you need to follow:

Choose the right bank:

Select a bank that is familiar with the specific requirements and documentation needed for opening corporate accounts for Belize-based companies. Some banks may have more experience in this area than others. It is recommended to work with an agent or consultant who has knowledge of which banks are safe, convenient, and open to working with companies from Belize.

Understand the different types of corporate accounts:

Corporate bank accounts in Belize are typically divided into two categories: Class A and Class B. Class A accounts are unrestricted licenses that require the account holder to establish, maintain, and operate a business in Belize. This option is suitable for those planning to domicile in the country. On the other hand, Class B accounts are restricted licenses with similar requirements but are limited to specific offshore banking activities. These accounts are tailored for companies looking to take advantage of Belize's favourable tax laws and privacy in the banking sector.

Gather the required documents:

To open a corporate account in Belize, you will generally need to provide the following documents:

• A notarized copy of your passport
• A filled-out and signed application form
• Proof of address or residency (e.g., a copy of a utility bill)
• A notarized certificate of incorporation
• Certificate of shareholders
• A notarized memorandum of association
• A letter of undertaking

Some banks may also require additional documentation, such as social security numbers, company licenses, or driver's licenses. It is important to check with your chosen bank to understand their specific requirements.

Be prepared for due diligence:

Banks in Belize, like those in other countries, are subject to regulatory compliance requirements. They will need to conduct due diligence on your company and its activities. This may include verifying the source of funds, understanding the nature of your business, and ensuring compliance with anti-money laundering regulations. Be prepared to provide detailed information and documentation to support the account opening process.

Consider working with a local entity:

If you are a foreign company without a physical presence in Belize, consider registering a local entity. This can increase your chances of successfully opening a corporate bank account. Healy Consultants Group, for example, offers services to register a local Belize entity specifically for this purpose.

Expect a lengthy approval process:

Global banks have tightened their corporate account opening procedures, and you should anticipate a longer approval timeline. According to Healy Consultants Group, it may take up to two months to receive approval for your corporate bank account in Belize.

Maintain a minimum balance:

While there is no minimum deposit required to open a corporate bank account in Belize, it is advisable to maintain a balance of at least US$5,000 in the account. This will help ensure your account remains in good standing and avoids any potential fees or penalties.

By following these steps and working closely with your chosen bank and any professional advisors, you can successfully open a corporate bank account for your Belize-based company. Remember to stay informed about any changes in regulations and requirements, as the financial landscape in Belize and internationally can be dynamic and subject to change.

Frequently asked questions