Belize Income Tax Payment Guide

Belize is a tax haven, allowing individuals and corporations to legally reduce their tax liabilities. It has a territorial tax system, meaning residents only pay income tax on income derived from within Belize. The tax year in Belize runs from January 1 to December 31, and the tax deadline is March 31 of the subsequent tax year.

Belize has a flat income tax rate of 25% on taxable income. Residents are exempt from income tax if they earn under $26,000 Belize Dollars (BZ) per year, and the first $14,500 of their annual income is also exempt. Non-residents are only taxed on income earned within Belize and are not taxed on foreign-earned income.

Income tax filing requirements for residents and non-residents

Belize has a territorial tax system, meaning residents are taxed on their worldwide income, while non-residents are taxed only on income sourced within the country.

Residents

As a resident of Belize, you must file a tax return if you have taxable income exceeding the annual threshold. Taxable income includes income from employment, business or self-employment, rental income, and investment income. The primary tax form for residents is BTS203 – Income Tax Return for Employees. The tax year runs from January 1st to December 31st, and the tax deadline is March 31st of the subsequent tax year.

If you are a US citizen or resident living in Belize, you must file a US tax return every year, reporting your worldwide income to the Internal Revenue Service (IRS). You may also be eligible for tax benefits such as foreign earned income exclusion and foreign tax credit to reduce your tax liability.

Non-Residents

Non-residents who earn income from Belizean sources are required to file a tax return. This includes individuals with income from employment or business activities in the country, as well as those with rental or investment income from Belizean sources.

Additionally, non-residents who are directors or officers of a Belizean company, receive dividends or other distributions from a Belizean company, own property in Belize, or are beneficiaries of a trust established in Belize, are also required to file taxes in Belize.

Income Tax Rates

Both residents and non-residents pay a flat income tax rate of 25% on taxable income. If an individual's income is less than $26,000 BZ per annum, they are exempt from income tax.

Income tax exemptions and reliefs

Belize's tax system is based on indirect taxation through three main sources of income: trade-related taxes, a tax on sales, and rates. It also has direct taxation through the Income and Business Tax. The Income Tax Department outlines the following income tax exemptions and reliefs:

• Individuals who are employed and reside in Belize, with a total income of less than $26,000 per year from all sources, are exempt from income tax.
• Those earning between $26,001 and $27,000 per year are eligible for a relief of $24,600.
• Those earning between $27,001 and $29,000 per year are eligible for a relief of $22,600.
• Those earning over $29,000 per year get a personal relief of $19,600.
• There are also other reliefs, such as Charity (maximum of $250) and Education (maximum of $400 per child that is not your own).

Additionally, there are deductions that can be applied when calculating the tax base, such as:

• A general deduction of $50 is applied to all taxpayers after the tax rate.
• Deductions for mortgage interest payments.
• Deductions for medical insurance premiums.
• Deductions for educational expenses.
• Deductions for contributions to retirement plans.
• Deductions for donations to charitable organisations.

The deadline for taxpayers is March 31st. Those earning less than $13,000 in income per year are exempt from paying income tax.

Income tax penalties and interest charges

In Belize, income tax returns must be filed by 31 March, unless otherwise approved by the Commissioner of Income Tax. If you miss this deadline, you will be charged a penalty of 3% of the balance of tax due for each month or part of the month that your return is late, with a minimum charge of $10.00.

If you have a balance of tax remaining after 31 March, you will be charged interest at a rate of 1.5% per month until the final payment is made.

Other taxes in Belize, such as VAT and property tax

Belize has a flat VAT rate of 12.5%. This is applied to the purchase of most goods and services within the country.

Belize also levies property tax, which is based on the value of the property and whether it is rented out or vacant. Rented properties are taxed at a flat rate of 12.5%, while vacant properties are taxed at a rate of 2%.

The country has a territorial tax system, meaning individuals are only taxed on income earned within Belize. Non-residents are taxed on income from Belizean sources, including employment, business activities, and rental or investment income.

Belize is considered a tax haven, allowing individuals and corporations to legally reduce their tax liabilities. The country's tax code defines offshore income as dividends, capital gains, earned interest, and revenues. Dividends paid by offshore companies incorporated in Belize to non-citizens are tax-free. Additionally, there is no tax on capital gains in Belize.

Tax compliance and navigating the tax system

Belize has a territorial tax system, which means that individuals are only taxed on income earned within the country. If you are a resident of Belize, you are generally required to file a tax return if you have taxable income that exceeds the annual threshold. Taxable income includes income from employment, business or self-employment, rental income, and investment income. The tax year in Belize runs from January 1st to December 31st, and the tax deadline is March 31st of the subsequent tax year.

The income tax rate in Belize is 25% on taxable income. However, residents of Belize are exempt from income tax on the first $14,500 to $26,000 of their annual income. Additionally, pension income is also exempt from taxation. For those earning between $26,001 and $29,000, there are intermediary reliefs available. Those earning over $29,000 receive a personal relief of $19,600.

Non-residents who earn income from Belize are also required to file a tax return. This includes individuals who earn income from employment, business activities, rental income, or investment income from Belizean sources.

It is important to note that even if you are not required to file taxes in Belize, you may still need to report certain information to the Belizean tax authorities. For example, if you have a bank account or other financial assets in Belize, you may need to report this information annually.

To qualify for residency in Belize, an individual must be present in the country for 183 days or more during a calendar year. Additionally, to apply for residency, one must have lived in the country for at least a year and not have left the country for more than 14 consecutive days during the past tax year.

Belize has a flat VAT rate of 12.5% on goods and services. Additionally, there is a 12.5% property tax on rented properties and a 2% property tax on vacant properties. Self-employed individuals in Belize must declare a weekly estimated income for Social Security tax, which is calculated at a 7% rate.

Belize does not have a tax treaty with the US. As such, US residents must still report their earnings to the IRS, even if their company does business solely in Belize. However, US residents can claim the Foreign Income Tax Exclusion to shield up to $108,700 of offshore earned income.

Frequently asked questions