Wednesday, June 19, 2024

Bill Amendments aimed to standardize offshore banking regulations pass through the House of Representatives


On Wednesday, December 12th, the House of Representatives passed three bills to standardize offshore banking regulations to meet European Standards. The bills tabled at the sitting included the Income and Business tax Amendment Bill, the International Business Companies Amendment Bill and the Stamp Duties Amendment Bill.
In the past couple of years, banks in Belize have encountered several issues when dealing with offshore counterparts. These issues went as far as blacklisting threats by the European Union (EU) and the Organization of Economic Co-operation and Development (OECD) if tax standards were not brought up to par to show transparency and accountability. The Government of Belize was given until the end of December 2018 to make the necessary law adjustment.
“The reason for the rush is that this is a consequence of the pressures that have been brought to bear on our jurisdiction by the industrialized countries, and in this case, by the EU, and by OECD. In its analysis of information on areas of tax transparency, fair taxation and implementation of anti-base erosion and profit sharing measures, the so-called ‘Code of Conduct group’, which is really an agency of the aforementioned OECD/EU axis, that group found that Belize’s Export Processing Zone and our International Business Companies Regimes are both considered to be carrying out harmful tax practices,” said Prime Minister Dean Barrow in his address at the House Sitting. “We don’t have much of a choice. The blacklisting with which we are threatened is not just a matter of imposing punitive measures concerning our exports to Europe and in various other ways. As the Central Bank tells us, that blacklisting if it were to happen, will make correspondent banking relations or continued correspondent banking relations difficult, if not impossible.”
Additionally, the International Business Companies Amendment Bill will see the equalizing of tax charged to national and foreign companies. “The amendment will be correcting the ring-fencing elements of our International Business Companies regime by eliminating the discrimination between domestic taxpayers and nonresidents, which leads to distortions in economic behavior. For example [the amendment will be] extending the International Business Companies regime to Belize residents and permit the ownership of International Business Companies by Belizeans, remove the restrictions that an International Business Company cannot carry on a business with Belize residence, and subjecting this income to Belize taxation, allowing the Belize International Business Companies to purchase and own land.”
Regarding the Stamp Duties Amendment Bill, Barrow further explained: “What it does, is to make clear that if an International Business Company does not have a physical presence in Belize, does not own property here, stamp duties will not apply to them.” The Stamp Duties Act was previously amended on November 1, 2017, when GOB increased the stamp duty transfer tax to 8% on all foreign purchased properties on a value of land more than $20,000BZ.
While the opposition was hesitant to pass the bills, since they had yet to r view it, the bills passed rather smoothly and will now be forwarded to the Senate for the final phase of approval.

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