Investors and account holders from around the world gravitate toward offshore financial institutions for a number of reasons.
Not only can offshore banks offer potentially lower overhead fees due to a lower cost of living, they can provide diversification for your portfolio, offer numerous foreign currencies and offer significant reductions on personal and corporate tax.
While there are plenty of offshore destinations to choose from, Belize stands out as one of the most sought after tax-neutral countries on the planet.
What is Tax Neutrality?
When an offshore location is called tax neutral, it means that it is possible to minimize exposure to taxes within the country. It doesn't necessarily mean that the country is entirely free from taxes altogether, but that can certainly be true for some foreign investors and international corporations.
Companies and individuals who are paying high capital gains taxes, or those who are worried that estate taxes will reduce the size of their holdings in the future, choose tax neutrality for its obvious financial benefits.
Belize's Taxation System
Belize has been called the last great tax haven on Earth for a number of different reasons. First, and perhaps most importantly, Belize has absolutely no capital gains taxes. Compared to the United States, where capital gains hovers around 15 percent, that offers a huge financial perk. Over the last 20 years, it has also been possible to become an IBC, or International Business Corporation, in Belize.
These businesses are exempt from taxes, and there are no fees for transferring assets into the corporation. Even if you pay yourself dividends from the company, you won't be required to pay taxes on the income.
The only taxes that are a consideration within the country include minor property taxes for full-time residents and income tax for residents. However, only those who reside in Belize for at least 183 days each qualify as residents, and the first $10,000 earned are exempt altogether anyway.
Trusts and Funds in Belize
Another reason that Belize is such a sought-after jurisdiction has to do with the ease of setting up trusts and funds in the country. Rather than paying substantial taxes on assets kept in their home countries, savvy investors are deciding to securely keep these assets in a trust offshore.
This is a great way to protect all types of valuable stocks, bonds and liquid assets, and it is a popular way to begin estate planning in order to financially care for loved ones and dependents in the future without the burden of heavy taxes.
Additional Perks of Banking and Investing in Belize
Along with the substantial tax benefits, many investors and account holders choose Belize for its affordable banking fees. Since the cost of living in Belize is much lower than in many other banking destinations around the world, application fees, maintenance costs and more are all far less expensive.
In addition, the country boasts a lack of government intervention into personal finances, political and banking stability and English as an official language.
Low or nonexistent taxes and a favorable climate for corporations make Belize one of the top banking destinations in the world.