Belize Budget Proposes Increase In Business Taxes

by Leroy Baker, Tax-News.com, New York

19 January 2005

Prime Minister of Belize Said Musa has proposed a number of tax increases and business levies in the 2005 budget, as the government seeks to ensure that the tax burden is shouldered by the wealthiest.

“I have been guided by the principle I stated in my New Year’s message: that those who have benefited from the impressive economic growth of the past six years will agree with our policy that the burden of any new taxes should not fall disproportionately on the shoulders of the working poor,” announced Musa as he set the theme for the new tax measures in his 2005/2006 budget speech.

While Musa has rejected the IMF’s recommendation of raising Belize’s general sales tax to 12% from 9%, fearing this would adversely impact ordinary Belizeans, he announced that sales tax on luxury items will be raised to 14% and expanded to cover items such as private luxury boats.

The Prime Minister and Finance Minister also detailed a series of increases in levies on businesses, summarised below:

• Trade and other business taxes that are presently at 0.75%, 1.25% and 1.5%, to 1.75 %, except for radio, television and newspapers, for which there will be no tax increase.
• Business tax on professionals, from 4% to 6%.
• Business tax on banks under the Banks and Financial Institutions Act, from 10% to 15%.
• Business tax on Banks in PIC groups of companies to 8%
• Business tax on real estate agents from 4% to 15% on their commissions.
• Business tax on gross casino earnings from 4% to 15%.

However, in an attempt to protect small and medium enterprises, the government has proposed to raise the threshold for businesses taxable under business tax from $54,000 to $75,000, with firms earning revenues below the new threshold exempt from business tax.

Musa also proposed an increase in the environmental tax from 1% to 3%, in addition to a rise in the environment tax on vehicles over 4 cylinders to 5% to curb the use of vehicles with high rates of fuel consumption.

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