Belize Considering Ending Income Tax

The government of Belize is considering the possibility of eliminating income tax as a means of attracting foreign investment.

This announcement follows the government’s recent decision to raise the income tax exemption threshold from BZ$20,000 (US$9,500) to BZ$29,000 (US$14,389).

As a result, more than 3,500 Belizeans will collectively save approximately BZ$3.3 million (US$1.6 million) in annual tax payments, which represents a significant amount for a nation with a population of just over 500,000.

“Our long-term plan is to eventually phase out PAYE (Pay As You Earn or income tax),” Prime Minister John Briceño said in an interview with local news outlet Channel15. “How quickly we achieve this depends on the growth of the economy and revenue,” he added.

The Prime Minister also noted that the reform was overdue, pointing out that the last update to Belize’s income tax system occurred in 2009. Under the current changes, anyone earning less than $29,000 annually will be exempt from paying income tax.

These changes were driven by complaints from workers in the tourism sector, who found themselves pushed into higher tax brackets after small monthly pay increases of around BZ$100.

The reform addresses this issue, known as “bracket creep,” which occurs when salary increases unintentionally result in reduced net pay due to higher tax rates.

Analysts suggest that fully eliminating income tax could position Belize as a tax haven. The country is already making efforts to attract offshore businesses through its International Business Companies Act.

Moreover, Belize’s strict confidentiality laws, which prevent the sharing of financial information with international tax authorities, offer additional privacy for corporations and individuals.