Corozal’s Commercial Free Zone is under the management of the Commercial Free Zone Management Agency (CFZMA) and is headed by the Chief Executive Officer under a Board of Directors within the Zone. The Commercial Free Zone (CFZ) was established under the Corozal Commercial Free Zone Act of 1994 and was in place by 1997. The FZA is the most modern laws governing Free Zones in Belize. Business entrepreneurs are offered insane tax free business opportunities. Businesses there are free of foreign exchange restrictions and benefits such as duty exemptions and tax holidays.
Goods imported or exported are exempt from any duties, quotas, stamp duties and revenue replacement duties. Income tax on Commercial Free Zone businesses is usually charged between 2% and 8%. Businessmen’s rates can be reduced up to 2% through tax credits by employing Belizean workers. The Zone provides a variety of facilities for activities such as manufacturing, processing, warehousing, packaging and distribution of goods and services. This allows the businessmen today to manufacture, import, export, distribute fuel, and to offer retail or wholesales to Mexico and many other international clients.
By doing so, they are also offered access to dock ships at ports in Belize and direct export by sea, air, land and entry into national customs territory. Today the Zone under gone vast improvement since then and continues to do. What started out first as a private sector with a great struggle to attract investors began to pay off due to the involvement of the few businessmen’s determination and dedication. First there were a few companies that only imported and exported their merchandise, then one or two retail stores, and then there was the addition of a SHELL gasoline station.
This then offered the Mexicans an economical and better quality fuel than Mexico’s state-run fuel company PEMEX offered. Mexicans then began to invest in the Zone and brought with them numerous stores which offered investors and consumers everything from a more active store location to batteries. Benefits that Foreign Investors Receive from CFZ The following is an extended list of benefits that Investors receive: 1. no restrictions on foreign exchange out of or within a CFZ, including the sale of foreign currency or the transfer of foreign exchange; 2. no
Government charges and taxes on foreign currency use within a CFZ; 3. all merchandise, articles and goods that enter a CFZ for commercial purposes are exempt from import duties, revenue replacement and stamp duties; 4. all fuel and goods, including buildings materials, equipment, furniture, supplies, etc. , needed for the functioning of a CFZ business are exempt from all duties and taxes; 5. A Social fee of 1. 5% is charged on all goods and services imported into the CFZ, except for fuel (on fuel it makes 10%); 6. no quotas for imports and exports; 7. t is possible to open an account in any currency with a duly registered bank of CFZ business choice located in the CFZ; 8. no import or export license is required for imports or exports; 9. imports and exports are exempt from all custom duties, consumption and excise taxes, and export duties; 10. During the first 5-year period of business functioning in a CFZ, it is exempt from income tax, or capital gains tax, or any new corporate tax levied by the Government of Belize; any dividends paid by this business are exempt from tax for the first 20-year period of its operation; 11.
The loss incurred over the 5years' tax holiday by a CFZ business may be carried forward and deducted against profits in the 3 years after the tax holiday period; 12. Any proceeds from the sale of stock or other ownership interest in a CFZ business are exempt from the above-mentioned tax. Employment, Government Revenue, CFZ Current State of Being and Effects on the Belizean Economy Employment The main industry in Northern Belize that provides over six thousand families with income is the sugar industry.
The other main industry which does so is CFZ. By 2003 there were over 400 businesses. Now there are about 700 which are offering employment to over 3000 Belizeans. Government Revenue 1. In 2004, CFZ brought in $274 million in economic activity annually of which the Government charged income tax as the five year mark had passed in 2002. 2. CFZ Christmas sales were approximately 50 percent lower than 2004 in 2008 CFZ Current State of Being Investors are losing confidence in the Belizean economy as: 1. There is less economic activity in the zone.
This has left investors who have built million dollar shopping plazas unable to meet financial commitment. As a result, half of the facilities have now become vacant. 2. The Chetumal Chamber of Commerce consistently pressures the Mexican Federal government to hinder Mexicans from purchasing at CFZ. 3. Before the Belize Bank and Atlantic Bank have been depositing pesos from the Free Zone in banks in Chetumal. Now Mexican banks are refusing to accept pesos deposited at CFZ due to money laundering concerns. Investors are then forced to keep large sums of pesos which posses the risk of theft.
As a result the risk of excess pesos forcing the Market is eminent causing investors to sell excess pesos to local currency dealers at a loss due to Mexico’s unstable exchange rate. 4. The Central Bank has lost its account with HSBC (an international bank which used to process the millions of US dollars in cash) this is due to US anti-money-laundering banking regulations. There are periods when commercial banks in CFZ have not been freely taking the US dollars for the past three weeks. As a result, there have been several U. S. dollar freezes at CFZ in 2002, 2009, 2010.
This is a very serious matter as it posses a possible treat to place CFZ activities on halt permanently if no resolution is provided. Hence anywhere up to over 17 million US dollars would be left to sits in a vault in Belize unprocessed. Effects on the Belizean Economy Consequences: 1. In 2008, Imports also fell by 38. 9 percent to a new low of $114. 5 million due to losses in the global economy . When economic activity fell to 50% in the Christmas of 2008; it caused the Belizean economy to decline. This is due to the fact that the industry is earning less; less income is being gained by the government through income tax.
As a result Commercial activity continues to decline. 2. CFZ income is dependent on foreign currency, especially so US currency. Any change in the U. S economy directly affects us. Also since investors are all foreign, and not local, they can leave at any point in time, and will provided that there is persistent decline in economic activity or U. S Dollar Freezes or whenever financial responsibilities cannot be meet. 3. As a result of businesses closing their shutters permanently thousands of Belizeans are left unemployed. 4. Belizean economy then continues to decline.