Declaration

It is hereby declaredSchedule. (a) that the arrangements specified in the arrangement set out in the Schedule to this Order have been made with Her Majesty’s Government in the United Kingdom with a view to affording relief from double taxation in relation to income tax and any tax of similar character imposed by the laws of the United Kingdom; and (b) that it is expedient that these arrangements should have effect. 26 Income and Business Tax SCHEDULE (Order 2) ARRANGEMENT BETWEEN HER MAJESTY’S GOVERNMENT IN THE UNITED KINGDOM AND THE GOVERNMENT OF BELIZE FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME. 1.–(1) The taxes which are the subject of this Arrangement are– (a) In the United KingdomThe income tax (including surtax) and the profits tax (hereinafter referred to as “United Kingdom tax”). (b) In BelizeThe income tax (including surtax) (hereinafter referred to as “Belize tax”). (2) This Arrangement shall also apply to any other taxes of a substantially similar character imposed in the United Kingdom or Belize after this Arrangement has come into force. 2.–(1) In this Arrangement, unless the context otherwise requires– (a) The term “United Kingdom” means Great Britain and Northern Ireland, excluding the Channel Islands and the Isle of Man; (b) The terms “one of the territories” and “the other territory” mean the United Kingdom or Belize, as the context requires; Income and Business Tax 27 (c) The term “tax” means United Kingdom tax or Belize tax, as the context requires; (d) The term “person” includes any body of persons, corporate or not corporate; (e) The term “company” includes any body corporate; (f) The terms “resident of the United Kingdom” and “resident of Belize” mean respectively any person who is resident in the United Kingdom for the purposes of United Kingdom tax and not resident in Belize for the purposes of Belize tax and any person who is resident in Belize for the purpose of Belize tax and not resident in the United Kingdom for the purposes of United Kingdom tax; and a company shall be regarded as resident in the United Kingdom if its business is managed and controlled in the United Kingdom and as resident in Belize if its business is managed and controlled in Belize; (g) The terms “resident of one of the territories” and “resident of the other territory” mean a person who is a resident of the United Kingdom or a person who is resident of Belize, as the context requires; (h) The terms “United Kingdom enterprise” and “Belize enterprise” mean respectively an industrial or commercial enterprise or undertaking carried on by a resident of the United Kingdom and an industrial or commercial enterprise or undertaking carried on by a resident of Belize; and the terms “enterprise of one of the territories” and “enterprise of the other territory” mean a 28 Income and Business Tax United Kingdom enterprise or a Belize enterprise, as the context requires; (i) The term “industrial or commercial profits” include rentals in respect of cinematograph films; (j) The term “permanent establishment” when used with respect to an enterprise of one of the territories, means a branch, management or other fixed place of business, but does not include an agency unless the agent has, and habitually exercises, a general authority to negotiate and conclude contracts on behalf of such enterprise or has a stock of merchandise from which he regularly fills orders on its behalf. (2) An enterprise of one of the territories shall not be deemed to have a permanent establishment in the other territory merely because it carried on business dealings in that other territory through a bona fide broker or general commission agent acting in the ordinary course of his business as such. (3) The fact that an enterprise of one of the territories maintains in the other territory a fixed place of business exclusively for the purchase of goods or merchandise shall not of itself constitute that fixed place of business a permanent establishment of the enterprise. (4) Where under this Arrangement any income is exempt from tax in one of the territories (with or without other conditions) it is subject to tax in the other territory, and that income is subject to tax in that other territory by reference to the amount thereof which is remitted to or received in that other territory, the exemption to be allowed under this Arrangement in the first-mentioned territory shall apply only to the amount so remitted or received. Income and Business Tax 29 (5) In the application of the provisions of this Arrangement by the United Kingdom or Belize, any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the laws of the United Kingdom, or, as the case may be, Belize, relating to the taxes which are the subject of this Arrangement. 3.–(1) The industrial or commercial profits of a United Kingdom enterprise shall not be subject to Belize tax unless the enterprise is engaged in trade or business in Belize through a permanent establishment situated therein. If it is so engaged, tax may be imposed on those profits by Belize but only on so much of them as is attributable to that permanent establishment. (2) The industrial or commercial profits of a Belize enterprise shall not be subject to United Kingdom tax unless the enterprise is engaged in trade or business in the United Kingdom through a permanent establishment situated therein. If it is so engaged, tax may be imposed on those profits by the United Kingdom, but only on so much of them as is attributable to that permanent establishment. (3) Where an enterprise of one of the territories is engaged in trade or business in the other territory through a permanent establishment situated therein, there shall be attributed to that permanent establishment the industrial or commercial profits which it might be expected to derive from its activities in that other territory if it were an independent enterprise engaged in the same or similar activities under the same or similar conditions and dealing at arm’s length with the enterprise of which it is a permanent establishment. (4) No portion of any profits arising from the sale of goods or merchandise by an enterprise of one of the territories shall be attributed to a permanent establishment situated in the other territory by reason of the mere purchase of the goods or merchandise within that other territory. 4. Where30 Income and Business Tax (a) an enterprise of one of the territories participated directly or indirectly in the management, control or capital of an enterprise of the other territory; or (b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the territories and an enterprise of the other territory; and (c) in either case conditions are made or imposed between the two enterprises, in their commercial or financial relations, which differ from those which would be made between independent enterprises, then any profits which would but for those conditions have accrued to one of the enterprises but by reason of those conditions have not so accrued may be included in the profits of that enterprise and taxed accordingly. 5. Notwithstanding the provisions of paragraph 3 and 4, profits which a resident of one of the territories derives from operating ships or aircraft shall be exempt from tax in the other territory. 6.–(1) (a) Dividends paid by a company which is a resident of the United Kingdom to a resident of Belize may be taxed in Belize; (b) Where a resident of Belize is entitled to a tax credit in respect of such a dividend under sub- paragraph (2) of this paragraph tax may also be charged in the United Kingdom, and according to the laws of the United Kingdom, on the aggregate of the amount or value of the dividend and the amount of that tax credit at a rate not exceeding 15 per cent; Income and Business Tax 31 (c) Except as aforesaid, dividend paid by a company which is a resident of the United Kingdom to a resident of Belize who is subject to tax in Belize on them shall be exempt from any tax in the United Kingdom which is chargeable on dividends. (2) A resident of Belize who receives dividends from a company which is a resident of the United Kingdom shall, subject to the provisions of paragraph (3) of this Order and provided he is subject to tax in Belize on those dividends, be entitled to the tax credit in respect thereof to which an individual resident in the United Kingdom would have been entitled had he received those dividends, and to the payment of any excess of that tax credit over his liability to the United Kingdom tax. (3) Paragraph (2) of this Order shall not apply where the recipient of the dividend is a company which, either alone or together with one or more associated companies, controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend. For the purposes of this paragraph two companies shall be deemed to be associated if one is controlled directly or indirectly by the other, or both are controlled directly or indirectly by a third company. (4) Dividends paid by a company which is a resident of Belize to a resident of the United Kingdom who is subject to tax in the United Kingdom in respect thereof shall be exempt from any tax in Belize which is chargeable on dividends in addition to the tax chargeable in respect of the profits or income of the company. (5) The term “dividends” as used in this paragraph means income from shares, or any other item which, under the law of the territory of which the company paying the dividend is a resident, is treated as a dividend or distribution of the company. (6) If the recipient of a dividend is a company which owns 10 per cent or more of the class of shares in respect of which the 32 Income and Business Tax dividend is paid then paragraphs (1) and (2) or, as the case may be, paragraph (4) of this Order shall not apply to the dividend to the extent that it can have been paid only out of profits which the company paying the dividend earned or other income which it received in a period ending twelve months or more before the relevant date. For the purposes of this paragraph the term “relevant date” means the date on which the beneficial owner of the dividend became the owner of 10 per cent or more of the class of shares in question; provided that this paragraph shall not apply if the beneficial owner of the dividend shows that the shares were acquired for bona fide commercial reasons and not primarily for the purpose of securing the benefit of this paragraph. (7) The provisions of paragraphs (1) and (2) or, as the case may be, paragraph (4) of this Order shall not apply where a resident of one of the territories has in the other territory a permanent establishment and the holding by virtue of which the dividends are paid is effectively connected with a business carried on through that permanent establishment. In such a case the provisions of paragraph 3 shall apply. (8) Where a company which is a resident of one of the territories derives profits or income from sources within the other territory, the Government of that other territory shall not impose any form of taxation on dividends paid by the company to persons not resident in that other territory, or any tax in the nature of an undistributed profits tax on undistributed profits of the company, by reason of the fact that those dividends or undistributed profits represent, in whole or in part, profits or income so derived. 7.–(1) Any royalty derived from sources within one of the territories by a resident of the other territory who is subject to tax in that other territory in respect thereof and is not engaged in trade or business in the first-mentioned territory through a permanent establishment situated therein, shall be exempt from tax in that first-mentioned territory; but no exemption shall be Income and Business Tax 33 allowed under this paragraph in respect of so much of any royalty as exceeds an amount which represents a fair and reasonable consideration for the rights for which the royalty is paid. (2) In this paragraph the term “royalty” means any royalty or other amount paid as consideration for the use of, or for the privilege of using, any copyright, patent, design, secret process or formula, trademark, or other like property, but does not include a royalty or other amount paid in respect of the operation of a mine or quarry or of other extraction of natural resources. 8.–(1) Remuneration, including pensions, paid by the Government of one of the territories to any individual for services rendered to that Government in the discharge of governmental functions shall be exempt from tax in the other territory if the individual is not ordinarily resident in that territory or (where the remuneration is not a pension) is ordinarily resident in that other territory solely for the purpose of rendering those services. (2) The provisions of this Order shall not apply to payments in respect of services rendered in connection with any trade or business carried on by either of the Governments for the purposes of profit. 9.–(1) An individual who is a resident of the United Kingdom shall be exempt from Belize tax on profits or remuneration in respect of personal (including professional) services performed within Belize in any year of assessment if– (a) he is present within Belize for a period or periods not exceeding in the aggregate 183 days during that year; and (b) the services are performed for or on behalf of a person resident in the United Kingdom; and 34 Income and Business Tax (c) the profits or remuneration are subject to United Kingdom tax. (2) An individual who is a resident of Belize shall be exempt from United Kingdom tax on profits or remuneration in respect of personal (including professional) services performed within the United Kingdom in any year of assessment if– (a) he is present within the United Kingdom for a period or periods not exceeding in the aggregate 183 days during that year; and (b) the services are performed for or on behalf of a person resident in Belize; and (c) the profits or remuneration are subject to Belize tax. (3) The term “annuity” means a stated sum payable periodically at stated times, during life or during a specified or ascertainable period of time, under an obligation to make the payments in consideration of money paid. 11. The remuneration derived by a professor or teacher who is ordinarily resident in one of the territories, for teaching, during a period of temporary residence not exceeding two years, at a university, college, school or other educational institution in the other territory, shall be exempt from tax in that other territory. 12. A student or business apprentice from one of the territories who is receiving full-time education or training in the other territory shall be exempt from tax in that other territory on payments made to him by persons in the first-mentioned territory for the purposes of his maintenance, education or training. 13.–(1) Subject to the provisions of the law of the United Kingdom regarding the allowances as a credit against United Income and Business Tax 35 Kingdom tax of tax payable in a territory outside the United Kingdom (which shall not affect the general principle hereof)– (a) Belize tax payable under the laws of Belize, and in accordance with this Arrangement whether directly or by deduction, on profits or income from sources within Belize shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits or income by reference to which the Belize tax is computed, provided that in the case of a dividend the credit shall only take into account such tax in respect thereof as is additional to any tax payable by the company on the profits out of which the dividend is paid and is ultimately borne by the recipient without reference to any tax so payable; (b) where a company which is resident of Belize pays a dividend to a company resident in the United Kingdom which controls directly or indirectly at least 10 per cent of the voting power in the first mentioned company, the credit shall take into account (in addition to any Belize tax for which credit may be allowed under sub paragraph(a) of this paragraph) the Belize tax payable by that first mentioned company in respect of the profits out of which such dividend is paid. (1A) For the purposes of paragraph (1) of this Order, the term “Belize tax payable” shall be deemed to include any amount which would have been payable as Belize tax for any year but for an exemption or reduction of tax granted for that year or any part thereof under– (a) the provisions of the [Development Incentives Act,] so far as it was in force on, and has not been modified since, the date when this 36 Income and Business Tax Supplementary Arrangement came into force, or has been modified only in minor respects so as not to affect its general character; or (b) any other provision which may subsequently be made granting exemption or reduction of tax which is agreed by the taxation authorities of the United Kingdom and Belize to be of substantially similar character if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character. (2) Subject to the provisions of the law of Belize regarding the allowance as a credit against Belize tax or tax payable in a territory outside Belize (which shall not affect the general principle hereof)– (a) United Kingdom tax payable under the laws of the United Kingdom and in accordance with this Arrangement, whether directly or by deduction, on profits or income from sources within the United Kingdom shall be allowed as a credit against any Belize tax computed by reference to the same profits or income by reference to which the United Kingdom tax is computed, provided that in the case of a dividend the credit shall only take into account such tax in respect thereof as is additional to any tax payable by the company on the profits out of which the dividend is paid and is ultimately borne by the recipient without reference to any tax payable; (b) where a company which is a resident of the United Kingdom pays a dividend to a company resident in Belize which controls directly or indirectly at least 10 per cent of the voting power in the first mentioned company, Income and Business Tax 37 the credit shall take into account (in addition to any United Kingdom tax for which credit may be allowed under sub paragraph (a) of this Order) the United Kingdom tax payable by that first mentioned company in respect of the profits out of which such dividend is paid. (3) For the purposes of this paragraph profits of remuneration for personal 9 including professional) services performed in one of the territories shall be deemed to be income from sources within that territory, and the services of an individual whose services are wholly or mainly performed in ships or aircraft operated by a resident of one of the territories shall be deemed to be performed in that territory. (4) Where Belize income tax is payable for a year for which this Arrangement has effect in respect of any income in respect of which United Kingdom income tax is payable for a year prior to the year beginning on the 6th April, 1947, then– (a) in the case of a person resident in Belize, the Belize tax shall, for the purposes of Order (2) of this Order, be deemed to be reduced by the amount of any relief allowable in respect thereof under the provisions of section 27 of the [United Kingdom Finance Act, 1920]; and (b) in the case of a person resident in the United Kingdom, the provisions of section 47 of the Belize Income Tax Act shall apply for the purposes of the allowance of relief from the Belize tax. 14.–(1) The taxation authorities of the United Kingdom and Belize shall exchange such information (being information available under their respective taxation laws) as is necessary for carrying out the provisions of this Arrangement or for the prevention of fraud or the administration of statutory provisions against legal avoidance in relation to the taxes which are the 38 Income and Business Tax subject of this Arrangement. Any information so exchanged shall be treated as secret and shall not be disclosed to any persons other than those concerned with the assessment and collection of the taxes which are the subject of this Arrangement. No information shall be exchanged which would disclose any trade secret or trade process. (2) As used in this Order, the term “taxation authorities” means the Commissioners of Inland Revenue or their authorised representative in the case of the United Kingdom and the of Income Tax or their authorised representative in the case of Belize. 15. This Arrangement shall come into force on the date on which the last of all such things shall have been done in the United Kingdom and Belize as are necessary to give the Arrangement the force of law in the United Kingdom and Belize respectively, and shall thereupon have effect– (a) in the United Kingdom, as respects income tax for the year of assessment beginning on the 6th day of April, 1947, and subsequent years; as respects surtax for the year of assessment beginning on the 6th day of April, 1946 and subsequent years; and as respects profits tax for any chargeable accounting period beginning on or after the first day of January, 1946, and for the unexpired portion of any chargeable accounting period current at that date; (b) in Belize, as respects income tax (including surtax) for the year of assessment beginning on the first day of January, 1947, and subsequent years. 16. This Arrangement shall continue in effect indefinitely but either of the Governments may, on or before the 30th day of June Income and Business Tax 39 in any calendar year after the year 1948, give notice of termination to the other Government and, in such event, this Arrangement shall cease to be effective– (a) in the United Kingdom as respects income tax for any year of assessment beginning on or after the 6th day of April in the calendar year next following that in which such notice is given; as respects surtax for any year of assessment beginning on or after the 6th day of April in the calendar year in which notice is given; and as respects profits tax for any chargeable accounting period beginning on or after the first day of January in the calendar year next following that in which such notice is given and for the unexpired portion of any chargeable accounting period current at that date; (b) in Belize, as respects income tax (including surtax) for any year of assessment beginning on or after the first day of January in the calendar year next following that in which such notice is given.