05 Sep Interview with Reynaldo Magana, Finance Belize
Can you explain the Financial Services Commission’s (FSC) development over the last two years and how do you see its impact on strengthening the health of the local market?
In 2017, Belize lacked a significant international financial services market. We faced numerous challenges and actively changed our tax regime and company laws to comply with Organisation for Economic Co-operation and Development, EU and Financial Action Task Force conventions. We aligned our tax and anti-money laundering laws with these conventions to avoid blacklists, which could severely impact our socio-economic development plans. These changes strengthened Belize’s reputation as transparent and compliant, building the country’s standing internationally. Concurrently, the FSC played a crucial role in shaping the regulatory landscape for international financial services. The FSC actively engaged in negotiations with external agencies to avoid blacklisting and strengthened key roles by hiring professional staff and revamping laws and regulations. These actions positioned the FSC as a premier regulatory agency trusted by the international community.
What are some of the biggest takeaways that you can share with our readers that you have picked up as a result of these reforms?
Belize actively enhanced its financial services regulatory framework, aligning with international standards to avoid blacklisting and improve its global reputation and is making significant legal and technological advancements, such as merging company acts and implementing an online business registry system, making the country more competitive in the global financial market. The government’s positive stance towards investment, evidenced by revamped fiscal incentives and the establishment of Finance Belize, is expected to attract more investors, especially in the financial services sector. Debt-for-nature swaps have positively impacted our economy by reducing the debt-to-GDP ratio, improving our international image and economic indicators.
Other small economies can learn from Belize’s approach to innovation, research and calculated risk-taking in improving business climates. We have simplified the tax process for American investors, making it more attractive for them to invest in the country and we are committed to becoming a premier financial hub by ensuring transparent, secure and compliant financial services.
What are some of the key services that it provides to investors, how does it aim to simplify investor journeys?
We made Belize more competitive by amending several key laws and regulations. We merged the IBC Act and Companies Act into a new Business Companies Act, introducing modern features simplifying the formation of various corporate vehicles. Additionally, we implemented an online business registry system in 2022. This system enhances our competitiveness by automating previously manual processes, allowing for secure, 24-hour access to documents at significantly lower costs than other jurisdictions. Furthermore, we implemented laws dealing with electronic transactions, including legally enforceable electronic signatures. We also established digital and data protection laws, for improving Belize’s global business profile. The new securities industry law, rolled out in 2022, promises to increase investment opportunities for Small Medium Enterprises (SMEs) and expand financial services offerings for professionals in Belize. These combined actions improve investor perception, enhance Belize’s reputation and demonstrate our commitment to compliance, transparency and safeguarding investments.
Belize held its second Investment Summit in 2023 where the government welcomed investors worldwide. What are some of the strengths in current government policy towards investment incentives and how are you working alongside the government to adopt the right policies?
At the Investment Summit, I observed significant interest in Belize. The government’s positive stance toward incentivizing investments is evident in its efforts to revamp fiscal incentive laws and expand designated processing areas, particularly benefiting Business Process Outsourcing (BPOs’). The government’s alignment of its tax regime with international standards is a step forward in attracting investments. Additionally, the government’s approval of Finance Belize as a marketing and promotion arm for the financial services industry is a positive move to diversify the economy. With the new securities and industry laws, I anticipate more SMEs will start up and leverage these opportunities to raise capital and carry out their business plans.
How have Belize’s debt-for-nature swaps impacted the country’s overall economy?
The debt-for-nature swaps significantly reduced Belize’s debt-to-GDP ratio to below 100 percent, sending a positive signal to the international community about our commitment to innovation and positive change. This improvement in our international image and economic indicators helps us secure the necessary funding for future growth. While I am not an expert in the carbon and digital assets market, I understand that the government will consider developing laws and regulations to foster growth in these areas in the near future.
What can similar markets in other countries learn from Belize’s successful implementation of this groundbreaking initiative?
For a small country like Belize, this initiative has significantly enhanced our image as a jurisdiction open to business and innovation. According to rankings by the Inter-American Development Bank, these actions improved our standing as a business-friendly country. Similar economies can learn from our experience by embracing innovation, conducting thorough research and being willing to take calculated risks.
What opportunities exist for American investment in the local financial services and investment space? What type of partnerships is Belize looking for in your industry?
American investors previously faced taxation challenges regarding the repatriation of capital and dividend payments due to high withholding taxes and complex tax credit application processes. However, we introduced a unique holding company regime allowing American investors to receive dividends in a low and tax-efficient manner, with taxation occurring solely in their home country. This change simplifies the process of paying dividends to U.S. entities and offers a tax advantage to American investors.
What would be your final message to the readers of Newsweek?
Belize is actively working towards becoming a highly respected and reputable financial services jurisdiction. The various changes to our laws and regulations over the years are focused on improving tax fairness, transparency and strengthening our regulatory framework, particularly in anti-money laundering. There is a clear plan to innovate and develop new products and services, ensuring investments in Belize remain safe and secure. Our regulatory frameworks are designed to prevent bad actors from entering the market. Finally, Belize is open for business and we are committed to becoming a premier financial hub.
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