WORLD TRADE
ORGANIZATIONG/SCM/N/95/BLZ
G/SCM/N/99/BLZ
3 July 2003
(03-3571)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
New and Full Notification Pursuant to Article XVI:1
of the GATT 1994 and Article 25 of the SCM Agreement
Extension Under SCM Article 27.4 of the Transition Period for the
Elimination of Export Subsidies Pursuant to the Procedures
in Document G/SCM/39
BELIZE
The following communication, dated 27 June 2003, has been received from the Permanent
Mission of Belize.
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The Government of Belize hereby submits its request and updating notification and request
related to the extension of the programmes currently in operation within the context of Article 27.4
and pursuant to Article 25.
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This is Belize’s request for extension and updating notification with respect to the operation
of the programmes for which Belize was granted an extension to 31 December 2003, pursuant to the
procedures under Article 27.4 and as set out in G/ SCM/39.  The programmes for which extensions are
sought include:
Page
Programme under the Fiscal Incentives Act .......................................................................................2
Programme under the Export Processing Zone Act ...........................................................................3
Programme under the Commercial Free Zone Act ............................................................................6
Please note that the Conditional Duty Exemption Facility was discontinued in 2002, and
elements of it have been incorporated into the Fi scal Incentives Act under new provisions for Small
and Medium Enterprises.  A copy of the releva nt amending legislation is provided herewith.
This request is necessary in light of Belize’s economic, financial and development needs.G/SCM/N/95/BLZ
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Detailed Update on Subsidies Notification
This notification is in respect of the investme nt incentives programmes being maintained by
Belize, and in respect of which an approval of extension was adopted on 22 December 2002 pursuantto Article 27.4, pursuant to Article 25 of the SCM Agreement and paragraph 10.6 of the Doha
Ministerial Decision on Implementation-Related Issues.
Updates on the programmes are presented in Sections A-D below.
Section A:  The Fiscal Incentives Programme
1. Description of the programme
The Fiscal Incentives Programme is a measure designed to encourage economic development
in all its aspects through investments in the production of goods and services, both for domestic
consumption and export.  The programme provides for the grant of fiscal incentives to investors,foreign and local, in the form of full or partial exem ptions from import duties and internal taxes.  The
programme is now being administered by the Be lize Trade and Investment Development Services
(BELTRAIDE), under the Fiscal Incentives Act.
In 2002, the Fiscal Incentives Act was amended to extend the benefits of the programme to
small and micro enterprises established or establishing in Belize.  The amendment should be
understood as in incorporation of the benefits previously available under the Conditional Duty
Exemption Programme into the Fiscal Incentives Programme.  The changes referred to are indicated
in the attached copy of Statutory Instrument (SI) No. 45 of 2002; Fiscal Incentives (Amendment)
Act 2002, which is presented as Attachment I to this notification.
It should be noted that no tax holidays are available to small and medium enterprises under
S.I. No. 45 of 2002.  Other enterprises (those w ith investments of BZ$300,000 or greater) may still
qualify for tax holidays under the previous provisions, which were not affected by the amendment.
Note also that import duty exemptions are granted to small and micro enterprises for a period
of two years, with the possibility of an extension for a total maximum of five years.
2. Period covered by the notification
2002 – 2003.
3. Policy objective and/or purpose of subsidy
The main objective still remains that of attracting foreign direct investments into Belize, and
to mobilize domestic investments, in order to boost the production of goods and services for domestic
consumption and export.
Note that prior to the amendment in 2002, benefits under the Fiscal Incentives Act were
available only to local companies and foreign direct investors engaged or intending to engage in
investments valued at BZ$300,000 and greater.  The other and more recent objective is to extend the
benefits of the programme to small and micro enterprises.  This is intended to correct an imbalancewhere the smaller entrepreneurs are not now being discriminated against in terms of accessing the
fiscal incentives.  The application of most-favoured-nation treatment to this programme will ensure
that both national and foreign direct investments have equal access to these benefits.G/SCM/N/95/BLZ
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4. Background and authority for the subsidy
The programme is being implemented under the Fiscal Incentives Act, Chapter 54 of the
Laws of Belize, Revised Edition 2000.  This Act was revised in 2000 under the Law Revision Act,Chapter 3 of the Laws of Belize, Revised Edition 1980-1990.  A subsequent amendment to the Act
occurred in 2002, under Statutory Instrument No. 45 of 2002, which extended benefits to small and
medium enterprises.  This change was mentioned in the new notification in 2002.
5. Form of the subsidy
The subsidy consists of tax holidays, effected through the grant of full and partial exemptions
from payment of import duties and internal taxes for a specified period.  The relevant internal taxes
are Stamp Duties but do not include the Sales Tax.
6. To whom and how the subsidy is provided
The concessions granted to companies meeting the investment requirement under the Act
prior to the amendment in 2002 (S.I. No. 45 of 2002) are still granted tax exemptions, but in a more
constrained and justifiable manner than previously administered.  Those that would qualify for
benefits under the provisions for small and medium enterprises are expressly denied the right to apply
for tax concessions (Section 21.1 (3) of S.I. No. 45).
7. Subsidy per unit
This level of information is not currently available.  The effort to establish a system and
mechanism for the compilation of such data on a routine basis is still ongoing.
8. Duration of the subsidy
As indicated earlier, these tax holidays are normally granted depending on the nature of the
business but can be for a period of 15 years in the first instance, with the possibility of extension for a
further period not exceeding 10 years.  However, concessions granted under the new provisions for
small and medium enterprises are valid for two years,  subject to extension for a total maximum of five
years.  In the case of agriculture, agro-industry, food-processing, mari-culture or manufacturing and
highly labour intensive operations, and for which production is strictly for exports, the duty
exemption period may be for a maximum of 25 years.
9. Statistical data on impact of the programme
This information is not presently being collected.
Section B:  The Export Processing Zone Programme
1. Description of the programme
The Export Processing Zone (EPZ) programme is an incentive programme designed to attract
investments into manufacturing, non-traditional sector s to build export supply capabilities in light of
the recurrent and widening merchandise trade deficit that Belize is experiencing.  It provides for
production and export of both goods and services.  Subsidies take the form of full exemptions from
import duties and internal taxes.G/SCM/N/95/BLZ
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The programme is being administered under the Ministry of Finance through the Export
Processing Zones Committee (EPZC), which also has oversight for the EPZ programme.  The
Ministry of Investment and Foreign Trade,  mostly through BELTRAIDE, however, handles
applications for the programme.
The new notification in 2002 indicated that “only a couple of EPZs have been designated so
far” and there are still only two full EPZs operating in  Belize.  It should also be made clear that the
programme provides for the designation of “Special EPZs”, which are single-factory operations not
located within any of the two full EPZs mentioned, and which may therefore be located anywhere in
the country.  That position has remained largely unchanged.  The majority of EPZ businesses are in
the services sector.  The total number of EPZ companies operating either within the two designatedzones, or under “Special EPZ” status, is summarized below.
Companies operating under the EPZ programme in Belize
EPZ Status Economic Sector No.
EPZ Zones:
a. Data-Pro EPZ Data-processing 37
b. San Andres EPZ Garments 1
Special EPZs:
a. Shrimp Farming Aquaculture 13
b. Fish (Tilapia) Farming Aquaculture 1
c. Fruit & Vegetable Processing Agro-industry 7
d. Stone tiles and slabs Manufacturing 1
e. Veneer and honey Forestry 1
f. Garments Manufacturing 1
g. Wooden parts for musical instruments Manufacturing 1
h. Hotel and casino Tourism 1
i. Movie production Entertainment 1
2. Period covered by the notification
2002 – 2003.
3. Policy objective and/or purpose of the subsidy
The main objective of the EPZ programme is to attract new investments into the productive
sectors of the national economy, and particularly in the manufacturing sectors, in order to increase the
number of export products and overall export supply capabilities.
All information previously communicated to the WTO Rules Division on this programme
remains valid.
4. Background and authority for the subsidy
As previously indicated, this programme was instituted under the Export Processing Zone Act
of 1990.  The regime was amended in 1994 to make it more attractive to foreign investors.  The
programme is currently being implemented under the Export Processing Zone Act, Chapter 280 of theG/SCM/N/95/BLZ
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Laws of Belize (Revised Edition 2000), which incorporates all amendments made to the regime since
1994.
5. Form of the subsidy
For purposes of the WTO SCM Agreement, the applicable subsidies are exemptions, full or
partial, from payment of import duties and internal taxes.  This remains the case.
The import duty exemption applies to all imports of an EPZ business, including capital
equipment, service and utility vehicles, office furniture, spare parts, raw materials, intermediate goods
and supplies, and fuel.  Note that in practices this facility has been limited to diesel fuel in most casesand to EPZ businesses active in a zone designated as a Special EPZ, and in possession of a valid
Certificate of Compliance.
6. To whom and how the subsidy is provided
The benefits (including subsidies) under the programme are open to EPZ developers and EPZ
businesses, which can be either domestic or foreign investors.  The EPZC establishes the developer
for each EPZ, and such a developer is entitled to all exemptions of import duties, taxes, licenses, etc.
under the programme.  Any private or public party may establish an EPZ business on property it owns
or has leased within the zone, provided it has applied for and been granted a Certificate ofCompliance from the EPZC.  All applications must be made to the EPZC, which is comprised of
representatives from the Ministries responsible for Trade, Labour, Economic Development, and
Finance, along with representatives of the Belize Chamber of Commerce and Industry, the Small
Business Sector, EPZ developers and EPZ businesses, and two representatives with suitable
knowledge and experience from the industrial sector.
All requirements for the granting of the benefits under this programme remain unchanged, as
notified in 2002.
7. Subsidy per unit
This information is not available at this time.  No procedures in place as yet.
8. Duration of subsidy
As indicated earlier, each business is exempted from income tax, withholding tax, capital
gains tax, or any new corporate tax subsequently adopted by the government, for a minimum of thefirst 20 years.  Any dividends paid by an EPZ business are exempted from tax in perpetuity.
With respect to import duties and internal taxes,  these apply for as long as the EPZ business
remains in compliance through a valid Certificat e of Compliance, and is terminated when such
certificate is revoked by the EPZC.
9. Statistical data on the impact of the programme
No statistical data exists at this time.  Th e efforts being made to implement a mechanism to
facilitate future reviews of the operation of this programme continues.G/SCM/N/95/BLZ
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Section C:  Commercial Free Zone Programme
1. Description of the programme
The Commercial Free Zone (CFZ) programme operates under the Commercial Free Zone Act,
Chapter 278 of the Laws of Belize, Revised Edition 2000.  The operation of existing CFZs is being
administered by the Commercial Free Zone Management Agency (CFZMA), and by BELTRAIDE.
The former deals mostly with matters connected with the daily operation of CFZs, of which there is
only one at present.  The latter, a quasi-government agency, deals almost exclusively with
applications for designation of CFZ zones.
Since the last notification, the scope of operations of the CFZ programme has not changed
significantly.  There is only one CFZ, located along Belize’s border with Mexico.  Some interest was
recently expressed by the private sector in opening two new CFZs, along Belize’s western and
southern borders with Guatemala.  The interests re main, but no new zone has been designated so far.
It must be clear that the Corozal Commercial Free Zone (CCFZ) is still not directly involved
in manufacturing.  It is merely engaged in the distribution of goods produced by other WTO
Members.  Most of these goods are distributed to the markets of (southern) Mexico and Belize.  All
imports of goods from the CCFZ are subject to most-favoured-nation (MFN) treatment on entry into
Belize.  This is in conformity with the policy adopted by the Caribbean Community and CommonMarket (CARICOM) that MFN treatment should be applied to all goods produced in, or shipped from,
a free zone.  The accepted definition of “free zone” covers both CFZs and EPZs.  Pending its review,
all CARICOM member States are still observing that Community policy.
The “social fee” introduced in 1999 is still in effect, with a generally applicable tax of 1.5%
on imports of all goods imported into the CCFZ, except fuel, on which the levy is 10%.  No other
restriction (tariff or non-tariff) is applied to CCFZ imports.
Belize again seeks to highlight the important point that to date no manufacturing has occurred
within the country’s only existing CFZ, the Corozal Commercial Free Zone.  There are no “CFZ
goods” being manufactured under that programme.  Therefore, there are no goods produced in the
CFZ to either enter Belize’s domestic market, or to be exported to another WTO Member’s domesticmarket.  The CCFZ is merely engaged in the distribution of goods produced by other WTO Members,
and most of which are directed at the markets of Mexico and Belize.
Belize now seeks to ensure that compliance issues  related directly and specifically to the CFZ
are fairly appraised, and that the rules-based foundations of the relevant WTO requirements arelegally correct and clearly understood.  In this context, a relevant issue is that the transactions taking
place in the CFZ are distribution services.  Services are not covered under the WTO Agreement on
Subsidies and Countervailing Measures.  It is therefore a valid quest to clarify if the CFZ services
programmes would qualify for review and fall under the jurisdiction of the Subsidies Agreement,
which is understood as pertaining mainly to trade in goods.
2. Period covered by the notification
2002 – 2003.
3. Policy objective and/or purpose of the subsidy
The main objectives of the programme were to increase manufacturing and processing
activities to generate new products for export markets, and thereby create employment for BelizeansG/SCM/N/95/BLZ
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in the border regions of Belize, as well as ge nerating new business wealth.  Although there has been
neither manufacturing nor processing in the CCFZ to date, the original objectives still remain.
4. Background and authority for the subsidy
The concept of a commercial free zone originated from interest in border industrialization,
drawing heavily on the USA-Mexico experiences with the “maquiladora” system.
The programme commenced under the legal authority of the Commercial Free Zone Act
1994.  It is now being executed under the Commercial Free Zone Act, Chapter 278 of the Laws of
Belize, Revised Edition 2000.  It was recently amended to accommodate new challenges.
5. Form of the subsidy
The subsidies take the form of full exemption from all import duties and charges, and partial
exemption from internal taxes.
6. To whom and how the subsidy is provided
The benefits under the programme are open to any company legally incorporated under the
Laws of Belize that applies for designation as either a CFZ developer or as a CFZ business.
The access to the duty-free treatment is facilitated by the customs administration.  The tax
benefits are under the authority of the competent authorities responsible for income tax, import duties,
and other taxes.
7. Subsidy per unit
This information is not available, reflecting data collection and analysis constraints.
8. Duration of subsidy
Benefits are still automatic for as long as the beneficiaries continue operating in the CFZ.
9. Statistical data on the impact of the programme
Data are not available.
Section D:  The Conditional Duty Exemption Scheme
This was the programme under which deserving enterprises were being granted exemptions of
import duties.  It was discontinued in 2002, when the Fiscal Incentives Act was amended to providefor benefits (import duty exemption and tax exem ption) to small and micro enterprises.  This
programme no longer exists.  It is therefore presumed that it is no longer relevant to the WTO
Agreement on Subsidies and Countervailing Measures.
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ATTACHMENT I
No. 451                                                            Fiscal Incentives                                                                  397
No. 45 of 2002
I assent,
Governor-General
An ACT to amend the Fiscal Incentives Act, Chapter 54 of the Laws of Belize, Revised Edition 2000,
to provide for a more expeditious procedure for the grant of fiscal incentives to small and medium
enterprises; to provide for matters connected therewith or incidental thereto.
(Gazetted 2002)
BE IT ENACTED, by and with the advice and consent of the House of Representatives and the
Senate of Belize and by the authority of the same, as follows:
1. This Act may be cited as the
FISCAL INCENTIVES (AMENDMENT) ACT, 2002And shall be read and construed as one with the Fiscal Incentives Act, which is hereinafter referred to
as the principal Act.
2. Section 2 of the principal Act is hereby amended as follows:
(i) in the definition of the expression “approved enterprise order”, by inserting
the words “or section 19” immediately after the word “section 4” occurring
therein;
(ii) by inserting the following new definitions in their proper alphabetic order:
“approved small or medium enterprises” means an enterprise
approved by the Minister pursuant to section 10”;
“small or medium enterprise” means an enterprise, whether a natural
or a legal person or an unincorporated entity or association, which
satisfies the requirements set out in section 18.
3. The principal Act is hereby amended by adding the following new sections immediately after
section 17:G/SCM/N/95/BLZ
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Small and Medium Enterprises
18. For the purpose of this Act, a small or medium enterprise is an enterprise that –
(a) is engaged or intends to engage in any of the activities set out in the Schedule and is a
net foreign exchange earner;
(b) has an annual turnover not exceeding $500,000;
(c) has a net worth not exceeding $300,000;
(d) has an investment in machinery and equipment not exceeding $300,000;
(e) is not a subsidiary of, or controlled by, an entity that is not a small and medium
enterprise; and
(f) holds a valid trade license and all other permits required to carry on its business.
19.(1) Notwithstanding any other provisions of this  Act, any person desirous of conducting a small
or medium enterprise in Belize may apply to the Minister through the Executive Chairman of
BELTRAIDE for an approved enterprise order.
(2) Every application made pursuant to subsection (1) shall be in such form and accompanied by
such fee and documents as may be specified by th e Minister of Regulations made under this Act.
(3) Every application from a small and medium enterprise for an approved enterprise order shall
be considered by a Cabinet Sub-Committee consisting of the following: –
(a) The Minister responsible for investment;
(b) The Minister responsible for industry;
(c) The Minister responsible for the activity set out in the second Schedule in which the
applicant is engaged or intends to engage.
20.(1) If, after consideration of all the facts and circumstances, the Minister is satisfied that the
applicant satisfies all the requirements for a small and medium enterprise and that an approved
enterprise order in favour of the applicant would promote the development of small and medium
enterprises, he may by Order declare the enterprise to be an Approved Small or Medium Enterprise.
(2) Before making an Order under this section the Minister shall comply with the notice
requirement in subsection (2) of section 4 provided that this requirement will be satisfied if the notice
is given in one issue of a newspaper of general circulation in Belize.
(3) Every such Order shall set out the cond itions subject to which it has been made.
21.(1) The duty exemption period for a small or medium enterprise shall not exceed two years at a
time, but may be extended to a maximum of five years.
(2) The duty exemption may be full or partial as the Minister on the advice of BELTRAIDE may
deem fit.G/SCM/N/95/BLZ
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(3) No approved enterprise order for a small or medium enterprise shall contain any provision for
tax holiday.
22. On every application by a small or medium en terprise for renewal of a concession, the Belize
Trade and Development Service (BELTRAIDE) shall examine every such enterprise to determine
whether it continues to satisfy the requirements for such an enterprise as specified in section 18, and
shall submit a report on its findings to the Cabinet Sub-Committee referred to in section 19 above.
23. The principal Act is hereby amended by re-numbering the existing Schedule and adding the
Schedule to this Act as the Second Schedule.
24. The Minister may from time to time by Order published in the Gazette make amendments to
any of the Schedules.
Printed in Belize by the Government Printer
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