The Designated Process Areas (DPA) Act is designed to bring Belize’s Export Processing Zone (EPZ) regime into conformity with the World Trade Organization (WTO)’s Agreement on Subsidies and Countervailing Measures (ASCM). Particularly, the law, assented to by the Governor General of Belize on December 21, 2018, removed the export requirement that existed under the EPZ.

Among the more salient features of the new DPA Act is the reduction in the time for the enjoyment of benefits from 20 years under the EPZ to 10 years under the DPA. This is outlined at Section 18 (2) of the Act which reads: 

“A company that applies to the DPAC [Designated Processing Areas Committee] for a DPA status on the first occasion, shall be eligible for all benefits listed under subsection (3), for a period of up [to] ten years.”

Those benefits, as referenced in the foregoing section, include exemptions from several taxes such as “customs and excise duties and taxies; tariffs; consumption tax on imports; trade turnover tax; or property and land tax.”

Additionally, the following laws do not apply to a DPA company: the Trade Licensing Act; the Rent Restriction Act; and the Land Tax Act. To the extent that imported raw materials for production of goods and services intended for sale outside, the DPA company shall also not fall subject to the Supplies Control Act. 

 The law does allow for application of renewal; however, any company seeking such renewal may not be eligible for the maximum ten-year period, and may not be eligible to “all benefits granted by the DPAC”. Regardless if it is for initial or subsequent application, no company could be granted the DPA status for drugs, firearms and ammunition, or military equipment and materials. 

It is noteworthy that the listed benefit, apart from being shorter in duration, also does not include income and dividend taxes, which were exempted under the EPZ Act. While under the amended section 8 of Income and Business Tax Act interest payments are exempt, DPA companies unlike the EPZ predecessors are expected to pay income tax at a rate of 1.75% for income above $3 million, and 3% for income earned below $3 million. 

This represents significant changes that can disincentivise investments in certain sectors, including the Business Process Outsourcing (BPO) sector that has relied extensively on the incentive regime.