The Fine Print Behind Belize’s Tax-Free US$125  Million

The US $125 million Belize Compact comes with sweeping exemptions from duties, taxes and fees. Why would it need tax exemptions, though? 

According to the Financial Secretary and chair of the board overseeing the Millennium Challenge Account-Belize programme, Joseph Waight, those waivers are necessary to ensure the U.S. grant is spent on the projects it was intended to fund. 

In other words, taxing goods and services purchased through the compact would effectively reduce the money available for investment. 

“Well, you know, the, the, the grant total is fixed, say $125 million, okay? If the government were to charge taxes on services being, on, on goods and services being funded by this grant, there’s less grant to spend,” Waight said. 

Waight said the arrangement is not unique to the MCC. “Any bilateral program and any multilateral program, there is a tax waiver in there because you want that money to fund the ultimate project,” he said. 

“The government shouldn’t get any of that money for itself,” Waight added. 

Waite says the board he chairs does not simply decide how the money is spent. The compact has already established detailed projects and components, with the agreement itself running about 125 pages with annexes. 

The board’s role, he explained, is primarily oversight as the five-year programme moves into implementation. 

The compact officially enters into force later this week on September 18, which would begin the five-year implementation period.