IBC
An international business company or international business corporation (IBC) is an offshore company formed under the laws of some jurisdictions as a tax neutral company which is usually limited in terms of the activities it may participate in, but not necessarily from, the jurisdiction in which it is incorporated. While not taxable in the country of incorporation, an IBC or its owners, if resident in a country having "controlled foreign corporation" rules for instance can be taxable in other jurisdictions.
IBCs are not subject to corporate tax in Saint Lucia
Characteristics
Characteristics of an IBC vary by jurisdiction, but will usually include:
Chart of an offshore company structure
exemption from local corporate taxation and stamp duty, provided that the company engages in no local business (annual agent's fees and company registration taxes are still payable, which are normally a few hundred U.S. dollars per year)
preservation of confidentiality of the beneficial owner of the company
wide corporate powers to engage in different businesses and activities
abrogation or restriction of the requirement to demonstrate corporate benefit
the ability to issue shares in either registered or bearer form (although many countries have restricted or eliminated bearer shares now)
an abrogation of any requirements to appoint local directors or officers
provision for a local registered agent or registered office
All of the above characteristics are also attributable to many "onshore" countries which have either a residency or territorial based tax system where setting up a company, LLC or LLP in the jurisdiction along with the use of "nominees" will offer all of the above characteristics. US LLCs, UK LLPs and Hong Kong companies are all examples which are widely used in similar capacity to IBCs and which meet all of the characteristics above.
However, under pressure from the Organisation for Economic Co-operation and Development (OECD) and the Financial Action Task Force on Money Laundering (FATF), most offshore jurisdictions have removed or are removing the "ring fencing" of IBCs from local taxation. In most of the jurisdictions, this has been accompanied by reductions of levels of corporate tax to zero to avoid damaging the offshore finance industry.
In contrast, Seychelles residents are legally able to own and operate a Seychelles IBC as long as the IBC is not conducting business within Seychelles. Seychelles also has a "territorial" tax system meaning that Seychelles residents are only taxed on their locally sourced income. Therefore, there is no advantage to non-residents over residents and claims of "ring fencing" have no merit on the Seychelles IBC. This has been, and continues to be, used successfully by Seychelles in defense of the Seychelles IBC vs. international bodies such as the OECD and FATF. Boosting the defense even more is that there are no restrictions on a Seychelles IBC owning shares of a Seychelles domestic company.
Further, most jurisdictions have either eliminated or highly restricted the issuing of bearer shares by IBCs due to international pressures
Legal Entry
An IBC is a legal entity incorporated under specific legislation which is usually free from all local taxation (except small fixed annual fees). However, in recent years countries such as Belize have changed their corporate laws in order to adhere to global transparency initiatives such as the Common Reporting Standard (CRS) and the United States version FATCA. Typically an IBC is limited in its activities it may conduct in and must conduct transactions and business activities outside the boundaries of the country. Though this is generally the rule of thumb, the last decade has seen many changes in corporate laws around the world; as a result, offshore companies and structures in Belize, for instance, are losing their 'offshore' status and are being restructured into the local economy.[1] Anguilla, Bahamas, Belize, Dominica, Nevis, St Vincent and Seychelles have special IBC legislation in place. The British Virgin Islands and Gibraltar formerly had popular IBC regimes, but in each case the relevant legislation has been repealed.
IBC Uses
IBCs are offshore companies that are most commonly used for international business such as trade and non-local services, offshore banking, investment, as a special purpose entity, as well as for asset protection. Offshore companies can be used for virtually any type of transactional activity (some requiring a special license) such as buying and selling goods and services, or holding of physical or digital assets, intellectual property, real estate or for banking and investment accounts.
Both terms Offshore company and an International Business Company (IBC) refer broadly to the same type of corporate structure and are often used interchangeably. They can be distinguished from traditional domestic companies in a number of ways such as business structure, tax obligations, reporting requirements etc. Each country defines and limits the scope of such companies through corporate laws. Most corporate laws in jurisdictions omit the word 'offshore' due to its negative connotations and non-specific character instead using IBC in reference to companies that engage in non-local activities outside the boundaries of the state. The term 'offshore' is used to refer to a company, or bank account, established outside the jurisdiction of residence or place of doing business.
also known as offshore companies can be incorporated in many countries known as offshore jurisdictions around the world. Offshore companies are also called IBCs for short. International Business Companies can be incorporated in the following offshore jurisdictions: Dominica, Panama, Belize, Anguilla, Seychelles, British Virgin Islands, and Hong Kong, Singapore, Cyprus, Mauritius and many other countries in the world.
Registration
Once the legislation is in place in a jurisdiction for registering an international business company then this company can be successfully incorporated. International business company registration is easily carried out and in some offshore jurisdiction this process takes no more than one working day for completion. In most offshore jurisdictions just one (1) shareholders and one company director is needed for the incorporation of an international business company and the same individual can play the role of shareholder and director.
For international business company formation many offshore jurisdictions makes it mandatory for the person wishing to register the company to employ a registered agent, who is a local person or company who have been licensed and authorized by the government to provide offshore services. The registered agent will prepare all the registration documents on behalf of the international business company and file those with the Registrar of Companies. The documents needed for International Business Company registration are: Memorandum of Association and Articles of Association.
Tax Status
International business companies are regarded as tax free companies. Once Offshore Corporation incorporated in an offshore jurisdiction and carrying out no kind of business operations there then offshore companies will pay no taxes in the offshore jurisdiction of incorporation. Offshore companies pay no income tax, corporate taxes, withholding tax, and other form of taxation. International business companies are solely responsible for paying an annual renewal fee. Many offshore jurisdictions do not allow offshore companies to do business with residents of the jurisdiction or do business within the jurisdiction but there are offshore jurisdictions such as Panama which allows international business companies to do business in and out of the jurisdiction. No taxes are charged on incomes gained outside of these jurisdictions but international business companies are entitled to pay taxes on incomes earned from doing business within the jurisdiction.
International business corporations are guaranteed tax exemptions from the day of incorporation in many offshore tax havens and this is just one of the benefits of International business company formation. Offshore companies provide asset protection since assets placed in these companies are protected by legislation in the offshore jurisdictions. International business companies can do business anywhere in the world and they can also be set up just for keeping assets. Offshore companies can be used for acquiring other assets whether it is real estate properties or other companies and these companies can set up offshore bank accounts at offshore banks which are scattered around the world.
One of the many advantages which an offshore corporation has over an onshore company is that the offshore company is not obligated to file annual financial reports and audits to the tax authority in most offshore jurisdictions. This information remains private to the company and can be held anywhere in the world. International Business companies are also not obligated to keep annual general meetings of shareholders, if any meeting is held this can be kept at any time and location convenient to the parties involved. International business companies provide secrecy for the owners and other persons who are involved in these companies. The names of the shareholders and directors of offshore companies and other company information are not made part of public records in most offshore jurisdictions.
International business companies are ideal business companies to be used as trading companies around the world. International business companies have gained a very good reputation over the years as good business companies.
