International business company
Encyclopedia
An international business company or international business corporation (IBC) is an offshore company
formed under the laws of some jurisdiction
s as untaxed company which is not permitted to engage in business within the jurisdiction in which it is incorporated. Offshore financial centre
s that have allowed the formation of IBCs include Antigua
, Anguilla
, the British Virgin Islands
, the Bahamas, Belize, Gibraltar
, Nevis
, Labuan
and Seychelles
.
Characteristics of an IBC vary by jurisdiction, but will usually include:
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 the fact that there are no restrictions on a Seychelles IBC owning shares of a Seychelles domestic company.
Further, most jurisdictions (Panama
and Seychelles
being the key exceptions) have either eliminated or highly restricted the issuing of bearer shares by IBCs due to international pressures.
which is free from all local taxes (except small fixed annual fees). Typically the IBC cannot conduct business in the country of incorporation. Dominica
, British Virgin Islands
, Nevis
and Seychelles
have special IBC legislation in place, which is similar to the legislation for Panama Corporation and Gibraltar Non-resident Company.
IBCs are offshore companies that are most commonly used for offshore bank
ing to conduct international trade, investment activities, by professionals and for asset protection. Offshore companies can be involved in buying and selling goods and services, hold bank accounts and operate businesses. IBCs are also commonly used for the ownership of real property and land; for ownership of intellectual property, licensing and franchising; personal service by individuals working overseas and offshore e-business among other things.
An IBC can hold assets in a safe, secure financial center. At the same time, an IBC also allows the owner to retain 100% control of assets. An IBC's assets are extremely private. In the offshore jurisdictions, there is no ITIN required in order to open an IBC bank account. It is a crime for a banker to reveal your association with a bank account to an individual outside of the bank. IBC ownership records are not available in any public record.
There are countries with IBC laws that take privacy very seriously. The asset protection provisions in some countries are extremely strong. Many of these countries are island nations that have become financially strong by offering a safe-haven in which to store one’s money. One of the strongest IBC asset protection laws found is on the Island of Nevis
(Nee’ Vuhs). Nevis
is located in the Caribbean Sea and is about a one-hour flight East of Puerto Rico.
Offshore company
The term offshore company is ambiguous. It may refer to either:# A company which is incorporated outside the jurisdiction of its primary operations regardless of whether that jurisdiction is an offshore financial centre i.e...
formed under the laws of some jurisdiction
Jurisdiction
Jurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...
s as untaxed company which is not permitted to engage in business within the jurisdiction in which it is incorporated. Offshore financial centre
Offshore financial centre
An offshore financial centre , though not precisely defined, is usually a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds....
s that have allowed the formation of IBCs include Antigua
Antigua
Antigua , also known as Waladli, is an island in the West Indies, in the Leeward Islands in the Caribbean region, the main island of the country of Antigua and Barbuda. Antigua means "ancient" in Spanish and was named by Christopher Columbus after an icon in Seville Cathedral, Santa Maria de la...
, Anguilla
Anguilla
Anguilla is a British overseas territory and overseas territory of the European Union in the Caribbean. It is one of the most northerly of the Leeward Islands in the Lesser Antilles, lying east of Puerto Rico and the Virgin Islands and directly north of Saint Martin...
, the British Virgin Islands
British Virgin Islands
The Virgin Islands, often called the British Virgin Islands , is a British overseas territory and overseas territory of the European Union, located in the Caribbean to the east of Puerto Rico. The islands make up part of the Virgin Islands archipelago, the remaining islands constituting the U.S...
, the Bahamas, Belize, Gibraltar
Gibraltar
Gibraltar is a British overseas territory located on the southern end of the Iberian Peninsula at the entrance of the Mediterranean. A peninsula with an area of , it has a northern border with Andalusia, Spain. The Rock of Gibraltar is the major landmark of the region...
, Nevis
Nevis
Nevis is an island in the Caribbean Sea, located near the northern end of the Lesser Antilles archipelago, about 350 km east-southeast of Puerto Rico and 80 km west of Antigua. The 93 km² island is part of the inner arc of the Leeward Islands chain of the West Indies...
, Labuan
Labuan
Labuan is a federal territory in East Malaysia. It is an island off the coast of the state of Sabah. Labuan's capital is Victoria and is best known as an offshore financial centre offering international financial and business services via Labuan IBFC since 1990 as well as being an offshore support...
and Seychelles
Seychelles
Seychelles , officially the Republic of Seychelles , is an island country spanning an archipelago of 115 islands in the Indian Ocean, some east of mainland Africa, northeast of the island of Madagascar....
.
Characteristics of an IBC vary by jurisdiction, but will usually include:
- 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 benefitCorporate benefitThe interest of the company is a concept that the board of directors in corporations are in most legal systems required to use their powers for the commercial benefit of the company and its members...
- the ability to issue sharesStockThe capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
in either registeredRegistered instrumentA registered instrument is a form of property, such as shares or bonds, where records are kept of who owns the underlying property, or of the transactions involving transfer of ownership...
or bearerBearer instrumentA bearer instrument is a document that indicates that the owner of the document has title to property, such as shares or bonds. Bearer instruments differ from normal registered instruments, in that no records are kept of who owns the underlying property, or of the transactions involving transfer of...
form - an abrogation of any requirements to appoint local directors or officers
- provision for a local registered agentRegistered AgentA registered agent, also known as a resident agent or statutory agent, in United States business law, is a business or individual designated to receive service of process when a business entity is a party in a legal action such as a lawsuit or summons...
However, under pressure from the Organisation for Economic Co-operation and Development
Organisation for Economic Co-operation and Development
The Organisation for Economic Co-operation and Development is an international economic organisation of 34 countries founded in 1961 to stimulate economic progress and world trade...
(OECD) and the Financial Action Task Force on Money Laundering
Financial Action Task Force on Money Laundering
The Financial Action Task Force , also known by its French name, Groupe d'action financière , is an intergovernmental organization founded in 1989 on the initiative of the G7. The purpose of the FATF is to develop policies to combat money laundering and terrorist financing...
(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 the fact that there are no restrictions on a Seychelles IBC owning shares of a Seychelles domestic company.
Further, most jurisdictions (Panama
Panama
Panama , officially the Republic of Panama , is the southernmost country of Central America. Situated on the isthmus connecting North and South America, it is bordered by Costa Rica to the northwest, Colombia to the southeast, the Caribbean Sea to the north and the Pacific Ocean to the south. The...
and Seychelles
Seychelles
Seychelles , officially the Republic of Seychelles , is an island country spanning an archipelago of 115 islands in the Indian Ocean, some east of mainland Africa, northeast of the island of Madagascar....
being the key exceptions) have either eliminated or highly restricted the issuing of bearer shares by IBCs due to international pressures.
The IBC legal entity
An IBC is a legal entity incorporated in a tax havenTax haven
A tax haven is a state or a country or territory where certain taxes are levied at a low rate or not at all while offering due process, good governance and a low corruption rate....
which is free from all local taxes (except small fixed annual fees). Typically the IBC cannot conduct business in the country of incorporation. Dominica
Dominica
Dominica , officially the Commonwealth of Dominica, is an island nation in the Lesser Antilles region of the Caribbean Sea, south-southeast of Guadeloupe and northwest of Martinique. Its size is and the highest point in the country is Morne Diablotins, which has an elevation of . The Commonwealth...
, British Virgin Islands
British Virgin Islands
The Virgin Islands, often called the British Virgin Islands , is a British overseas territory and overseas territory of the European Union, located in the Caribbean to the east of Puerto Rico. The islands make up part of the Virgin Islands archipelago, the remaining islands constituting the U.S...
, Nevis
Nevis
Nevis is an island in the Caribbean Sea, located near the northern end of the Lesser Antilles archipelago, about 350 km east-southeast of Puerto Rico and 80 km west of Antigua. The 93 km² island is part of the inner arc of the Leeward Islands chain of the West Indies...
and Seychelles
Seychelles
Seychelles , officially the Republic of Seychelles , is an island country spanning an archipelago of 115 islands in the Indian Ocean, some east of mainland Africa, northeast of the island of Madagascar....
have special IBC legislation in place, which is similar to the legislation for Panama Corporation and Gibraltar Non-resident Company.
IBCs are offshore companies that are most commonly used for offshore bank
Offshore bank
An offshore bank is a bank located outside the country of residence of the depositor, typically in a low tax jurisdiction that provides financial and legal advantages. These advantages typically include:...
ing to conduct international trade, investment activities, by professionals and for asset protection. Offshore companies can be involved in buying and selling goods and services, hold bank accounts and operate businesses. IBCs are also commonly used for the ownership of real property and land; for ownership of intellectual property, licensing and franchising; personal service by individuals working overseas and offshore e-business among other things.
An IBC can hold assets in a safe, secure financial center. At the same time, an IBC also allows the owner to retain 100% control of assets. An IBC's assets are extremely private. In the offshore jurisdictions, there is no ITIN required in order to open an IBC bank account. It is a crime for a banker to reveal your association with a bank account to an individual outside of the bank. IBC ownership records are not available in any public record.
There are countries with IBC laws that take privacy very seriously. The asset protection provisions in some countries are extremely strong. Many of these countries are island nations that have become financially strong by offering a safe-haven in which to store one’s money. One of the strongest IBC asset protection laws found is on the Island of Nevis
Nevis
Nevis is an island in the Caribbean Sea, located near the northern end of the Lesser Antilles archipelago, about 350 km east-southeast of Puerto Rico and 80 km west of Antigua. The 93 km² island is part of the inner arc of the Leeward Islands chain of the West Indies...
(Nee’ Vuhs). Nevis
Nevis
Nevis is an island in the Caribbean Sea, located near the northern end of the Lesser Antilles archipelago, about 350 km east-southeast of Puerto Rico and 80 km west of Antigua. The 93 km² island is part of the inner arc of the Leeward Islands chain of the West Indies...
is located in the Caribbean Sea and is about a one-hour flight East of Puerto Rico.
See also
- International Business Companies ActInternational Business Companies ActThe International Business Companies Act, 1984 was a statute of the British Virgin Islands which permitted the incorporation of International Business Companies within the Territory...
- Multinational corporationMultinational corporationA multi national corporation or enterprise , is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation...
- Offshore bankOffshore bankAn offshore bank is a bank located outside the country of residence of the depositor, typically in a low tax jurisdiction that provides financial and legal advantages. These advantages typically include:...