International Business Company (IBC)

An International Business Company is an excellent and popular tool in estate and financial planning. Such companies are established in offshore jurisdictions under special laws of those particular jurisdictions.

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
• The ability to issue shares in either registered or bearer form
• An abrogation of any requirements to appoint local directors or officers
• Provision for a local registered agentJurisdiction offers special treatment to the International Business Company set therein.
• IBC’s are exemption from taxation. There are no taxes levied on an IBC in most jurisdictions where domestic companies pay income taxes in excess of 35% on net profit. Some jurisdictions allow for minimal taxes of 1.5% to 5% taxes on net income as reported.
• Formation of an IBC is a simple procedure. A company can be formed in just two or three days. Off the shelf companies are available of 1, 2 or threes of age. Older companies can be obtained at a substantially increased cost.
• Articles of Incorporation (Charter) can be adapted to meet individual needs of a company or individual
• Minimal capital requirements. There is no minimum paid up capital requirement. An IBC may issue bearer shares and no par value shares. Domestic companies may not issue bearer or no par value shares.
• Subscribers may be an individual, a corporation or a trust. A company may have nominee shareholders through local licensed registered agents.
• At least one director. In an IBC, the Director & Secretary may be an individual or corporation. A secretary is not required but proves to be rather helpful in carrying out business.
• IBC must maintain a Registered Agent and a Local Registered Office through the services of licensed individuals or companies that provide such services.
• The fee for establishing an IBC (including government and agents’ fees) is usually around US$1,500.
• The annual costs to maintain an IBC encompasses the annual charge for (a) Government Fee and (b) Registered Office/Agent. This amounts to approximately US$500.

Formation Procedures

An IBC company can be formed in just two or three days through a very simple and quick procedure. One, two or even three years old off the shelf companies are available. Older companies can be obtained at a higher cost.

Generally, an IBC is not required to file details related to shareholders or directors. Filing audits or accounting reports is not a necessity. There are no requirements for tax returns or reports of any kind. The directors of an IBC are not required to hold meetings and any meeting held may take place anywhere or by electronic means. There are also no exchange controls for an IBC.

Most jurisdictions, however, impose some of prohibitions. An IBC cannot carry on business with the residents of the jurisdiction or persons owning an interest in real property situated within the jurisdiction. The company may lease property for office purposes. An IBC may also not carry on banking business, insurance or reinsurance business, or the business of providing the registered agent/office for companies.

Most jurisdictions assure security, anonymity and confidentiality. Thus, no information needs to be disclosed and there are even no accounting or audit requirements. Since a completely staffed office in the jurisdiction is not a requirement, costs are highly reduced.  Management an offshore corporation is easy through contracted facilities or through your own facilities established in the selected jurisdiction, or in any other jurisdiction as a branch of your IBC.

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