Providing business-friendly features and ease of incorporation, an international business company has become a popular offshore structure for startups and solopreneurs.
In today’s article, let’s walk you through some key considerations and how you can successfully kickstart your own international business company.
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What is an IBC?
An International Business Company (IBC) is an offshore company structure that you can incorporate in an offshore jurisdiction to receive favorable tax treatment.
However, to qualify for these tax advantages, you cannot use an IBC to conduct business activities in the host jurisdiction where you register your IBC.
Despite this limitation, you can use an IBC to do business on a worldwide scope, for a variety of purposes such as an International trading company; an International joint venture; or a holding company.
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What are the advantages of an IBC?
If you are looking to start your own IBC, you should look into its advantages below:
- Favorable taxation
The tax benefits for your IBCs can vary from country to country.
Generally, your IBC can be exempt from taxes in the jurisdiction of incorporation.
Moreover, the use of local corporate taxation, stamp duty, or exchange controls does not extend to your IBC.
As aforementioned, you must not conduct business activities within the host country to receive all these tax reliefs and deductions.
- Strong asset protection
An IBC can offer you strong asset protection.
Each offshore jurisdiction has its own legislative framework for IBC. This means your IBC, along with your personal assets, are well protected under layers of legal protection.
Moreover, by incorporating an IBC for your business, you can minimize the risk of financial crisis and instability and ensure your asset safety in unfortunate events.
- Fast incorporation
The incorporation process for your IBC is fairly straightforward. In fact, you can wrap it up by yourself in a few days.
However, it is always recommended that you engage a professional formation service to reduce the burden of paperwork and waiting hassles
- Flexible business structure
Normally, an IBC will require 1 director and 1 shareholder to incorporate. You can act as both director and shareholder for your IBC, or assign another person to do it on your behalf.
- Minimum compliance
Typically, you do not have to file an annual return or audit financial statements for your IBC.
In addition, an IBC is not required to hold annual general meetings in some jurisdictions.
There may be obligations on record-keeping, but these requirements are not too complicated to comply with.
- High level of confidentiality
The information related to your IBC such as directors’ identity, beneficial owners, shareholders is not open to the public.
You can be assured that your information will not be submitted or disclosed in any public records.
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What are the considerations for forming an IBC in 2021?
Incorporating your IBC, like any other offshore company formation, is associated with some considerations.
First and foremost, you must have a registered place of business in the jurisdiction where you intend to form your IBC.
More importantly, you should employ a registered agent to handle all official correspondence on behalf of your IBC, such as paperwork from the government, tax forms, and legal notices.
Last but not least, you should prepare all needed documents and file your incorporation with the authorities in the offshore jurisdiction. In general, required documents will include:
- identification documents;
- residential address proof;
- business overview;
- memorandum of association and articles of association, and
- additional documents.
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Where to incorporate an IBC?
You can choose to incorporate your IBC in popular offshore financial centers like Belize, The British Virgin Island, Seychelles, Dominica, Marshall Islands, or UAE.
Recently, many offshore jurisdictions have enacted the economic substance rule, which put forward the principle of real economic activities and tax affairs of IBC.
Consequently, if you form your IBC in jurisdictions with economic substance rules, you’ll have to comply with specific regulatory requirements, depending on your business activities.
- Conclusion
At this point, you’ve learned more about the International Business Company and its key features, as well as the procedure you need to incorporate your own IBC.
You may be interested in: Guide to Offshore Company Registration Process 2021