An International Business Corporation or an International Business Company (IBC) is an offshore company. It is registered and formed in a tax neutral setting. These kind of companies are either not liable to pay any tax or pay minimal tax. This condition normally applies as long as the business is undertaken outside the country of incorporation. Even though these companies are not taxable in the country of incorporation, however, if its owners are resident in a country that has clear rules regarding “Controlled Foreign Corporation” then an IBC may be subject to tax in other jurisdictions.

Advantages

Some of the important advantages of having an International Business Company are as follows:

  • International Business Companies comes with the advantage of freedom of operation. They can enter into business without any restrictions, right from indulging in trade, production, and commerce. This implies that an IBC can have beneficiaries and members literally anywhere in the world only with the permission of a local office. An IBC can undertake any form of business with no restriction on the level of returns.
  • The process of formation of an International Business Company is not a very complex one. It takes a very short while to form this offshore company. All it takes is letters of compliance, one time returns for filing, and specified fees. You are also supposed to ascertain the fact that you understand the circumstances in which you wish to operate the business. Hence with basic documents such as a registration document, license you are all ready to run an International business Company.
  • The accounts of an IBC can be held in any currency and not necessarily in the official business currencies such as Euros, Pounds, and Dollars. Hence you can operate a business without losing value to stronger currencies and without being vulnerable to its fluctuations in the international market.
  • An IBC is subject to certain guarantees of exemptions and benefits for years. However, that may vary from one country to another. This safeguards the assets and funds of an IBC from things like taxation levied by the states, depreciation from auditors, and accountability regarding submission of documents to the Registrars.
  • An International Business Company pays either zero tax or is subject to minimal tax rates. The rates may vary between 0.25 percent to 3 percent. These subsidized tax rates come with a cost. The cost is that the state can deny the knowledge of the IBCs existence or operations at any given point in time.
    An International Business Company can be used to own or operate an obscene sum of money on high-value items such as antiques, rarities, yachts, and ships. This kind of an offshore company is ideal for wealthy folks to secure fortunes.

Disadvantages

Some of the significant disadvantages associated with an International Business Company are cited below:

  • One of the major shortcomings of establishing an IBC is exclusion from a local business. Since these companies lack the support of the authorities and locals, they often face hostile deals and inflated prices. IBCs have to often depend on acquiring essentials from informal settings such as auctions, unregulated markets, black markets, and cartel strongholds. An IBC is also barred from appointing local officers and directors.
  • Another disadvantage of setting up an International Business Company is exposure to illegal circumstances. IBCs are very much exposed to money laundering schemes, rogue businessmen, and cartels. The Waiver of certain rights of IBCs leaves them handling risky matters on their own. These type of companies generally like to retain their secrecy and autocracy to draw business from abroad.

If you are considering the formation of an International Business Company, then you can weigh the advantages of an IBC against the disadvantages mentioned above to ensure that you are taking the right step towards prosperity channeled internationally.