International Business Corporation – Is It Right For You?
What is an IBC (International Business Corporation)?
An IBC is basically a limited-liability corporation.
A limited company has the same rights and privileges as an ordinary little business. They are generally not permitted to do business in any country other than the one where they were formed. They can do business in any other country that allows them to operate their business.
Let me expound. They cannot do business in the country where they were formed, but they can have their administrative offices there. They are not allowed to carry out their everyday business activities.
You might be asking yourself what the advantage of an IBC is if they share the same rights, responsibilities but are not allowed to operate in the country where they were formed.
It is your responsibility to pay the taxes as well as comply with all laws in the country where you do business. You are required to pay income tax.
The IBC’s benefit is that once your taxed-paid funds or profits are taken out of the country where you do business, and they are returned to the country where your IBC resides, then any gains you make on those funds will not be taxable. The company’s profits are not subject to tax in the country where they are made. This could include interest on deposits in your country. These countries don’t charge taxes on interest earned. Capital gains or losses on company assets. One
The bottom line:
The IBC’s assets can grow tax-free or with minimal tax once the tax has been paid in that country where the business was run, and the earnings have been earned. After this time, the asset will be repatriated to its home country. It all depends on the laws in your country and how they regulate your activity.
The IBC also has another significant advantage:
It is difficult for litigators to access the assets of the company in many countries. If there is no income generated in the country, then there is minimal reporting.
It is therefore difficult for a litigator to determine the actual assets and liabilities of a company. They cannot attach charges or lean against assets if they don’t know what they are.
Additionally, the IBC is located in a foreign country, so it is costly to litigate such a company.
Is this to say that these companies are expensive to set up?
It is simple. It is generally less expensive than setting up one in your country.
An IBC also has the advantage of being able to transfer information.
Nominated shareholders and directors can be used to run the company
This conceals the identity of those who own and run the company.
To provide additional security to the principals, it is possible to stop or slow down potential legal lawsuits against the companies and their owners from hungry litigators.
It is up to you to decide if this strategy is beneficial for your situation. That is up to you. We are not providing tax advice or legal advice. As your primary business, it is advisable to speak with a knowledgeable and reputable professional who specializes in these areas. There are many issues that could arise if you don’t know the laws of the country where you live and the country in which your International Business Corporation is located.