Simple Definition

An international business company or international business corporation (IBC) is an offshore company that is established based upon the laws of certain jurisdictions as a tax-free company. IBCs are not permitted to conduct business within the jurisdiction in which they are incorporated. Antigua, Anguilla, the British Virgin Islands, the Bahamas, Gibraltar and Nevis are all offshore financial centers that permit the formation of IBCs.

General Characteristics

Although the characteristics of an IBC tend to vary from jurisdiction to jurisdiction, they usually include the following:

• exemption from local corporate taxation and stamp duty, as long as said company does not engage in local business (nevertheless annual agent's fees and company registration taxes are still due and are generally several hundred U.S. dollars per year);
• preservation of the confidentiality of the beneficial owner of the company;
• extensive corporate powers to conduct different businesses and activities;
• abrogation or restriction of the requirement to demonstrate corporate benefit;
• the freedom 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 agent.

Despite pressure from the Organization for Economic Cooperation and Development, the OECD, and the Financial Action Task Force, the FATF, the majority of offshore jurisdictions has either removed or is removing the "ring fencing" of IBCs from local taxation. Many of the jurisdictions have also simultaneously reduces their levels of corporate tax to zero hoping to avoid damaging the offshore finance industry.

What's more, with the notable exception of Panama, most jurisdictions have also either eliminated or highly restricted the issuing of bearer shares by IBCs.

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