International business companies enable businessmen throughout the world to conduct business seamlessly by streamlining the business of monetary transactions. The benefits of the services rendered by International Business companies are many. These IBC’s set up their presence in offshore locations to take advantage of the relaxed taxation laws which are enforced upon them in such locations. Since these banks deal with a huge amount of money transactions, any tax laws are of great advantage to them as well as their customers since the customers are now paying much lesser taxes than before and also they need not worry about their identity being divulged since the law states that IBC’s in offshore locations do not need to reveal the identity of the owners of the IBC as long as the required registration fees and other payments are made with respect to setting up the company. One of the main advantages of holding an IBC for very high income persons or similar is that it gives them the privacy which may not be possible for them if the same account was operated in their home country.
Also, since privacy these days is a primary concern for the safety of these high net worth individuals, it is imperative that these people have at least one stake in an IBC to increase their certainty about being safe both financially and legally. It does not cost a whole lot to form an IBC and on the contrary anyone with a reasonable amount of money can be the owner of an IBC. With respect to IBC’s, even the owners are termed as members according to the laws governing the IBC formation.
Countries in the Caribbean are especially known for having laws which favour the formation of IBC’s. Hence one can find a high percentage of IBC’s that are around the world to be in and around the Caribbean islands. There is a variation of IBC which is present in the United States. However, this unit known as the LLC or Limited Liability Company is not tax-free unless it is operated from an Offshore Financial Centre rather than the mainland of the States. If you are a member of such an IBC and you are also a citizen of the United States, then you are required by law to submit to tax reviews and pay your share of taxes. Because the taxes payable by the IBC owners to the country where the IBC is established is a fixed amount, there are not many losses that are incurred on the part of the owner.
Efforts are on these days by the organisations known as the Financial Action Task force (FATF) and the Organisation for Economic Co-operation and Development (OECD) to ensure that the money that flows into the banks are legitimate and aren’t untaxed in the region from where the money comes from. This is essential since in many instances, these IBC’s have been set up by unscrupulous people for purposes that are sinister in nature and this in turn poses a risk to everyone involved because money that has no source is usually used to fund the activities of terrorists in order to be able to cover their tracks. Thus although IBC formation has many advantages there are also some disadvantages which pose a threat to the industry as a whole.