HOW
AND WHY TO UTILIZE AN IBC OR OFFSHORE CORPORATION
An IBC or international entity which is often called an offshore corporation can be used to expand business activities internationally, develop an international presence, hold assets, invest globally, achieve privacy, segregate high risk assets from more secured holdings, and conduct business while remaining anonymous. While these are only a few of the advantages to using an International Business Entity, there are many others available.
An
IBC or other international entity is used by many companies
to take advantage of jurisdictions with lenient business
legislation. Further, if a company needs an offshore banking
relationship such as a merchant
account to accept credit cards, an international business
presence is often required. Below are examples of Industries
which take advantage of offshore jurisdictions:
Financial
Industry
Financial service businesses such as banking, trustee services,
mutual funds, and brokerage firms often start operations
offshore as capital, licensing, experience, tax and reporting
requirements are less stringent in offshore jurisdictions.
High Risk Industries
Casinos, sportsbooks, Travel, adult entertainment, pharmacies,
health products, and other industries set up entities offshore
due to various jurisdictions either prohibiting these activities
onshore or not having favorable business legislation in
their home jurisdiction. Also, some businesses cannot obtain
a merchant account to accept credit cards onshore due to
their banks not accepting their type of business or volume.
As such, companies will open an offshore
merchant account or a high
risk merchant account to meet their business needs.
The high risk industries typically operate their business
over the internet. Therefore, the need to obtain online
credit card processing services from a merchant account
provider that provides services worldwide is necessary to
the success of their business.
If
you would like assistance in setting up an international
entity, obtaining a banking relationship, setting up an
internet merchant
account for credit card processing, or consulting on
a jurisdiction, please contact us at info@guardianfinance.com.
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SELECTING
AN OFFSHORE JURISDICTION
The International Business Company ("IBC") is an offshore corporation that may be established in jurisdictions throughout the world. Prior to selecting a jurisdiction in which to incorporate your company, you should determine whether the jurisdiction has the following: legislation governing the type of business you are considering (i.e., legality, necessary licensing requirements, etc.), banks that will enable your business to facilitate business transactions (i.e., credit card processing services if your company will be accepting credit cards for payments from customers), a well established financial infrastructure, quality professionals, tax or financial disclosure requirements, political stability , and reliable communication infrastructure.
There
are many jurisdictions in which to incorporate your offshore company.
Each jurisdiction has different company structures and laws
regulating the business activities and operations of these
entities. We will discuss some of the characteristics relating
to a business entity such as an IBC, corporation, and a
limited liability company. Other company structures exist
in these jurisdictions and should be considered prior to
incorporating an entity. Below are some jurisdictions:
If
you would like information on other jurisdictions, Please
contact us at admin@guardianfinance.com.
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HOW
TO OPERATE AN IBC OR OFFSHORE CORPORATION
Procedures on
operating an IBC vary from jurisdiction to jurisdiction. This
variation is the reason individuals and companies take their
business offshore to take advantage of the more lenient business
legislation. Some of the common procedures that are necessary
to begin operating an IBC are as follows:
-
File the Articles of Incorporation in selected jurisdiction
-
Hold a meeting and elect your directors and officers
-
Establish and accept the company's By-laws
-
Establish financial accounts such as bank, brokerage, merchant account,
and credit/debit cards
-
Fund the company based on investor and legislation capital requirements
-
Obtain the necessary licenses, bonds, and government
approvals
prior to establishing an IBC, It is necessary for you to obtain the advise from an attorney or consultant who is knowledgeable in the offshore industry as well as your countries tax and reporting requirements.
OFFSHORE BANKING
JURISDICTION
When selecting
a jurisdiction for banking you should make sure that the laws
governing banking prohibit the release of information regarding
client accounts. In addition, you should make sure that the
jurisdiction has high rated world banks as many offshore banks
are not insured by the government. Even if a bank is insured
by the government, you should still be cautious as the government
may not have the ability to bail the bank out and indemnify
account holders in the event that the bank has financial difficulties.
Obtaining quality insurance on financial accounts is the main
reason that US citizens are hesitant to take money to offshore
banks. It is difficult to obtain a similar FDIC insurance
on offshore accounts.
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US
CITIZENS/RESIDENTS OFFSHORE REPORTING REQUIREMENTS
US
citizens and residents who have a "financial interest
in or signatory authority, or other authority over bank,
securities, or financial accounts in a foreign country"
are required to file US Dept. of Treasury form TDF-90-22-1
Report of Foreign Bank and Financial Accounts. This
disclosure eliminates the privacy benefits of establishing
an offshore corporation.
To obtain the privacy and asset protection benefits
of an offshore corporation, you cannot have a
financial interest in excess of 9%, signing authority,
or other authority over any foreign bank accounts,securities,
and financial accounts. An IBC where you own less than
10% of the shares and where you do not have control
or signing authority over financial accounts may allow
a US individual to maintain privacy and asset protection.
However, an attorney, international consultant, or international
estate planner should be contacted to discuss these
possibilities so that you do not violate any US laws.
Additional reporting requirements may be required. Therefore it is important to speak with a tax specialists to insure that you are in compliance with your countries reporting and disclosure requirements.
US CITIZENS SHOULD CONSIDER THE FOLLOWING WHEN CONSIDERING GOING OFFSHORE:
You should not utilize an IBC if the following exists:
-
Threatened or pending litigation
-
Your liabilities exceed your assets
-
You have insufficient funds to pay all of your creditors
-
Your main reason for going offshore is for tax avoidance
Before
contemplating obtaining an IBC, you should consider
the Fraudulent Disposition Act. If assets are transferred
offshore to avoid creditors, a criminal offense will
have occurred. Not only will you be
charged with fraud in the United States, but also the
laws in many offshore jurisdictions will consider the
transfer an illegal transaction and will allow the veil
of secrecy to be pierced.
On
the other hand, if none of the above situations exist,
then an IBC is an excellent vehicle for privacy, global
diversification, and international business activities
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