The advantages of International Business Company (IBC) incorporation have become unquestionably clearer as the current economic recession has highlighted the need for more innovative, profitable and economical means of asset protection and conducting business. As the United States of America confronts the worst stock market crisis and credit crunch for the first time decades and the United Kingdom experiences the highest rise in unemployment for the first time in 17 years, millions of people across the globe wait to see what would be the possible effects of this economic crisis in their respective countries.
Technology and reliable international courier service make it possible to operate and provide services in any part of the world. A locally based company that is involved in the international trade of goods can benefit tremendously from incorporating itself as an IBC in Dominica.
Dominica IBC’s are not limited in their operations as long as the business undertaken by the company is legal and conducted as was stipulated in the IBC’s constitution upon its formation. Being established as a Dominican IBC also provides the advantage of being exempt from taxes on passive income such as capital gains and corporate taxes that would under normal circumstances be levied on the company. Although the IBC may be liable for meeting the necessary taxes that are payable in the countries where its trading activities are conducted, exemption from passive income assists the company to maintain and accumulate profits. An IBC formed in Dominica is exempt from such taxes for 20 years. In light of the current ‘credit crunch’ and economic recession, the establishment of new offshore departments is a sure way of maintaining and improving earnings, while saving thousands of jobs.
As a Dominican IBC, the company can purchase goods from a foreign manufacturer, avoid intermediaries and handle shipping if it has the capacity to and distribute the goods accordingly to clients both home and abroad. In this way, the Dominican IBC serves as a company that deals with importing, exporting, shipping, distributing and selling goods.
Moreover, a Dominica IBC can be formed for offering professional online services. This could take the form of consultancy, marketing, chat sites or advertising, to name a few. Dominica IBC’s are particularly ideal for doing electronic commerce since they can virtually be located in any part of the world and are free to offer services on an international level.
Using a Dominican IBC as a holding company may be of particular interest to business persons that are actively involved in holding activities. As a holding company that is able to have an international scope, the IBC can be used to provide loans to subsidiaries in other countries, on which the subsidiaries may benefit from tax deductions on interest paid. Again, the Dominica IBC holding company is not subjected to paying capital gains and corporate taxes, which of course allows the company to grow financially.
Besides being capable of operating in numerous ways, a Dominica IBC offers a significant benefit due to its ability to protect assets. Based on the fact that an IBC is a limited liability company, which makes it separate from its owner, assets held in the name of the company cannot be made part of any litigation or divorce settlement that the beneficial owner or owners of the Dominica IBC may go through. By placing valuables such as property, expensive jewelry, bonds or money in the name of the IBC, they become the IBC’s property. This allows the IBC’s owner(s) to reduce his net worth, thus making any litigation or divorce claims limited to only what is owned by the person. Pilots, doctors, actors, professional sportsmen, boat captains, lawyers and businessmen are generally considered high net worth individuals and are most commonly faced with such issues.
Asset protection and excellent tax benefits can also be derived in the area of real estate. Real estate that is owned by an IBC in Dominica is able to accumulate its value over a period of several years. The value that the property would have acquired will not be affected since it would be exempt from inheritance tax, gift tax, death and estate duties. This definitely reduces the burdens and expenses that are involved in transferring assets, which can be done in much less time than under normal circumstances. The payment of transfer taxes can also be avoided by simply selling the IBC’s shares to the person that is purchasing or acquiring the property. The sale of the IBC, in whose name the property is held, is a perfectly legitimate means of transferring property which provides immense tax savings on transfer taxes, capital gains tax and inheritance tax.
The owners of a Dominica IBC can decide to reinvest their accumulated funds. In so doing, the possibility of establishing another IBC as an investment company or mutual exists. The formation of an investment company allows the IBC to make investments and deposit funds internationally. Although the interest or returns made on the funds invested may be liable to taxes in the countries where the funds are being held, capital gains are generally not applicable.
Owning an IBC is also a gateway to offshore banking. Offshore banking permits businesses to perform operations that domestic onshore banks are incapable of doing. Offshore banking facilitates international financial transactions and access to funds and account information on a 24 hour basis. Offshore banking also allows an IBC to accumulate tax free interest, hold accounts and do transactions in different currencies (sometimes as many as 10 depending on the bank’s size and net worth) and invest in stocks, bonds, forex, ‘money market’ and futures.
Going offshore makes it possible to do business with a corporate vehicle that is excellent on tax savings, protecting assets, broadening business scope and market base in a legal environment that guarantees confidentiality and privacy. Today, going offshore is definitely the way forward in finding ways to improve efficiency, reduce expenses and secure profits, particularly in a time of economic recession and reduced availability of credit. In addition forming an IBC can also reduce job cuts resulting from cuts in investments. It is very clear then that there are so many associated benefits to forming an IBC in Dominica and Caribbean Land and Property Financial Services are pleased to be your service provider for this essential and savvy business venture.
(c) Caribbean Land and Property October 2008