Some other factors may come into consideration when establishing an international structure. Some of these include:
- Risk Management: For many companies, the risk management element is the most important one. Many companies have acceptable tax situations, but they face potential litigation and commercial risks with their international business ventures. Information technology, biotechnology, environmental, transportation and consumer product companies are just some examples of the industries that face challenges relating to risk. Setting up an IBC is not a total risk management solution. Obviously, more traditional responses such as insurance and implementation of risk management programs are still applicable. However, the use of an IBC can significantly reduce risk, both to the company itself and its Directors/Officers. It is important to note that in some jurisdictions, the potential liability of Directors/Officers is far greater than it is in Canada. An IBC offers a buffer between the Canadian company and litigation. Most of the Caribbean jurisdictions do not automatically recognize foreign judgements, thereby forcing a potential litigant to restart litigation in that jurisdiction. As well, the IBC usually has some limited assets and may also have sent dividends to asset protection trusts. There are several strategies that can be employed, each suited to the needs of a particular company. Suffice to say, an additional layer of protection has been added.
- Financing Options: In many jurisdictions, financing and lines of credit are available (with suitable security) to allow the IBC to provide finance to international ventures. This has been very effective in dealing with third countries with high withholding tax rates, and where exchange controls may be an issue.
- Foreign Partners in International Ventures: In many cases, the Canadian company will have a foreign partner in its international business activity. How the offshore jurisdiction will relate to this foreign partner will be a factor in determining the exact nature of the structure. In most cases, this is very workable, but it should be taken into account from the very beginning.
- "On the Ground" Factors: The reality is that the structure must be a workable one, from a business standpoint as well as from a tax standpoint. Too often, advice is given to companies that is technically accurate, but does not take into account local "on the ground" factors. It is very important for the advisors to work with people having some real knowledge of the chosen jurisdiction.
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