Today's international business leaders register IBCs primarily because this legal structure provides a way to run a business on a global scale while legally avoiding property taxes and excessive paperwork – in addition to having offshore bank accounts or buying non-reportable assets like offshore gold, etc Real estate abroad or productive, high-yield farmland in politically and economically less influential countries using cryptocurrencies. Some believe that low tax rates are the future.

At the same time, the jurisdictions that offer such opportunities to business owners are often referred to as tax havens or offshores. Offshore jurisdictions are often blacklisted as IBC beneficiaries are typically prohibited from conducting local business - meaning they are legally unable to conduct business in the country where their company is based to do. IBC owners can use transfer pricing to distribute intellectual property and sales for very low tax rates. However, this may have certain consequences as their home country will likely require them to report their involvement in offshore business activities. Offshore jurisdictions may aim to generate profits by allowing business owners to hide their names while supporting illegal and harmful business activities, including war, drug trafficking and other harmful activities.

Depending on the particular jurisdiction, offshore company owners may take the opportunity to comply with laws that are more customer- or company-friendly than creditor-friendly. Some countries offer protection from all claims unless the transfer is deemed fraudulent. There are different types of offshore companies, so-called letterbox companies and shelf companies, which have been set up specifically to carry out illegal activities. The former exist only on paper, produce nothing, and encourage tax avoidance while disguising the identities of scammers. The latter are full-fledged entities with no activity, created to bypass the registration process while still making quick trade deals with established companies.

Thirty countries are currently on the EU offshore blacklist drawn up by the European Commission. It includes countries such as Anguilla, Andorra, Antigua and Barbuda, the Bahamas, Belize, Barbados, Bermuda, Brunei, the British Virgin Islands, the Cook Islands, the Cayman Islands, Grenada, Guernsey, Hong Kong, Liechtenstein, Liberia, the Maldives, the Marshall Islands, Mauritius , Montserrat, Monaco, Nauru, Niue, Panama, Saint Vincent and the Grenadines, Saint Kitts and Nevis, Seychelles, US Virgin Islands, Turks and Caicos Islands and Vanuatu.

The consequences of a company being located or making and receiving payments in offshore jurisdictions that are blacklisted can be quite severe as those involved may unknowingly engage in hostile and questionable activities such as terrorism, warfare and the search for weapons of mass destruction ( nuclear programs) trigger or support. and enter into partnerships with socially and politically dangerous terrorist organizations, human traffickers and drug cartels. In addition to legal charges, sanctions and a criminal record, involvement in such activities may lead to increased corruption after due diligence has been carried out.

There are also certain grey-listed countries that are considered to be insufficiently cooperative, as they only partially meet and follow the European Union (EU) and Organization for Economic Co-operation and Development (OECD) regulations and standards on information transparency that are aimed at to harmonize corporate tax laws and align tax systems across EU Member States.

Such jurisdictions support greater transparency by increasing social security and committing to the internationally agreed tax standard, but have not substantially implemented that standard. They are seen as alternatives to blacklisted offshore companies that have not committed to internationally agreed tax standards, nor have taken steps to work with the OECD.