A Tuvalu International Business Company (IBC) offers foreigners a fast formed company to engage in international business with limited liability and no taxes.
The International Companies Act of 2009 (hereinafter the “Act”) oversees the formation, acceptable activities, and termination of their IBC’s. This Act provides for one business day registration, one shareholder, one director, limited liability, privacy, and tax free income.
Tuvalu is a nine islands nation located in the Western Pacific Ocean. Situated halfway between Australia and Hawaii, its population mainly consists of Polynesian descent (96%).
It was formerly called the Ellice Islands. After more than 80 years of being a British colony, independence was achieved in 1978, but remains as part of the British Commonwealth.
Its political system is described as a “non-partisan parliamentary democracy under constitutional monarchy”. It has a democratically elected one house parliament and a prime minister. Its monarch is England’s Queen Elizabeth II.
The judicial system is based on English Common Law. While its primary language is Tuvaluan, English is its second official language.
Tuvalu IBC Benefits
A Tuvalu International Business Company (IBC) obtains the following benefits:
• Total Foreign Membership: All of the shareholders can be foreigners.
• Tax Free: As long as no income is derived within Tuvalu, all income is free from taxation. However, U.S. taxpayers and others paying taxes on global income must report all income to their governments.
• Privacy: The names of the shareholders are not included in any public records.
• Limited Liability: A shareholder’s liability is limited to his or her unpaid share capital contribution.
• Personal Liability Limit: Shareholders, directors, and officers are no held personally liable for an IBC’s debts or defaults unless due to his or her own acts or conduct.
• Fast Incorporation: An IBC can be incorporated in one working day.
• One Shareholder/One Director: Only one shareholder and director is required which can be the same person for total control.
• No Minimum Capital: There is no requirement for a minimum authorized capital.
• English: After 80 years as a British colony, English is its second official language.
Tuvalu International Business Company (IBC) Name
IBC’s must choose a company name different from all other legal entities in Tuvalu.
Since IBC’s offer limited liability and limits the number of shareholders, the company name must end with the word “Limited” or its abbreviation of “LTD”.
Restricted Business Activities
IBC’s can engage in any type of business around the world. However, they cannot conduct any business with residents. In addition, they cannot own real estate located in Tuvalu.
Separate licenses must be obtained to carry on business as a bank, insurance, trust, or re-insurance.
Private Companies Incorporation
Private companies are called “proprietary” in Tuvalu. In order to incorporate, private companies must issue a Memorandum limiting the maximum number of shareholders to 20. The transfer of shares must be restricted. No shares or debentures can be sold to the public. Invitations to the public to deposit funds with the IBC are prohibited. Directors must be shareholders. Only one class of shares may be issued.
Application is made with the Tuvalu International Companies Registry.
The following documents must be filed with the Registrar:
• Application for Formation;
• Memorandum of Association; and
• Articles of Association.
Upon completion of the filing of the application and the memorandum, the Registrar issues a Certificate of Incorporation.
Memorandum of Association
A Memorandum must contain the following details:
• Company name;
• Registered office address;
• Share capital amount;
• Statement that it is a proprietary (private) company;
• Declaration of limited liability for the shareholders;
• Purpose of the company;
• Number of directors.
Articles of Association
The Articles of Association are the bylaws of the company setting forth the rules under which the company operates.
Shareholders’ liabilities are limited to their unpaid contributions to the shares capital. In other words, whatever is owed to complete full payment for the shares they purchased?
No director, member (shareholder), officer, or agent shall be liable for any default, obligation, or debt of the company unless he or she is liable for own acts or conduct.
Only one shareholder is required to form an IBC. Shareholders can be citizens of any other country and reside anywhere in the world.
Only one class of shares can be issued.
A minimum of one director is required to manage an IBC. Directors can be residents and citizens of any country living anywhere.
The appointment of officers is optional as they are not required.
Registered Agent and Office
Every IBC must appoint a local registered agent and maintain a local office address which can be the registered agent’s office.
The registered agent must keep a register of directors and a register of shares at the registered office which are confidential and not available for public inspection nor filed with the government.
IBC’s do not pay any taxes. No corporate tax, no income tax, no withholding taxes, or stamp duty. These exemptions apply as long as the IBC only gains income from international business activities and not locally.
Note: U.S. taxpayers and all others paying taxes on their worldwide income must report all income to their government’s tax authorities.
IBC’s are not required to file any financial statements or tax returns. Audits are not required.
There is no minimum authorized share capital.
Time for Formation
An IBC can be formed and registered within one business day.
Shelf companies can be purchased in Tuvalu.
A Tuvalu International Business Company (IBC) can take advantage of the following benefits: 100% foreign ownership, no taxation, fast formation, privacy, no minimum capital, limited liability, limited personal liability, and English is the official second language.