An IBC cannot be engaged in local business (although it can invest in the domestic company and keep a administrative office in Seychelles). It must keep to international business and it cannot be engaged in the business of banking, insurance and trustee services, and it cannot even apply for any licences for those prohibited businesses. Because it cannot operate locally it does not have to file annual returns, tax returns and accounts.
Structurally the 2 types of companies are very similar but a domestic company needs 2 directors instead of one (who must be individuals) and 2 shareholders instead of one. In some local businesses carried out by the domestic company, local shareholders may be required. This may all change shortly and the domestic company may soon also allow you to have only 1 director and 1 shareholder just like with an IBC. Filing and reporting requirements of the domestic company may also be changed so that the only real difference that will remain will be in the scope of their operations and in their tax positions.