On the illegal end of things, typically the benefit is three fold, one is that the company obscures the identity of the beneficial owners (simply by not reporti

On the illegal end of things, typically the benefit is three fold, one is that the company obscures the identity of the beneficial owners (simply by not reporting the shareholders), tax evasion - often this being the entity holding the money in a tax free offshore jurisdiction (I.e. It's may be easier and you less likely to get caught evading taxes if a Panamanian trust opens a brokerage account in Hong Kong), and lastly as conduits of illegal gains - money laundering - company a takes illegal money in Mexico, makes a loan to company b in Panama which pays a dividend to company c in the United States (and paying tax on that dividend and deposing the rest in a u.s account to spend freely). On the legal side there are actually probably more reasons, anonymity being one (I.e. Hiding from your neighbors who just bought the house next door), numerous legal tax avoidance reasons (two common ones would be: 1. Because of the u.s. Tax code (unlike most other places) the u.s. Charges corporate tax on foreign income but only when it is repatriated - so many companies will avoid tax by having offshore subsidiaries that hold IP to keep profits from coming back to the u.s. and being subject to tax (see every big software company with irish subsidiaries or swiss corporate inversions) 2. Hedge fund/private equity business makes extensive use of offshore companies so that non-u.s investors do not become subject to US tax and also so that US non-taxable investors (pensions and universities) do not create inadvetant tax liability for themselves (UBTI in particular)), also simple local compliance i.e. if you are a u.s. citizens and want to buy land in mexico i believe there are certain areas (typically near the coast) where the only way you can do this is to form a mexican entity)