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The way I understand it, the offshore companies exist for the purpose of funneling money out of "onshore" companies and out of the country. Extraction of dirty

The way I understand it, the offshore companies exist for the purpose of funneling money out of "onshore" companies and out of the country. Extraction of dirty money (from bribery) is also very easy to do with offshore companies. The third reason is to add confusion about ownership of companies and real estate. More simply, offshore companies help rich people pay less taxes. Why do countries permit offshore companies to dominate and rob their economies ? Could anyone explain it to me ? Wouldn't banning trade with offshore companies have the effect of drastically reduced corruption and illegal "schemes" ? Edit: By "offshore" I mean companies registered in small island nations or "tax havens".

kasey_junk 11y ago
International trade requires operating companies in many jurisdictions. Even something as small as a single person consultancy that has clients in 2 countries (Canada/USA say) are frequently benefitted by having entities in each location. Those entities also need money, frequently in each location, so holding cash in banks in each location is also beneficial. Having offshore corporations is not evil, its just mechanics.
- justsaysmthng 11y ago
  Your comment doesn't contain an answer to my question. Having entities in different countries for easier interface with local customers and authorities is very different from transferring ownership or large chunks of money to a company registered in the British Virgin Islands, population 28,054. Maybe "it's just mechanics" in some countries where corruption is low, but the world is very corrupt and offshore companies are tools which allow for this corruption to happen.
  - kasey_junk 11y ago
    Here is a more direct answer then. Banning trading with foreign companies would destroy international trade for the company doing the banning. Most jurisdictions view the benefits of that trade to be worth the costs. As for legislating how you can do transfers/ownership/taxation etc of foreign entities and cash, every jurisdiction in the world already legislates that. This article is about a law firm that exists solely as experts in that area for instance.
cromulent 11y ago
There was a recent Planet Money show on this topic. http://www.npr.org/sections/money/2016/03/30/472452808/episode-403-what-can-we-do-with-our-shell-companies http://www.npr.org/sections/money/2016/03/30/472452808/episo... I was interested to hear the example they had for a legal reason: JOFFE-WALT: But again, Daniel and David emphasized they do not help people launder money or do anything illegal with offshore entities. There are lots of legal reasons to have companies like these. They would repeat again and again as we spend time with them. For instance, they said, imagine, you know, you have a international T-shirt making company, and you have investors from Canada and Mexico and China, all over the world. So sure, you could set up your company here in the U.S. But if you do that, then the Canadian and Mexican and Chinese investors, they all have to file tax paperwork in the U.S. And sometimes it's just easier to set up the company offshore, have the company file all the paperwork. You know, the same amount of taxes gets paid, but ultimately, it's just less paperwork for all the investors.

kasey_junk 11y ago

International trade requires operating companies in many jurisdictions. Even something as small as a single person consultancy that has clients in 2 countries (Canada/USA say) are frequently benefitted by having entities in each location. Those entities also need money, frequently in each location, so holding cash in banks in each location is also beneficial. Having offshore corporations is not evil, its just mechanics.

justsaysmthng 11y ago
Your comment doesn't contain an answer to my question. Having entities in different countries for easier interface with local customers and authorities is very different from transferring ownership or large chunks of money to a company registered in the British Virgin Islands, population 28,054. Maybe "it's just mechanics" in some countries where corruption is low, but the world is very corrupt and offshore companies are tools which allow for this corruption to happen.
- kasey_junk 11y ago
  Here is a more direct answer then. Banning trading with foreign companies would destroy international trade for the company doing the banning. Most jurisdictions view the benefits of that trade to be worth the costs. As for legislating how you can do transfers/ownership/taxation etc of foreign entities and cash, every jurisdiction in the world already legislates that. This article is about a law firm that exists solely as experts in that area for instance.

cromulent 11y ago

There was a recent Planet Money show on this topic. http://www.npr.org/sections/money/2016/03/30/472452808/episode-403-what-can-we-do-with-our-shell-companies http://www.npr.org/sections/money/2016/03/30/472452808/episo... I was interested to hear the example they had for a legal reason: JOFFE-WALT: But again, Daniel and David emphasized they do not help people launder money or do anything illegal with offshore entities. There are lots of legal reasons to have companies like these. They would repeat again and again as we spend time with them. For instance, they said, imagine, you know, you have a international T-shirt making company, and you have investors from Canada and Mexico and China, all over the world. So sure, you could set up your company here in the U.S. But if you do that, then the Canadian and Mexican and Chinese investors, they all have to file tax paperwork in the U.S. And sometimes it's just easier to set up the company offshore, have the company file all the paperwork. You know, the same amount of taxes gets paid, but ultimately, it's just less paperwork for all the investors.