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Regardless of the above, the benefits of using offshore companies as a conduit for international business, asset protection, wealth management and tax planning are numerous. It is impossible to list all of them but some of the most common are discussed below. Unless otherwise stated, the term “offshore companies” refers to all or any one of the four categories of offshore companies previously mentioned..

Reduced Tax: Most offshore companies enjoy zero or low corporate tax. Undoubtedly this is one of the most sought after benefits. Provided that the tax law of the country of origin is carefully considered, the use of offshore companies can offer legitimate and significant tax advantages.[1]

Confidentiality:[2] Most offshore companies are shielded by some form of confidentiality provision. For example, provided the business conducted is a legitimate one, it would be extremely difficult for a third party to inquire into the identity of the owner and the affairs or management of an offshore company unless the owner gives consent or disclosure is obtained through a court order. This confidentiality feature not only shields the owner from unwanted publicity but also from preying eyes.

Conduit for mobile and borderless business: Many offshore companies are being used as conduits to conduct borderless and highly mobile business. Examples of such businesses are financial advisory, consultancy, internet business[3] or investment in the world exchanges.

Cost saving: Due to this high mobility and the expansion of virtual activities, often no real or significant physical presence is required. No local licensing and staff are required. This means significant cost advantage in using offshore companies.[4]

Asset protection: A correctly structured offshore company, either alone or with an offshore trust may be used to enhance protection of assets. An offshore company normally has an in-built confidentiality feature which makes tracing of ownership daunting if not impossible. Any asset owned by an offshore company which in turn is owned by a trust gives extra asset protection features. The beneficial owner ceases to be connected to, or with, his assets and achieves anonymity in relation to his assets.

Liberal exchange control policy: Most offshore centres adopt very liberal exchange control policies which allow free remittance of profits and capital.

Access to tax treaties: Double tax treaty benefits may be enjoyed by using companies in jurisdictions that have signed numerous DTAs with other countries. The major benefit is that DTAs allow tax relief that can significantly reduced withholding tax rates. Examples of such jurisdictions are Mauritius, Labuan, Cyprus and the Netherlands Antilles.

Banking privacy: Some jurisdictions, notably Switzerland, offer very significant banking privacy benefits. Other major banking centres like Singapore and Hong Kong are equally well known and popular.

The search for political stability: There are many investors in the world who live in countries with less than desirable levels of political and economic stability. High net worth persons from politically unstable countries have often used offshore structures and centres as their financial refuge, transferring funds to an offshore location where the funds can be deposited with an offshore bank and invested with greater security. By using an offshore company as a vehicle, they can avoid death or estate duties.

Real estate holding: An offshore company is frequently interposed to own property to avoid inheritance tax and capital gains tax.

Various commercial uses: The principal commercial uses of offshore companies are numerous, some of which are:

i.      international trading

ii.     investment holdings

iii.    inter company financing

iv.    professional services or consultancy

v.      patent, royalty and copyright holding

vi.    ship management and yacht ownership

vii.   personal and corporate tax planning

viii. banking, finance and treasury management companies

ix.     debt securities issuing companies

x.    international headquarters and administrative companies

xi.     brokerage and leasing companies

xii.    insurance, life insurance and reinsurance companies

xiii. international shipping and air transport companies

xiv.  international joint venture companies for property management

xv.    mutual fund companies

xvi.   trust companies

xvii.  internet marketing companies