Pandora Papers: Is it illegal to setup an offshore company?

Offshore companies refer to any business activity that takes place outside of the resident country. This term is usually used in the financial sectors to describe locations where regulations are different than that of the home country. Offshore locations are generally island nations, where entities set up their corporations, investments, and deposits e.g. British Virgin Islands, Seychelles, The Caribbean, Hong Kong and Belize. There exists an impression that an offshore company is not a legal entity but this isn’t the case because offshore company incorporation doesn’t exclude the company from the law, instead, the company owner is bound by the laws of that location/country and hence matters such as compliance, accounting, filing, and licensing must all be taken earnestly. The benefits available to offshore companies include favorable tax laws, relaxed regulations, asset protection, some level of confidentiality and reduced risk due to diversified portfolio formation. But critics suggest that offshoring helps hide tax liabilities and money laundering.