Incorporating Offshore
September 28, 2014 Leave a comment
An offshore company is a corporation or other type of legal entity which is incorporated or registered in an offshore financial centre or “tax haven”‘.
The extent to which a jurisdiction is regarded as offshore is a question of perception and degree.Classic tax haven countries such as Bermuda, British Virgin Islands and the Cayman Islands are quintessentially offshore jurisdictions, and companies incorporated in those jurisdictions are invariably labelled as offshore companies. Then there are certain small intermediate countries such as Hong Kong and Singapore ,sometimes referred to as “mid-shore” jurisdictions, which, while having oversized financial centres, are not zero tax regimes. Finally, there are industrialised economies which can be used as part of tax mitigation structures, including countries like Ireland, the Netherlands and even the United Kingdom, particularly for corporate inversion.Also, in federal systems, states which operate like a classic offshore centre can result in corporations formed there being labelled as offshore, even if they form part of the largest economy in the world ,for example, Delaware in the United States.
Similarly, the term “company” is used loosely, and at its widest can be taken to refer to any type of artificial entity, including not just corporations and companies, but potentially also LLCs, LPs, LLPs, and sometimes partnerships or even offshore trusts. Read more of this post
Under the Indian tax law, long-term capital gains on listed equity shares (capital gains when there is at least a year’s gap between the time a share is bought and when it is sold) is tax-free. This fact is used to launder money as explained by Prashant Kumar Thakur in his book ‘Tax Evasion through Shares’.For example,a broker and his client could strike a deal whereby the broker sells shares in a penny stock to his client for a low price, say a few rupees.The catch here is that the contract note issued to the client is backdated to a year earlier. In the interim, the broker has manipulated the price of the stock up through circular trading — two or more brokers circulate the stock between them each selling at a higher price than earlier. After the client has bought the shares for a few rupees each, he transfers physical cash to the broker who then routes it through a range of accounts. In the final step, the broker ‘buys’ the shares back from his client at the higher price, locking in a long-term capital gain. Essentially, the broker has routed the client’s own money back to him, with the advantage that the client can show this as a legitimate capital gain in his tax return — a gain which is tax free.For this purpose,many CAs control a clutch of listed companies each. 
This is a link to an interview of Robert Kiyosaki by Time Magazine: 
wealthymatters 