| Offshore companies have the following advantages which may be beneficial,such as simplicity to set-up and reporting, low maintenance fees and confidentiality.Mergers and acquisitions of domestic enterprises by offshore companies will improvethe liquidity of foreign capital and facilitate the foreign investors acquiring thedomestic enterprises. Meantime, the domestic enterprises or individuals may makeuse of offshore companies to invest abroad or do round-tripping investment. However,due to the improper operation on offshore companies by few domestic enterprises,some people have one-sided and negative view of offshore companies, which appearsthat the only purpose of offshore business operation is to evade the tax andsupervision or serve some ulterior purpose and even they make inevitable connectionbetween offshore company and capital flight, loss of state-owned estate and taxevasion. There is also one-sided and negative view of the offshore companies ininternational society and they attributes the unfair competition, multi-national moneylaundering and criminal to the development of offshore companies that effecting thefair development of the global economic development.As a developing country attracting a huge amount of foreign capital, China shallnot underestimate the impact of offshore companies. Therefore it is not to neglect thelegitimate supervision on cross-border investment by offshore companies. Based onthe domestic laws and regulations, this essay takes research on the foreign investmentlaws, taxation system, foreign exchange system and hidden risks relevant to offshorecompanies. The essay proposes to take effective supervision on offshore companiesby improving the legal system so that the investor may make reasonable use of theadvantage of offshore companies while avoid disadvantage in multinational trade. |
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