In several countries, the tax system allows for the sheltering or deferring certain types of income by establishing companies in zero tax jurisdictions. Often, these companies are used for one-time transactions or for regulatory or personal holding purposes. Companies established in the British Virgin Islands as well as Anguilla, the Bahamas and the Cayman Islands can serve these purposes. Companies or trusts in countries with a territorial tax regime, like Singapore, Hong Kong and, to a certain extent, New Zealand, can provide the same result.

The most common reason for establishing a zero-tax company is so that the company can act as an intermediary for purchasing and selling of goods and/or services. Profits can then be realized in the zero-tax jurisdiction. The zero-tax company is also frequently used as an investment company, reducing income taxes by financing local activities through an offshore loan instead of an equity investment. The Company receives tax-exempt interest income in the zero tax jurisdictions. Zero-tax structures are regularly used to benefit from the differences in legislation between various countries where complicated securities laws or currency restrictions exist.

Ultimately, such zero tax companies can efficiently net profits and losses before up-streaming dividends to a higher tax jurisdiction.