One employee in a little office.
A real functioning place that does something, e.g. processing orders or some paperwork.
Something bigger. Describe.
How is it not real? You don't need any employees based there to establish a real company. Employees can be located anywhere. There are many administrave companies in these kinds of locations who's business is to provide a valid address and take care of the local requirements.think, not for sure, but I think what he is asking is your opinion on what the US government should recognize. For example if the "company" licensed in the Caymans only has an office and one employee but does a large amount of business through it's US devision, should the US government be going after them for Tax Evasion? Since basically, the company isn't real there.
In our case, the USA based distributor takes possession of the product outside the USA. We have no USA income and therefore are not obligated to file USA taxes.
A lot of companies similar to ours use these techniques. Its pretty straight forward if the company has the right structure.I don't know how many actually use that scheme, but frankly I like it. It allows a company to only be taxed on profits earned in the US instead of total profits as I understand it. Maybe a tax lawyer or corporate lawyer can give you more information.