system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: how do the rich use shell companies and off shore accounts to hide money? Can’t the government just follow where they invested?
gpt
They can and it doesn't change anything.

Laws apply only in the country you're in. Meaning that if you manage to get the money out of the country, they can't do anything. And it's most often very legal.

An example: They create a shell company in a tax haven. They pay the shell for service (whatever they can find. Most easily consultancy. ) It's legal because they're paying for a service. Since they're spending the money and not keeping it its not profit but spending so it isn't taxed in the original country. The money is now legally out of the country and in another shell company. The original company will not pay taxes on it because it wasn't profit. Only the shell company will pay taxes but to the tax haven with incredibly low taxes.

Most likely, the tax haven will also not care if you literally pocket 99% of the profit to your account rather than follow regulations like in other countries. They still get their 1% of tax, and since they're staying that way solely to attract the filthy rich, they're not gonna change anything.

TL:DR, Pay shell company for whatever, shell company transfer to bank account. Original company don't pay taxes on spending, shell company is barely taxed.