There are at least three reasons. The first, generally, is cost reduction. It’s not just tax rates, but could also be payroll, rents, interest rates, utilities and materials. If Your competition have lower costs and You can’t, your business will fail. The second reason is asset protection – in simple terms, protection from your national government robbing you blind. The third reason is the business climate – simpler regulation, less red tape, incentives for doing business. All of these reasons usually complement each other. Many countries – especially the small ones – often have powerful combinations of all of these advantages.