There are companies that using overseas shell company to avoid tax, or reduce tax, through profit transfer or pricing transfer method, especially for those tax heaven countries.

Eg.
A has a local company (X) doing export business, so every profit you made to need to taxed at 24%.

Now A set up another shell company (Y) at country Z, that only has corporate tax of 10% or tax exempted countries.

X sell the good to Y first at cost, (no profit made, hence no tax locally),
But then Y sell to the customer at a profit but the profit is taxed at much lower rate or no tax at all, as Y is following Z country tax rate.

In this way, A has evaded the tax through an overseas shell company.

So beware on this kind of issue, especially if one is running the actual business/operation here through overseas shell company as it may look suspicious in the eye of both countries tax department.
And every countries tax ruling may not the same, and one needs to clear about respectively country tax law.

The main reason is probably the ease of setting up shop in country Z.

Setting up a foreign company is not easy. The requirement usually is one of the below or maybe a few of the below combined.
1)You're a citizen or permanent resident
2)If you're opening a foreign owned company, you usually require one of the directors to be a citizen of the country
3)High paid up capital. Usually in millions. For Signapore for example, you must have a min of 5 mil and employ at least 10 people if I'm not wrong.

For the normal person, it is usually not possible to just set up shop in another country. But for the rich, these problems can be solved with money. Easily.