Hi Everyone,
Thought I would add some comments to clarify some of the points discussed.
Firstly, the word "offshore" is often thought to mean different things to different people. Offshore can be understood as the jurisdiction outside that of your home country or residence, usually a Tax Haven or country that has established beneficial laws relating to paying either low or zero taxes (on income derived from outside of the country incorporated in) and has good Privacy & Asset Protection.
Panama certainly meets this criteria and is a good place to establish your company.
Getting back to the original question, what can an Offshore Company be used for? Well anything you would usually use a traditional company for. Trading in business, holding assets etc. The main difference is that the company can offer a high degree of protection to the beneficial owner. The Offshore Company can also prove to be a cost effective investment, because of the many benefits such as reduced taxation.
The Company is best structured with Nominee Directors and Bearer Shares, so that you are not on any public records.
It is worth mentioning that you should also consider how you will receive funds to the business, either into an Offshore Bank Account via Bank Wire, or Credit Cards through a Merchant Account.
Hope this helps, you can find more detailed information here:
http://www.thepanamalawyer.com