An offshore company formation in the UAE provides several advantages and benefits to business owners and entrepreneurs. For these international investors, the UAE market offers an independent and “whitelisted” overseas territory.
In this article, you will learn everything about offshore company formation in the UAE and its benefits. Additionally, we will learn its definition, and at the of this article, we will answer some FAQs. Let us observe:
1. What is an offshore company?
The local authorities have designed offshore companies to operate outside of their registered jurisdiction or primary location. As a result, UAE offshore companies cannot conduct business within the UAE.
People frequently confuse offshore companies with Free Zones by those living outside the UAE. The offshore company is legally outside of a country’s borders, whereas a Free Zone is within but governed by the local authorities’ rules; which frequently offer lighter regulation and duty exemptions.
On the other hand, offshore companies do not provide UAE residency visas to their owners, whereas free zones will assist investors with UAE residency status.
2. The benefits of an offshore company formation in the UAE
2.1. Anonymity in business
Offshore company registration in the UAE provides advantages in terms of anonymity when conducting business in Dubai and the other Emirates. One of the primary benefits of operating an offshore company in the UAE is confidentiality; such an advantage has attracted investors, entrepreneurs, and businessmen from all over the world to be a part of an offshore business setup.
2.2. Asset safeguarding
In contrast with domestic business structures, offshore company UAE has asset protection jurisdictions that provide a strong and reliable platform for investors. Asset protection provisions are provided to foreign trustees by Dubai offshore companies as well as offshore companies in the UAE. Hence, this allows them to erect a legal barrier between the company’s assets and its creditors.
2.3. Taxation
Another significant advantage of an offshore company formation in the UAE is that it is completely tax-free. Tax-free environments provide transparency for business people to engage in business activity and profit fully.
Furthermore, this type of tax management encourages stakeholders to invest within the country, resulting in numerous commercial advantages and a stronger economy.
2.4. DTTA stands for Double Taxation Avoidance Agreement
A tax treaty signed between countries to benefit investors and foreign residents is known as the Double Taxation Avoidance Agreement. According to the treaty, taxpayers and international residents can avoid paying taxes in both the source and residence countries.
Because the UAE has signed the DTAA with over 40 countries around the world, offshore company formation has more advantages.
2.5. Lawsuit defense
Lawsuit protection in an offshore company formation in the UAE protects your assets in the event of a legal judgment. An offshore authority in the UAE ensures that your company is formed ethically, but that in the event of a legal proceeding, the resources and other assets involved are protected.
2.6. Get complete control
Unlike other GCC countries, they do not require an offshore company to have a local partner or shareholder. You can easily become the director of an offshore company regardless of your nationality. Furthermore, shareholders can own real estate in a variety of designated areas.
You can run your business however you want without relying on any other local partner or entity. However, if you want to involve a local partner in the hopes of utilizing their skills or experience in the country, you are free to do so.
3. Formation process of a RAK offshore company
Ras Al Khaimah (RAK) is one of the seven emirates that comprise the United Arab Emirates Federation (UAE). This is an emirate in the UAE on the Arabian Gulf coast. It takes only 50 minutes to get to Dubai International Airport and 25 minutes to get to RAK International Airport.
Hence, RAK is proud of its traditional shipbuilding and trade, as well as its leadership in quarrying, manufacturing, and tourism. Ras Al Khaimah has steadily grown and gained credibility as a desirable business location with a dynamic and diverse economy.
Commercial incentives and low-cost business setups have drawn a diverse range of commercial activity. Furthermore, a RAK offshore company provides a quick and viable solution for companies looking to redomicile from more traditional offshore solutions. For this reason, RAK firms are ideal.
- Transactions in structured finance
- Ring-fencing assets and securitizations
- Property and asset ownership in real estate.
- Special purpose vehicles and holding structures
- Asset protection and estate planning
3.1. Key characteristics of a RAK offshore company
- There must be at least one shareholder, and they permit corporate shareholders. All company documents must be attested for international corporate shareholders.
- They permit corporate directors, and they require a minimum of one director. The public register does not contain information about the directors.
- They also require a secretary in every business. A company director may also serve as a secretary.
- Share capital. There are no share capital requirements.
- Annual reporting. In addition, they require every company to keep accounting records for seven years from the date of preparation. They do not require the accounts, however, to be filed with the RAK authorities.
4. Incorporation of a JAFZA offshore company
JAFZA was established in 1985. It is an industrial area surrounding the Jebel Ali Port, one of the world’s largest shipping ports that allow international companies based there to take advantage of the free zone’s special benefits.
These include a 15-year exemption from corporate tax, no personal income tax, no import or export duties, no currency restrictions, and easy labor recruitment. In addition, Jebel Ali is located just outside of Dubai and is about an hour’s drive from Abu Dhabi, the capital city of the United Arab Emirates.
Al Maktoum International Airport, which will be the world’s largest airport in terms of both freight and passenger volume, is being built just outside the port area.
The offshore company was introduced in 2003 by the Jebel Ali Free Zone Authority (JAFZA) in collaboration with the Dubai Government under the Jebel Ali Free Zone Offshore Companies Regulations 2003.
4.1. Key characteristics of a JAFZA offshore company
- Firstly, there must be at least one shareholder, and they permit corporate shareholders. International corporate shareholders must attest to all company documents.
- They do not permit corporate directors, and they require a minimum of two directors. The public register does not contain information about the directors.
- A secretary is required in every business. A company director may also serve as a secretary.
- Share capital. There are no share capital requirements.
- Annual reporting. Lastly, they require every company to keep accounting records for ten years from the date of preparation. To examine and report on accounts, the company must appoint an auditor (from a pre-approved list).
4.2. The key advantages of registering an offshore company in JAFZA
- 100% foreign ownership. They do not require any local shareholding under the JAFZA offshore companies regulations.
- Ownership of local real estate. A JAFZA offshore company is the only offshore company permitted to directly own local Dubai real estate. JAFZA offshore companies can own most properties in Dubai, but they require both Free Zone and developer approval.
- Shares in local companies. Despite a general prohibition on offshore companies doing business with UAE residents, the authorities permit offshore companies to own shares in both Free Zone and Onshore (LLC) Companies. Documents for use in the UAE, Bahrain, Saudi Arabia, and Qatar do not require authentication.
- Local bank account. To conduct routine international transactions, an offshore company can maintain multi-currency bank accounts in the UAE.
- Shareholder/Director information. They do not require the names of shareholders and directors to be published on a public register.
- Lastly, the registrar has the authority to appoint inspectors to investigate an offshore company’s affairs. All inspection fees may be levied against the company’s owner.
5. Some frequently asked questions
5.1. How long does it take to establish a UAE offshore company?
After Connect Services Middle East receives all of the necessary registration documents from all shareholders and directors of the new company, it takes approximately one week to register a RAK IC. On the other hand, it will take approximately 4 weeks to register a JAFZA Offshore company.
5.2. Is it necessary for me to travel to the UAE to register a UAE offshore company?
Such a requirement does not exist for registering a RAK IC. However, for a JAFZA Offshore Company, the shareholders and directors must sign in the presence of Jebel Ali authorities.
5.3. Is it possible to get a UAE residency visa through an offshore company in the UAE?
Offshore companies cannot issue visas. A resident visa can only be issued by Mainland and Free Zone companies in Dubai. If you intend to apply for a resident visa or hire foreign workers, you may need to establish a company in a Free Zone or on the Mainland.
5.4. Is it possible for an offshore company to rent office space in the UAE?
No. Each company, however, must have a registered address and can use it to receive mail and perform other secretarial services. As a registered agent, Connect Services Middle East can provide these services in the best business centers.
5.5. Is it necessary for me to have a bank account in Dubai, or can I have an international account?
They typically form offshore companies in the UAE to take advantage of local banking services and a 0% tax rate. These companies may, however, have accounts in other parts of the world. For this reason, we have numerous international banking relationships around the world and can make the necessary introductions. Therefore, if you would like to better understand this process, you can count on our tailored banking services.
5.6. Additional considerations for offshore companies in Dubai
You must consider certain aspects when registering an offshore company in Dubai. Following the requirements precisely will ensure that you receive your business license as soon as possible. In addition, your offshore company in Dubai can begin full-fledged business operations. Additional considerations for offshore companies in Dubai include:
- A non-UAE resident can also serve as a director of the offshore company. However, the designated manager must be a UAE resident.
- Offshore companies cannot conduct banking, insurance, or real estate transactions.
- Offshore companies cannot have a physical office in the UAE.
- There is no yearly government audit.
- A resident visa to the UAE is not permitted.
- Offshore companies cannot conduct business in Dubai Mainland.
- Finally, an offshore company can also own stock in other companies.
6. How can Connect Services Middle East help you?
Now, you are aware of the benefits of an offshore company formation in the UAE. Dubai is the primary business hub for the entire Middle East region. It maintains its dominance in the vast region by encouraging foreign investors to take advantage of various business startup formations, such as offshore companies.
Because they are owned and controlled by foreign investors, most of whom venture into international markets, offshore companies are also known as non-resident companies or international business companies. We, at Connect Services Middle East, can provide you with the best assistance with our business consultancy.
Did our guide help you? In case you are interested in an offshore company formation in the UAE, please contact us. Our phone number is +971 43 316 688. However, in case you prefer to send us an email, here you can do it: contact@c-uae.com.
