An offshore company in the UAE is an international business company (IBC) owned by foreign capital registered in a tax-free jurisdiction on the territory of one of the country’s free economic zones (Free Zone). In the UAE, such companies can only be registered in three of the seven emirates in free zones: JAFZA (Jebel Ali Free Zone Authority) in Dubai, AFZ (Ajman Free Zone) in the emirate of Ajman, and RAKIA (RAK Investment Authority) in Ras Al Khaimah.
Main Types of Offshore Companies and Their Distinctive Features
You can open an offshore company in the UAE in various organizational and legal forms. Register the following types of offshore companies in the UAE:
- LTD is a limited liability company, the founder of which can be one or more individuals and legal entities, and the authorized capital is divided into shares.
- LLC is a limited liability company, a cross between a limited liability company and a corporation. It must have at least two founders. The liability of each shareholder of such a company is limited to his share in the share capital.
- UC (Unlimited Company) – a company with unlimited liability. Its owner (owners) are liable with their property for all obligations.
If you want to open an offshore company in Dubai, Ajman, or Ras Al Khaimah, don’t hesitate to contact Dynasty Business Adviser for advice on choosing the type of company.
What Are the Benefits of a Business Opening Offshore in the UAE
Registration of an offshore company in the UAE provides foreign firms with several advantages that allow them to organize profitable legal activities in a prestigious jurisdiction with a good reputation in the business world and minimize their costs.
Tax Benefits and Advantages Over Other Countries
The main advantage of opening an offshore company in the Emirates is the absence of tax pressure. International business companies are exempt from paying the following taxes:
- profit tax;
- capital gains tax;
- VAT (even if the offshore is engaged in the import-export of goods – subject to this tax in the UAE);
- royalties, interest, and dividends tax;
- income tax.
The only tax deduction a UAE offshore company pays is a property purchase tax of 4%. In addition, the company will have to pay an annual offshore re-registration fee ($1,750).
Similar conditions exist for classical offshores (Dominican Republic, Belize, Panama). Still, they all have a very dubious reputation, while the United Arab Emirates is not on the black and gray lists of the OECD and FATF. Therefore, most companies are willing to cooperate with firms registered in one of the offshore zones of the UAE.
Protection of Privacy and Personal Data
The United Arab Emirates ensures complete confidentiality of personal data about the beneficiaries and directors of offshore companies, economic and financial activities of offshore companies since this country:
- is not a member of the OECD;
- registers companies in non-public, closed registers;
- does not exchange information with tax departments and services of other countries.
The confidentiality of offshore activities in the Emirates is ensured following the Federal Law-Decree 45, which entered into force on January 2, 2022.
A Wide Range of Services and Highly Qualified Specialists
After registering an offshore company in the UAE, it will be easy to find well-trained personnel among many highly qualified specialists among ex-pats. In addition, a wide variety of business services are offered here – from consultations and substantial assistance in registering and re-registering a company to IT services that every modern business needs. The specialists of our company will help you prepare and legalize all documents and quickly register an offshore company in the emirate of Dubai, Ras al-Khaimah, or Ajman.
What Is Allowed for Offshore Companies in the Emirates
Offshore companies registered in the UAE are permitted to:
- conduct international trade in goods that are not prohibited by the laws of the country and the emirate;
- manage maritime transportation;
- act as a holding company;
- provide consulting services, except for offshore companies registered with JAFZA;
- provide professional services outside the country;
- open bank accounts and make deposits in banks located in the UAE and abroad;
- purchase real estate in the emirate in which the offshore is registered as part of projects approved by the free zone management;
- act as the founder of companies in the Emirates and outside the country.
As you can see from the above list, offshore business in the UAE has good prospects for profitable activities.
What Is Prohibited for Offshore Companies in the Emirates
Along with versatile business opportunities, there are some restrictions for offshore companies in the United Arab Emirates. They are prohibited from:
- conducting any business activity in the UAE;
- receiving bank transfers from companies registered in the Emirates;
- applying for a residence visa for founders and directors;
- renting a physical office throughout the state;
- engaging in finance, banking, and insurance without obtaining a special license.
What is the difference between offshore and other types of companies?
The main differences between offshore and onshore types of companies in the United Arab Emirates are shown in the comparative table.
| Named | Onshore company | Offshore company |
|---|---|---|
| Business registration | In any of the 7 emirates | Only in the offshore free economic zones of Dubai, Ajman or Ras Al Khaimah |
| Organizational and legal form of business | Companies with limited (LTD, LLC) and unlimited (UC) liability, Sole Proprietorship, branches (Branch of a Freezone Company, Branch of a Foreign Company) | International Business Company (IBC) – offshore companies can be registered only as international business companies |
| Restrictions on areas of activity | Any type of activity regulated by licenses issued during registration | International trade, consulting, sea freight transportation |
| Doing business in the UAE | Allowed | Armored |
| Rent a physical office | Yes, for certain types of activities it is a prerequisite | Armored |
| Opening a bank account | To open a corporate account, you can contact any bank in the country | Not all banking institutions in the Arab Emirates will work with an offshore account |
| Resident visa for founders | Issued for a certain period with the possibility of extension an unlimited number of times | It can’t be formalized |
| Cost of registration | From $6990 | From 6000 AED |
| Terms of opening a company | 1-90 business days | 1-14 business days |
How Much Does It Cost to Open an Offshore Company in the UAE?
The cost of opening an offshore company in the United Arab Emirates depends on the chosen free zone. In RAK Investment Authority and Ajman Free Zone, opening an international business company (IBC) will cost 6,000 AED (dirhams); registration of a similar offshore company in Dubai will cost several times more – from 15,000 AED, depending on the type of activity.
How to Open an Offshore Company in the UAE: Registration Procedure
To open an offshore company in the UAE, you must adhere to the following algorithm of action:
- Find a local registration agent who will deal with offshore registration and the annual renewal of the registration certificate.
- Determine the type of activity of the future company.
- Choose a suitable free zone where this type of business is allowed, taking into account the cost and features of registration.
- Come up with a company name in English.
- Find directors – their number must meet the requirements of the free zone management.
- Collect and legalize the necessary documents.
- Pay the registration fee and apply to open an offshore company along with a package of documents to the free zone management.
- Wait for a decision, and receive a registration certificate and other constituent documents.
- Open an offshore account.
Dynasty Business Adviser (UAE, Dubai) is a certified registered agent and will help you open an offshore company in Dubai and other emirates of the country in the shortest possible time.
In Which Emirate Is It Better to Open an Offshore Company in the UAE
The most prestigious option would be to open an international business company in the emirate of Dubai, in the Jebel Ali offshore zone. Such an offshore will have a high reputation, which is beneficial for doing business with other countries. But it must be taken into account that:
- Company registration will cost more than in AFZ and RAKIA free zones.
- Opening an offshore company in Dubai will take longer (1-2 weeks only for registration, while in Ajman and Ras Al Khaimah, an offshore company can be registered in 1-3 days).
- You will need to hire at least 2 directors (in other emirates, one is enough).
- The founder’s presence or a letter of attorney from the registered agent will be required to open a company.
If you want to open an offshore company in the emirate of Ras Al Khaimah, you should have an authorized capital of 1000 AED.
Offshore Bank Account
An offshore company in the UAE will need a bank account to conduct business. You can open a corporate and personal offshore account with an Emirates local or foreign bank. It should be noted that most banks in this country do not work with offshore companies.
Our company specialists will help you find a reliable bank and open an offshore account. You only need to provide us with a package of necessary documents, and we will take care of their translation and consular legalization. When applying, you will need to be present at the bank.
Risks When Dealing with Offshore Companies in the UAE
When operating an offshore company, there are the following financial risks:
- Unforeseen tax liabilities include fees for a permanent establishment and other payments.
- Invalid transactions may occur if you do not provide information on the ownership structure stipulated by the contract terms.
- Unforeseen subjects of tax liability if customers and partners are individuals and legal entities, for example, from the UK or the USA.
Tips and Recommendations for Working with Offshore Companies in the UAE
When working with an offshore company in Dubai and other emirates, you should:
- study the local legislation well for obligatory payments for offshore companies;
- evaluate the possibility of unexpected taxes when concluding contracts with companies from high-tax jurisdictions;
- monitor compliance with tax laws concerning residents of the UAE if they are co-owners of the offshore.
Do you want to register a company in the UAE, quickly and easily, as well as avoid risks in your future work? Contact the licensed registrar Dynasty Business Adviser!
