In today’s age, the United Arab Emirates has become a global hub to start your entrepreneurship journey. The country draws various businesses and investors from all over the globe. This is because the UAE provides various benefits to corporate establishments, for instance, tax benefits, rights related to intellectual property (copyrights, patents, etc), asset protection, confidentiality, and many more.
In this article, we will take a look at legal requirements regulatory frameworks, and statutory frameworks overseeing offshore company setup in Dubai. We will explore the formation of an offshore company, what are the compliance requirements of such a company, and the guidelines for running their business
Offshore companies in the UAE are a completely different concept from that of companies located in a free zone in the UAE. A legal business entity that operates or intends to operate from outside the location of its registered dominion is known as an offshore company. They are established in specified jurisdictions which provide a conducive environment for overseas business operations. These companies are beneficial for holding various assets, international business activities, investment purposes etc.
Advantages of Setting Offshore Company in the United Arab Emirates
There are various advantages of Offshore Company Setup in Dubai. Some of them are listed below:
- Tax-free environment: A tax-free environment is one where there is no corporate tax or income tax, as well as no value-added tax, capital gains tax, or inheritance tax, is levied. Offshore companies in the UAE are exempt from paying corporate tax and income tax. This provides them a substantial savings in tax
- Strategic Global Location: The greatest advantage is the UAE’s strategic location as it is located in the middle of the world which provides access to both sides of the globe. Dubai’s location as a crossroads for trade between the East and West makes it simple to reach global markets.
- Complete Ownership and Control: They provide a hundred percent ownership to overseas enterprises. So, continue to run your company entirely through international ownership and without the need for a local partner.
- Flexible Capitalization: Since there is no minimum share capital requirement, you can launch your business with as much capital as you choose as there is no fixed capital requirement.
- Asset protection: A strong framework for shielding their assets from possible risks and liabilities is offered to offshore businesses.
Choosing the Right Jurisdiction in the UAE
Jurisdictions providing offshore company setup in Dubai
There are two jurisdictions which offers offshore company setup in the UAE:
- Ras Al Khaimah International Corporate Center (RAK ICC)
- Jebel Ali Free Zone (JAFZA)
Companies set up in Ras Al Khaimah International Corporate Center (RAK ICC) are regulated under the RAK ICC Business Companies Regulations 2018. It is established in accordance with Decree No. 12 of 2015, as revised by Decree No. 4 of 2016, RAK ICC. Ras Al Khaimah International Corporate Center is the result of the amalgamation of two company registers in Ras Al Khaimah: RAK International Companies, which was originally a component of the RAK Free Trade Zone, and RAK Offshore, which was previously a part of the RAK Investment Authority. The mission of Ras al Khaimah international corporate sector is “To be a world-leading International Corporate Registry of choice in the pursuit of stakeholder excellence and in compliance with international standards.”
Jebel Ali Free Zone Offshore Companies Regulations 2018 overseas the formation and management of companies set up as offshore companies in JAFZA. Jebel Ali Free Zone, one of the biggest free zones in the world, is home to thousands of businesses, producers, exporters, and merchants from all over the world. Due to its closeness to Jebel Ali Port, Al Maktoum International Airport, and Dubai International Airport, JAFZA guarantees global connectivity for business enterprises and provides them with around 24% of the overall foreign direct investment (FDI) flow into Dubai. With connections to one hundred and fifty ports, JAFZA is a significant hub in the worldwide trade network. With storage facilities, furnished office spaces, and industrial land, this free zone enables businesses to lower their cost of operations.
Factors to be considered while choosing a jurisdiction
Various factors are to be considered in offshore Company Setup in Dubai.
- Jurisdiction Selection :
Dubai Offshore (JAFZA): Dubai Offshore (JAFZA) is chosen for its strategic location and excellent infrastructure.
RAK Offshore: If you are in search of an adaptable and cost-effective place for your business establishment as well as regulatory compliance, then Ras Al Khaimah (RAK) is the right choice for you.
- Rules and Legal Framework Company Formation: Depending on what suits your needs best among limited liability company (LLC) formation, branch establishment, or setting up a representative office locally; select the appropriate legal form. Ensure that all laws and regulations applicable under commercial companies law of the United Arab Emirates (‘UAE’) and any free zone rules are duly observed.
- Commercial Activities:
Identify which types of business activities can be conducted within the chosen jurisdiction. Certain operations may be restricted or require additional licenses. Outline what services will be offered, where product provision will take place geographically speaking, and so forth.
- Directors and ShareholdersOwnership Structure:
Establish the number and type of shareholders (individuals or corporations) in addition to their respective share percentages. Appoint directors and determine their duties according to local laws.
- Need for Capital Minimum Capital: Confirm the minimal amount required for offshore company setup in Dubai in your chosen jurisdiction. Organize where you will get money from and ensure all necessary documents are signed before any funds are transferred.
- Financial Planning and Taxes: Utilise the UAE’s 0% corporate tax, 0% income tax, and 0% withholding tax rates on dividends or interests earned locally or internationally by companies operating within designated free zones or special development areas. Ensure that financial statements are prepared based on international accounting standards (IAS) so they are accurate and submitted timely.
- Financial Services and Banking: To ease company transactions, open a corporate bank account in Dubai or with a foreign bank. To ensure seamless business operations, make use of both domestic and foreign financial services.
- Infrastructure and Office Space Virtual Office: For flexibility and cost savings, have a look at virtual office choices. If space is needed, rent an office block in a prime location inside the selected free zone.
- Visas for Employment and Residency: Obtain residency permits for directors, shareholders, and important staff members. Assure adherence to UAE labor rules by obtaining work permits and employment visas for employees.
- Professional Services and Support Consultants: For knowledgeable advice on operational, legal, and regulatory matters, contact business setup consultants.
Legal Requirements and Process for Offshore Company Setup
- Selection Of jurisdiction: There are two jurisdictions in the UAE which provide for setting up offshore companies. Select between Jebel Ali Free Zone Authority (JAFZA) and Ras Al Khaimah (RAK) based on your business requirements.
- Company Name Reservation: Send the company’s name to the appropriate offshore authorities to reserve it. Make that the name is both unique and conforms with naming norms.
- Submission of Application: The application form must be completed within the given timeline provided by the offshore authority. define the business activities that the company is intending to carry on.
- Appointment of Shareholders and Directors: shareholders and directors must be appointed to fulfill the criteria as provided by the jurisdiction. Written consent must be obtained from the appointed directors and shareholders.
- Memorandum and Articles of Association: Draft the Memorandum and Articles of Association providing a brief idea of the company’s objectives, shareholding pattern, and governance. Submit the documents to authorities for their approval.
- Appointment of Registered Agent: Appoint a registered agent who is authorized to act on behalf of the company in the UAE.
- Share Capital: Ascertain the share capital and, if necessary, make arrangements for its deposit.
- Office Address: Provide a registered office address in the UAE to the authority. It can be a virtual office or a physical office space.
- Due Diligence and KYC: Submit due diligence documents and KYC (Know Your Customer) information for all shareholders and directors.
Documents Required for Offshore Company Formation
- Application Form
- Company Name Reservation Certificate
- Memorandum and Articles of Association
- Passport Copies of all shareholders and directors
- Proof of Address (Utility bills or bank statements)
- Bank Reference Letter
- CV/Resume
- Due Diligence Documents as required by the offshore authority
- Shareholder and Director Consent Letters
- Registered Office Address Proof
Timeline and Costs Involved in Offshore Company Setup
Timeline
- Name Reservation: 1-2 days
- Preparation of Documents: 1-2 weeks
- Submission and Approval: 1-2 weeks
- Certificate of Incorporation: 2-3 days after approval
- Total Time: Approximately 3-6 weeks
Costs
- Company Registration Fees: Varies by jurisdiction (approximately USD 2,000 – 5,000)
- Registered Agent Fees: Approximately USD 1,000 – 2,500 annually
- Office Address Fees: Virtual office services start from USD 1,000 annually
- Bank Account Opening Fees: Varies by bank
- Legal and Consultancy Fees: Varies depending on the service provider
- Miscellaneous Costs: Additional costs for notarization, attestation, and other administrative expenses
Compliance requirements
- Annual Renewal: The license and registration for your offshore business should be renewed annually. There may be fines and penalties for not doing so.
- Yearly Financial Statements: It is mandatory for offshore businesses to compile and provide their yearly financial statements to the appropriate authorities each year. International accounting standards ought to be followed in the preparation of these statements.
- Adherence to Local Rules and Regulations: It is essential that your offshore business follows all relevant Ras Al Khaimah rules and Jebel Ali free zone rules and regulations. This covers, among other things, tax laws, immigration rules, and labor laws.
- Meeting and Reporting Requirements: You must keep minute books and conduct yearly general meetings for your offshore business. Furthermore, consistent reporting to the registered agent and pertinent authorities might be required.
- Record Keeping: It’s critical to keep correct and thorough records of all business dealings, agreements, and other significant paperwork.
Why choose Avyanco UK?
A group of professionals at Avyanco UK works to simplify the company formation in Dubai procedure for investors. With all approved and required formalities, we promptly offer the best and the most dependable methods. Avyanco UK specializes in developing quick and efficient business startup plans. Get more information about starting a business in Dubai, United Arab Emirates, by getting in touch with our qualified consulting staff to see what would work best for your venture.
Our Expertise Spectrum
Mr Jashvantkumar Prajapati is the founder and CEO of Avyanco Group of Companies. He has gained recognition as a leading business personality in the United Arab Emirates thanks to his vast industry knowledge and broad range of business consulting skills, which he uses to support SMEs on their entrepreneurial journeys.
With a diversified portfolio and core competencies in investment management, business consulting, business planning, market research, and other operational business domains, he hopes to assist prospective clients and investors in establishing their businesses in rapidly developing economies such as the Middle East and North Africa (MENA).
In order to help committed investors with the necessary company formation in Dubai procedures, he launched Avyanco UK, which quickly established itself as the most reputable company setup consultancy in the UAE, assisting investors in increasing profitability thanks to his extensive industry experience and skills.
Our team in action:
We are proud to have a team of competent and skillful experts committed to bringing innovative ideas and solutions to the table with exceptional service to our clients. With a wide range of expertise and knowledge, our team works on tackling complex challenges and driving positive outcomes from our clients.
Contact Avyanco UK
Ready to launch your business in Dubai? Choose Avyanco UK to transform your company. To optimize processes, and boost business performance, our knowledgeable staff contributes unmatched industry knowledge and strategic insights, Select Avyanco UK for Company Formation in Dubai catered to your unique requirements. To book a consultation, contact us today.
FAQs
1 – What is an offshore company in the UAE?
An offshore company in the UAE is a legal business entity established to operate outside its registered jurisdiction or the location of its primary owners. These companies benefit from tax exemptions and can conduct international business but are not permitted to trade within the UAE.
2 – What are the benefits of setting up an offshore company in the UAE?
Benefits include complete foreign ownership, zero corporate and income taxes, confidentiality of shareholders and directors, minimal reporting requirements, ease of international operations, and access to a stable and business-friendly environment.
3 – How do I choose the right offshore jurisdiction in the UAE?
The UAE offers several offshore jurisdictions, including Jebel Ali Free Zone (JAFZA), Ras Al Khaimah International Corporate Centre (RAK ICC), and Ajman Offshore. The choice depends on factors like the nature of your business, specific jurisdiction benefits, and setup costs.
4 – What are the steps to set up an offshore company in the UAE?
Steps include selecting a business activity, choosing a suitable offshore jurisdiction, appointing a registered agent, preparing required documentation (such as passport copies, proof of address, and a business plan), submitting the application, and receiving the certificate of incorporation.
5 – Are there any restrictions on business activities for offshore companies in the UAE?
Yes, offshore companies in the UAE cannot conduct business within the UAE, including renting office space or employing staff within the country. They are primarily used for international trading, holding assets, and other activities outside the UAE.
6 – What documentation is required to set up an offshore company in the UAE?
Required documents typically include passport copies of shareholders and directors, proof of address, a business plan, bank reference letters, and in some cases, copies of existing company documents if the shareholders are corporate entities.
7 – How much does it cost to set up an offshore company in the UAE?
The cost varies by jurisdiction but generally includes registration fees, the cost of a registered agent, and annual renewal fees. Initial setup costs can range from $1,500 to $5,000, depending on the chosen jurisdiction and the services required.
8 – What are the ongoing compliance requirements for an offshore company in the UAE?
Offshore companies have minimal compliance requirements, including annual renewal fees, maintaining a registered agent, and ensuring proper record-keeping of financial statements and shareholder meetings. There are no audit or annual reporting requirements, making compliance straightforward.