How To Start An Offshore Incorporation In UAE
“Offshore” company formation refers to a situation in which investors prefer to invest in a tax-exempt jurisdiction to take advantage of the tax benefits.
Business investors have always favoured the tax advantages. Because of this, several nations have taken the necessary steps to become offshore jurisdictions.
You’ll find that offshore incorporation in UAE can be a rather popular goal for many businesses, small or massive in size. The United Arab Emirates is no exception on this front.
It is one of the most sought-after locations for persons dealing in the offshore sector. Or ones who want to launch an offshore firm. Keep on reading for our full breakdown of everything you need to know about how to start an offshore incorporation in the UAE.
What Is an Offshore Company?
An offshore corporation is a legal entity that operates outside of the jurisdiction of its ultimate owner. You relocate your firm to another nation to take advantage of the country’s tax benefits.
Capital gains taxes in many countries where offshore companies are set up are minimal or non-existent. There is a growing number of companies trying to outsource their activities to the UAE.
If you want to expand your business, an offshore corporation in the United Arab Emirates is a fantastic option. You don’t have to take on administrative duties if you want to expand your horizons.
Critical Features of an Offshore Incorporation in UAE
Offshore enterprises in the United Arab Emirates (UAE) are ideal for taking advantage of global marketplaces.
Before you can start doing business overseas, you must be familiar with the nuances of an offshore company organization. Here are the essential factors to bear in mind when it comes to offshore corporations in the United Arab Emirates.
- Corporate Bank Account:
In the United Arab Emirates, offshore firms may establish both corporate and personal bank accounts. In the United Arab Emirates, opening an offshore bank account to protect a company’s commercial or personal assets is a cinch. This is critical to the development of your firm, particularly if you want to use your offshore corporation to do worldwide commerce (outside of the UAE).
- Increased profits:
The corporation will experience an increase in profits due to savings in operating costs as well as sales from new products, services and ventures.
- Benefiting From The Jurisdictional Advantages:
There are only three jurisdictions that can assist with creating an offshore business in a specific Emirate of the UAE.Many different firms may benefit from offshore jurisdictions with distinct benefits. As a result, before settling on an offshore jurisdiction for your firm, it is critical that you thoroughly research each one.
- You Must Adhere To The KYC Process
Know Your Customer (KYC) procedures are followed by offshore enterprises in the UAE.To complete the KYC procedure, you’ll need to provide documentation such as a copy of your passport, proof of residence, a letter from your bank, and the biographical information of your investors. You must submit these papers to the appropriate authorities in the offshore jurisdiction.Financial crimes, including identity theft, financial fraud, and money laundering, may be tracked down with this.
Understanding Three UAE Jurisdictions for Offshore Company Formation
Offshore companies may be set up in the UAE in three key jurisdictions. Your offshore company’s success is solely dependent on the “emirate” (or state) in which it is organized.
However, what exactly is a jurisdiction?
In legal terms, a jurisdiction is a state or region where a particular court and system of law are in charge. The federation of the United Arab Emirates is made up of seven distinct Emirates, each with its own independent court. Only in three of these jurisdictions may you establish offshore businesses in the United Arab Emirates (UAE).
Let’s take a deeper look.
RAK International Corporate Centre (RAK ICC)
Located around an hour’s drive from Dubai, Ras Al Khaimah is one of the most popular destinations in the United Arab Emirates. As we speak, it’s the UAE’s fastest-growing Emirate.
Ras al Khaimah developed the RAK ICC, an offshore company registration, in 2006. Consequently, the United Arab Emirates was able to establish International Business Corporations (IBCs).
It’s one of the greatest in the United Arab Emirates.
There is no need for a RAK offshore business to have a local shareholder. RAK offshore companies may purchase shares in local UAE corporations. This is notwithstanding the overall restriction on doing business inside the UAE. A RAK offshore firm needs a multi-currency offshore bank account. It’s to conduct regular international transactions.
Next, you do not have to submit an annual audit report if you register a RAK offshore business. When registering an offshore company in RAK, a registered agent would be a UAE citizen who can assist you. To register a corporation in the UAE, you don’t need to be physically present.
RAK Offshore firms may now purchase real estate in the United Arab Emirates. This applies even if they do not have a business license, according to a regulatory change made in 2019.
In most cases, an offshore RAK company is formed within a week after applying. Yet, to create a RAK offshore company, you’ll need at least one director and one shareholder.
Jebel Ali Free Zone (JAFZA)
It takes an hour to travel from Abu Dhabi to the Dubai commercial centre of Jebel Ali.
The UAE’ has initially created a free zone in Jebel Ali (JAFZA). The characteristics of a JAFZA or Jebel Ali offshore business are almost identical to those of a RAK offshore corporation.
However, you’ll need to note the following distinctions.
Your firm may be established in the United Arab Emirates’ major commercial centre with a JAFZA offshore company incorporation. Company formation in the JAFZA Free Zone is more costly than other offshore financial centre jurisdictions. And to complete the offshore business formation procedure, a stakeholder must go to the United Arab Emirates.
You have to submit a yearly audit report to the JAFZA authorities. An offshore JAFZA business requires a minimum of one shareholder, two directors, one secretary, and a registered agent to be established.
The Ajman Free Zone
RAK-style offshore firms have many of the same characteristics that their Ajman counterparts do. It is located in the Emirate of Ajman in the United Arab Emirates. In this UAE free zone, you may set up an offshore corporation at a low charge and benefit from their offshore regime.
It’s also popular in the corporate world because of the following attributes.
Ajman offshore companies are reasonably priced and need a little operating expense. It’s simple to make changes to your company’s organizational structure. For example, you may implement a change to a corporate shareholder within a week.
For offshore incorporation, one director and one shareholder are required. Additionally, the shareholder and director might be the same individual.
Requirements for UAE Offshore Company Formation
Finally, below is a checklist of the last needs for creating an offshore corporation in the United Arab Emirates. First, you’ll start with the company’s name.
You’ll need to add the suffix “Limited or Ltd” at the end of the name of your UAE offshore company to indicate the legal status of the entity.
Next, you’ll need to contract with an offshore consultant, like Feenix Consultants. We specialize in providing well-tailored international offshore services
UAE Offshore authorities, including JAFZA, RAK and Ajman offshore authorities, register a local offshore representative.
The establishment of your UAE offshore company will be completed by one of these registered agencies. The only exception is a JAFZA offshore business, which requires a face-to-face registration process.
Finally, you’ll need to have anyone who may establish an offshore corporation in the United Arab Emirates with no minimum share capital required.
In 2009, an update to the Corporations Law made it possible for offshore companies to choose the share capital of their limited liability companies. Of course, they’ll need a substantial amount of money to pull this out.
Why Start an Offshore Incorporation?
Setting up an offshore corporation in the United Arab Emirates has numerous benefits. First, you’ll have increased access to the global market.
A low-cost approach to developing your business internationally might be to set up an offshore corporation in the United Arab Emirates.
Having a Dubai offshore corporation on paper does not need the purchase of pricey Dubai-based real estate. As a result, new international agreements and cooperation may be possible.
Next, you’ll be able to tap into various tax advantages. Now, tax evasion and tax avoidance are two distinct concepts. Establishing tax havens like the United Arab Emirates are legal means of avoiding (not evading) taxes.
With an offshore business set up in the United Arab Emirates, you would be immune from a wide range of taxes. These include corporation tax, income tax, sales tax, inheritance tax, property tax, and personal tax. After all, no one wants to pay taxes twice.
Popular Offshore Jurisdictions: The UAE Edition
So, you’re a small business, self-employed or even heading a giant multi-corporation; regardless, there are many advantages to starting an offshore incorporation in UAE. We hope that our guide has shed some light on the nuances of doing so in a straightforward manner.
But, remember that starting a whole endeavour with this magnitude will require some experience at the helm. You can contact us for a free consultation to explore your options.