How to set up an Offshore Company in the UAE and reduce your Tax Bill
Unlike onshore businesses, such as Free Zone and Mainland companies, the UAE’s Offshore Companies operate internationally. Offshore companies are not allowed to operate within the UAE. This business structure presents an advantage to entrepreneurs who are wishing to increase their global presence while optimizing, eliminating, or reducing their taxation costs.
This blog will explore the offshoring business opportunities provided by the Jebel Ali (JAFZA) and Ajman (AFZA) Free Zones’. In addition, there is a very similar method to operate overseas from the UAE, this is to set up an International Business Company (IBC) in the Ras Al Khaimah International Corporate Centre (RAKICC).
Why set up an Offshore Company or IBC in the UAE?
The UAE offers entrepreneurs an economically a stable and business-friendly offshoring platform. This helps entrepreneurs maximize their overseas profits as opposed to incorporating the mainland or free zone alternatives. The UAE’s flexible legislation for offshore companies, as well as its Double Taxation Avoidance Agreements with over 40 nations, ensures that this structure is a lucrative investment for every entrepreneur worldwide.
- Taxation and Asset Protection
The owners of UAE offshore companies enjoy no personal, corporate, capital gain, or inheritance taxation. Your business will have full access to global funding, while protecting, as well as separating company assets from the firm’s operating entities. In addition, the details of the directors are not required to be disclosed on a public register.
- Operations, Transactions, and Requirements
With an offshore / IBC company, you will be able to open a multi-currency bank account and conduct business activities globally. The scope of operations, however, does not include dealing with UAE residents or owners of onshore (UAE-based) businesses. Unlike free zone companies, offshores do not provide their employees, directors, or owners with UAE residency visas. Lastly, there are no minimum share capital requirements for these entities.
How can I set up my Offshore Company in the UAE?
There are three local authorities which accommodate offshore and IBC registrations. Jebel Ali and Ajman Free Zones both offer offshore company formation services known as JAFZA Offshore and Ajman Offshore. RAKICC, on the other hand, offers International Business Company (IBC) formations.
These three jurisdictions offer tax-free and foreigner-friendly business structures (Offshores and IBCs). Foreign investors benefit from having 100% share ownership of their business.
Offshores and IBCs are more beneficial when compared to the more common mainland businesses. Unlike offshores, mainland firms require foreign investors to give a majority stake (51% of share ownership) to a UAE National local partner.
As per UAE law, an Offshore or IBC formation must occur via a certified agent, such as Dubai Business Advisors.
We will provide you with comprehensive advice and affordable assistance during every stage of your business setup. Contact us to get a quote and a free consultation regarding Offshore/ IBC incorporation in the UAE.
What are the benefits of setting up an Offshore Company / IBC?
- 100% Foreign Ownership
- Offshores enable investors to hold various assets worldwide including, but not limited to shares of both Mainland LLC’s and Free Zone Companies and real estate.
- No attestation of KYC documents required for individual shareholders
- Multi-currency local bank accounts for eased international transactions
- Shareholder/director confidentiality, the names and details of owners and executives are not publicly available
What are the differences between RAKICC’s IBCs, JAFZA Offshores, and Ajman Offshores?
- Ras Al Khaimah International Corporate Centre (RAKICC)
Ras Al Khaimah, like Jebel Ali, is located near Dubai. The emirate’s growth can be attributed to its industrial focus, contributing to more than 1/4th of the UAE’s GDP level. RAKICC attracts investors through the most competitive prices in the UAE and its renowned business-friendly environment.
RAKICC’s IBCs have one of the fastest and most affordable incorporation processes when compared to JAFZA. The average time to incorporate an IBC with RAKICC is comparable to that of the Ajman Offshore, typically taking 2 days, but varying based on the fee structure. Like JAFZA, RAKICC now offers IBCs the ability to freehold properties in Dubai. You will require approvals from RAKICC as well as the property’s developer. Contact us for more details and other inquiries.
RAKICC offers the following company packages:
- Company Limited by Shares
- Company Limited by Guarantee
- Special Purpose Vehicles (SPVs)
For more information regarding how these packages can benefit your business, contact us.
Here are the requirements to set up an IBC with RAKICC:
- The financial records of the company must be kept for at least 7 years since the date of their creation. You do not need to file these records with RAKICC
- You will require 1 shareholder, 1 director, and 1 secretary. The director and secretary position can be held by the same individual.
- You are able to have corporate shareholders, if the shareholder is foreign, the company’s documents will need to be attested.
- JAFZA Offshore
The Jebel Ali Free Zone (JAFZA) is the world’s largest free economic zone. It is located near the prominent Jebel Ali Port and offers Free Zone companies with office units, warehouses, and light industrial units.
The JAFZA Offshore is based on the same authority, therefore it is the most expensive option due to its global prestige and reputation. One of the benefits of this Economic Zone, for offshore incorporation, is the ease and convenience of opening a corporate bank account.
International firms enjoy 15 years of corporate tax exemption, which can be renewed for an additional 15 years. JAFZA companies are exempt from income taxation, duties, and currency restrictions. This allows JAFZA companies to minimize their expenditure while enjoying the UAE’s competitive and accessible human capital.
JAFZA’s Offshores have the same requirements as RAKICC IBCs, apart from these two conditions:
- Your offshore company must keep its financial records for 10 years since the date of the records’ creation.
- The company must appoint a minimum of 2 directors.
- Ajman Offshore
The Ajman Free Zone (AFZA) is an autonomous authority which recently became one of the UAE’s most frequent offshoring destinations. Like AFZA’s onshore companies (Free Zones), Ajman’s Offshores enjoy 0% taxation and 100% foreign ownership, corporate anonymity, and asset security. The Offshore Company’s address is documented as the same as the address of its certified agent, like Dubai Business Advisors.
Ajman Offshore is the 2nd most affordable option for a company setup. The authority offers an incorporation which takes only 2 days, as opposed to JAFZA’s 1 week. In addition, this authority does not require you to visit the authority in person to sign the Memorandum of Association (MOA) – making it the most convenient offshoring option in the UAE.
Owners will be sent a soft copy of the MOA which they can print and sign anywhere, after signing a courier will deliver the signed agreement to the Ajman Free Zone Authority for processing. Lastly, the requirements of an Ajman Offshore are the same as the more affordable RAKICC IBC incorporation.
Who can act as the certified agent for my Offshore Company Setup?
Dubai Business Advisors have 17 years of incorporating businesses of all forms and sizes in the UAE. We provide comprehensive advice and assistance – ensuring that you receive the fastest and most affordable Company Setup in the UAE!