The United Arab Emirates is the core business hub that retains its position on a global level as the most enticing place to start a company. It encourages global investors to take advantage of the different business startup formations such as offshore companies. An offshore company setup in UAE is an ideal system for business management and wealth management. It offers an easy application of smart international investment strategies as well as freedom of business operations. Furthermore, it is a tax-efficient and cost-effective corporate structure for budding entrepreneurs aiming to conduct international trade.
An offshore company, also known as a “non-resident paper company”, is basically a corporate entity set up to operate outside the registered jurisdiction. For instance, if the offshore business is registered in Dubai, it can operate and establish itself outside Dubai. It is a tax-exempted jurisdiction that has no tax obligations and annual accounting.
Besides, there are several reasons to choose an offshore company as it allows business owners to engage in several activities, such as –
- International trading
- Owning real estate
- Holding shares in local companies
- Registering copyrights and patents
- International consulting services
Offshore businesses in the UAE have several additional advantages which we will discuss further.
Benefits of offshore company setup in UAE
- No taxes
- Exemption from customs duty
- Permission of 100% foreign ownership
- Only one director and one shareholder required for registration
- Flexible foreign currency policy
- International business and trade
- No compulsion in depositing money in the offshore bank account
- Privacy of details and documents of the company as well as shareholders
- Economical and easy to open a corporate bank account for an offshore company
- Scope to expand internationally
- Stable location, in economic, social, and political terms
- Strong rules and laws
- Protection of assets
- Access to global funding
- Exemption from local inheritance laws
- Rapid incorporation process
- Low operational expenses
- No requirement for minimum share capital
- Free transfer of shares
- Stable and business-friendly legal system
- Flexible regulatory regime
- No financial audits required
- Globally recognized jurisdiction
- Uses both English and Arabic in documents
On the contrary, there are also certain disadvantages of offshore company formation in the UAE. These may include the following:
- No access to the local complex for trade
- Not authorized to trade within UAE
- Require a company registration agent to execute the registration process
- Includes only certain types of business
- Cannot hire local staff
- Not allowed to secure residence or work visa for staff
- Incorporation can be quite expensive compared to other jurisdictions
- Cannot use double taxation treaties
Business structures for offshore company setup in UAE
The following types of business structures are allowed for offshore company formation in UAE –
- Sole Establishment
- Limited Liability Company (LLC)
- Limited Liability Partnership (LLP)
- Public Shareholding Venture
- Private Shareholding Venture
- Joint Stock Company
Also read the post: How to Get a Technical Services License in Dubai?
The procedure for offshore company formation
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Identify the nature of business activities
Offshore business in UAE is usually not advisable as the scope of activities is limited as compared to other jurisdictions. However, businesses related to trading activities can be lucrative and have a wider range. Hence, it is recommended to wisely decide your business activity for your offshore company setup in UAE.
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Finalize the business structure
After you select the activity you wish to carry out in your offshore business, it’s time to determine the legal business structure that you want to form. For Example, Limited Liability Companies, Partnership, Joint ventures, Sole proprietorships, etc. Once you finalize your company structure, you also need to make decision regarding the number of directors and shareholders who will participate.
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Choose a company name
Before finalizing a name, it has to be initially verified by the registrar. Additionally, there are stringent rules regarding trading names established by the UAE government. Hence, to avoid any violations, it is important to cross-check them with the authorities. In addition, the company cannot use words like insurance, bank, society, cooperative, fund, trust, Royal, chartered, finance, Emirates, etc. in the name. However, it should end with Ltd. or Incorporated.
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Fill in an application for registration
After selecting a preferred company name and getting it registered, the company owner must fill in an application for company registration. The offshore businesses do not get a license for their operations, rather the authorities issue a certificate of incorporation to authorize their existence in UAE.
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Present the concerned documents
While submitting the application for incorporation, you need to attach certain documents that are relevant to the procedure. The authorities will then review the documents and application and issue the certificate accordingly.
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Prepare an MOA and AOA
Once you obtain the approval for incorporation, draft a Memorandum of Association(MOA) and Articles of Association(AOA). Submit them as well to the authorities for verification and start off with your business operations after obtaining the approval.
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Open an offshore bank account
The final step of this procedure is opening an offshore bank account. A corporate bank account help business owners carry out business transactions easily. Moreover, the offshore authorities also assist business owners to start an offshore bank account in their preferred location abiding by all the legal formalities.
Required documents:
- Address proof, such as utility bills
- Business plan, including the overall budget, projected finances, liquidity, and development plans
- Bank statements
- Passport copies of shareholders
- CV of the shareholders
- Three suggested names for the business
- Description of business activities
- Board Resolution
- Memorandum of Association(MOA)
- Articles of Association(AOA)
- Details and incorporation certificate of the existing company, if any
- Hierarchy of beneficiaries
Major options for UAE offshore company setup
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Jebel Ali Offshore Company
Jebel Ali Free Zone Authority, JAFZA, is one of the primary options for offshore company formation in the UAE. It is situated near the world’s biggest shipping port – Jebel Ali Seaport. This, thus, facilitates international trade in a much easier way.
Contrary to the laws of the UAE government, JAFZA offshore allows business owners to own property located in Dubai. Furthermore, the owner gets to enjoy other privileges such as zero currency restrictions, offshore company registration in Dubai, tax exemption for 15 years, and an easy import policy when exporting.
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Ras Al Khaimah Offshore Company
Ras Al Khaimah(RAK) Offshore Company is a more established as well as a well-known trade zone for international entrepreneurs. Moreover, it allows maintaining a registered office in Dubai. Therefore, it is a more preferred option for investors looking for an offshore company setup in UAE.
Regardless of the general restrictions, RAK offshore provides you the opportunity to hold shares in local companies, be it in the free zone or onshore. Besides, the registration process takes only around one week with all the documentation and application procedure.
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Ajman Offshore Company
Ajman Offshore Company allows an easier incorporation procedure, including minimal requirements and timeframe. In addition, it enables trading outside of the UAE as well as setting up an international business at a low cost. It can also be used to conduct holding companies, estate planning, and asset protection vehicles.
Winding up
Establishing an offshore company in the UAE is one of the most effective strategies to expand your business in the UAE’s flourishing industry. Although the offshore company setup in UAE is a straightforward procedure, certain delays and errors might occur due to misinformation or lack of relevant documents. So, this is why you need to work with the offshore company formation specialist of Shuraa Business Setup who can guide you with the right information on offshore business setup in the UAE and also assist with other important tasks, such as the preparation of the documents, application of visas, opening of corporate bank accounts, etc.
To know more about Shuraa services, contact us now.
Call – +971 44081900
Email – [email protected]
