The United Arab Emirates has quickly established itself as one of the most enticing places in the world to start a company. Creating an offshore company is one of the most effective strategies to start or expand your business in today’s flourishing industry. With a business in Dubai Offshore, you will benefit from a well-established reputation, as well as the advantages and assistance that come with holding a company in the United Arab Emirates.
It is possible to register an offshore company in Dubai and benefit from tax advantages, as well as ease of establishment, total secrecy, and complete control over your organization. The establishment of a company in Dubai’s Offshore is a good choice if you want to expand the global reach of your company while reaping significant advantages at the same time. Allow the professionals at KGRN to take you through the whole process of incorporating a straightforward corporation.
KGRN offers the most comprehensive company formation services in Dubai and the United Arab Emirates, covering everything you need to start or develop your business in the UAE. You will benefit from our assistance in making critical choices such as where to begin, how to begin, and why you should begin a company in Dubai.
UAE Jurisdictions for Offshore Company Formation
Among the seven Emirates, only three are authorized to establish offshore companies: Ajman Free Zone, Ras Al Khaimah, and Jebel Ali Free Zone.
Ajman Free Zone
Ajman Free Zone offers cost-effective and competitive offshore incorporation services, positioning your business for success. Key features include:
- Establishing an Ajman offshore company is a highly economical option, with minimal operational costs.
- Business structure modifications, such as adding a corporate shareholder, can be completed within seven days.
- Only one director and one shareholder are required, and the same person can fulfill both roles.
Ras Al Khaimah International Corporate Centre (RAK ICC)
Ras Al Khaimah has seen rapid growth, making it a prime jurisdiction for international businesses. RAK ICC offers:
- No local shareholding requirement for offshore company formation.
- Cost-effective incorporation, typically completed within seven days.
- Authorization for RAK offshore companies to purchase shares in local UAE businesses.
- Similar to Ajman, only one director and one shareholder are needed.
- Ability to invest in UAE real estate without a business license.
- Multi-currency bank account management in the UAE for international transactions.
- Possibility to register a RAK offshore company without being physically present, with the help of a UAE national.
- No requirement to submit an annual audit report.
Jebel Ali Free Zone (JAFZA)
Jebel Ali, a major trading hub in Dubai, was the first free zone in the UAE, known as JAFZA. It provides businesses with access to top-tier infrastructure and services for expanding trade opportunities locally and internationally.
- JAFZA offshore company incorporation is more expensive compared to Ajman and Ras Al Khaimah.
- Shareholders must be physically present in the UAE to complete the incorporation process.
- A minimum of one shareholder, one secretary, and two directors is required.
- An audit report must be submitted to JAFZA authorities.
Key Benefits of Offshore Company Registration in Dubai
Tax Optimization
Offshore companies in Dubai are entirely tax-free, allowing you to retain all your profits. Additionally, the UAE has signed double taxation avoidance agreements with over 40 countries, enabling you to avoid paying taxes in both the source country and your country of residence.
Full Foreign Ownership
Offshore companies in Dubai do not require any local shareholding, allowing for 100% foreign ownership. This is particularly attractive for entrepreneurs and startups looking to expand their business to Dubai.
Asset Protection
Offshore companies in Dubai act as a legal shield, protecting your assets—such as real estate, intellectual property, stocks, and securities—from legal obstacles and third-party adversaries. This safeguards your holdings in case of lawsuits or other legal judgments.
Privacy and Confidentiality
Offshore companies in Dubai are not required to maintain or publish financial records or shareholder details. This helps keep your business dealings private and confidential.
Ease of Banking
Offshore companies can open multi-currency bank accounts with local and international financial institutions in the UAE. This allows you to send and receive money globally while benefiting from one of the world’s most robust banking infrastructures.
Operational Flexibility
Offshore companies can hold shares in UAE free zone and onshore (LLC) companies, despite the general prohibition on conducting business with UAE residents. They can also directly own real estate in Dubai, a benefit unique to JAFZA offshore companies.
Efficient Formation Process
Setting up an offshore company in Dubai is a fast and straightforward process, with incorporation possible within 2-3 working days. The minimum requirements include just one shareholder and one director, with no minimum capital needed.
Procedures for Establishing an Offshore Business in Dubai
The procedures for establishing an offshore business in Dubai involve several key steps to ensure compliance with local regulations and facilitate a smooth setup process. Here are the main steps:
Choose a Company Name
Select three potential names for your offshore company. The final name will be approved by the registration authorities, so ensure your choices comply with naming regulations, avoiding restricted terms like “bank” or “insurance.”
Determine Business Activities
Identify the nature of your business activities, such as consultancy, commerce, shipping, or investments. Clearly defining your business scope is crucial for the application process.
Finalize Ownership Structure
Decide on the ownership structure of your company, including the number of directors and shareholders. This step is essential for drafting the necessary legal documents.
Prepare Required Documents
Gather all necessary documents, which typically include:
- Passport copies of shareholders and directors
- Proof of address for shareholders and directors
- CVs of shareholders and directors
- A well-drafted business plan
Submit Application
Complete and submit the application along with all supporting documents to the relevant authorities. This step usually takes about three business days for approval.
Draft Memorandum and Articles of Association
Once you receive approval, draft the Memorandum of Association (MOA) and Articles of Association (AOA) in English. These documents outline the company’s structure and operational guidelines.
Open a Bank Account
After obtaining the necessary approvals and documentation, you can open an offshore bank account. This account will facilitate your business transactions and help manage your finances efficiently.
Compliance and Maintenance
While offshore companies in Dubai do not require annual audits or tax filings, it is essential to maintain compliance with any local regulations to ensure the company remains in good standing.
There Must be Some Kind of Documentation.
Copies of the passports of the directors and shareholders are required.
- Confirmation of the mailing address
- A list of shareholders’ curriculum vitae
- A letter of recommendation from a financial institution
- Indications of a Memorandum of Association (MOA)
- The title deed or ownership certificate.
What is the Need for a Dubai Offshore Company, Exactly?
An offshore company in Dubai is a sort of business that is distinct from the other types of enterprises that can be found in the United Arab Emirates. If you choose to set up your company offshore, you will be able to sidestep some of the formalities associated with traditional company formation, saving time and money.
Here are a few of the reasons why a Dubai Offshore company may be a good fit for your circumstances:
- Taxation – You continue to benefit from the tax reductions that come with owning a company in the United Arab Emirates.
- Total anonymity – When you engage with an offshore company in Dubai, you will be able to maintain complete discretion. Your name will be deleted from any official documentation.
- International Business and Trade – When conducted by an offshore firm, international business and trade may be very profitable.
- Shareholders in an offshore company in Dubai may range from one to fifty, and the company owns the land on which the company is headquartered. This is one of the few locations on the planet where it is legal to have many property owners at the same time.
- Account with a bank – There are various international and local banks in Dubai. An offshore company may simply open a bank account with a Dubai-based financial institution.
Disadvantages of Establishing an Offshore Company in Dubai
Establishing an offshore company in Dubai can present several disadvantages that potential business owners should consider:
- Ineligibility for Business Licenses: Offshore companies in Dubai are classified as “paper” companies, meaning they cannot obtain business or trade licenses. This restriction limits their ability to operate profitable businesses within the UAE, prohibits them from employing residents, and restricts their ability to conduct business with individuals living in the UAE.
- Limited Business Activities: The range of permissible activities for offshore companies is quite narrow. They are primarily allowed to engage in international trade, property holding, and certain service operations but are restricted from operating in sectors like insurance, aviation, or media. Additionally, they are not allowed to conduct business with other companies in the Middle East.
- Restrictions on Real Estate Ownership: While some offshore companies can purchase real estate in specific free zones, such as the RAK International Corporate Centre and Jebel Ali Free Zone, this privilege does not extend to all offshore entities. For instance, offshore companies registered in the Ajman Free Zone cannot acquire real estate.
- Higher Setup Costs: Establishing an offshore company in Dubai can be more costly compared to other jurisdictions. The expenses related to incorporation, maintenance, and compliance can accumulate, making it a significant investment, especially for small businesses.
- Physical Presence Requirement: Shareholders of offshore companies may be required to physically visit the UAE to complete the incorporation process. This requirement can be inconvenient and may deter potential investors who prefer a more streamlined setup process.
- Ongoing Compliance and Reporting: Although offshore companies benefit from minimal reporting requirements, certain jurisdictions, like JAFZA, may require financial audits and the submission of reports. This can add to the administrative burden and increase the costs associated with maintaining the company.
- Perception Issues: Offshore companies are sometimes associated with negative connotations, such as tax evasion or money laundering. This perception can affect the reputation of the business and its owners, potentially complicating relationships with banks, clients, and partners.
Types of Business Licenses Required in UAE
- If you are looking to set up an offshore business in the UAE, you will need a license from the Department of Economic Development (DED). There are three types of licenses available: commercial, professional, and industrial.
- The type of license you need depends on the nature of your business. For example, if you are setting up a restaurant, you will need a commercial license.
- You can apply for a license online through the DED website or at their offices.
- To setup an offshore company in the UAE, one must first acquire a commercial license from the Department of Economic Development. To acquire this license, they must be registered as an entrepreneur or agent with SAWA and obtain trade registration with DEWA as well as fulfill all requirements set by these agencies before being granted a commercial licence by DED.
- When it comes to offshore business setup in freezone area like Dubai International Financial Centre (DIFC), there is no requirement for trade registration with DEWA but that doesn’t mean it isn’t important- DIFC recommends all businesses be registered with them so that they know who’s doing what inside their borders which helps keep things safe.
- Businesses should also consider getting liability insurance when opening any kind of company- even offshore ones!
Minimum Capital Requirement for Foreign Nationals & Expatriates Opening Businesses in UAE
Mainland: For mainland businesses (operating outside free zones), there is no official minimum capital requirement, but in practice, the Department of Economic Development (DED) often requires a paid-up capital of around AED 300,000 (USD 81,700). This can vary depending on the specific emirate and type of business.
Free Zones: Each free zone in the UAE has its own regulations and minimum capital requirements, ranging from as low as AED 1,000 (USD 272) to AED 50,000 (USD 13,613) or even AED 1,000,000 (USD 272,272) for specific activities. Popular free zones like Jebel Ali Free Zone (JAFZ) tend to be more flexible, while Dubai International Financial Centre (DIFC) has stricter regulations and higher capital requirements.
Ownership Structure:
- Wholly owned foreign business: Requires a higher minimum capital compared to businesses with local partners.
- Limited Liability Company (LLC) with local partner: Typically requires 51% local ownership, and the minimum capital requirement may be lower, depending on the emirate and business type.
Cost of Setting Up Offshore Company in Dubai
The cost of setting up an offshore company in Dubai depends on the type of business you want to establish. If you are looking for an offshore business setup in a freezone, the cost will be higher than if you choose to set up your business in the mainland. However, the benefits of setting up your business in a freezone are that you will be able to enjoy tax-free status and 100% foreign ownership. The process of setting up an offshore company in Dubai is also very simple and straightforward.
Ensuring Compliance with Dubai’s Offshore Regulations
Ensuring compliance with Dubai’s offshore regulations is essential for maintaining the legitimacy and operational efficiency of your offshore company. Below are the detailed steps and considerations to ensure full adherence to the legal framework governing offshore companies in Dubai:
Understand the Legal Framework
To ensure compliance, it is critical to have a thorough understanding of Dubai’s offshore company legal framework. This involves familiarizing yourself with the specific laws and regulations that govern offshore entities, including permissible business activities, ownership structures, and reporting requirements. Staying updated on any changes in local or international laws is also crucial.
Work with a Registered Agent
Engaging a registered agent is mandatory for setting up an offshore company in Dubai. These agents assist with document preparation and submission, conduct due diligence checks, and act as intermediaries between your business and UAE authorities. Their expertise helps navigate complex legal processes efficiently.
Maintain Accurate Documentation
Proper documentation is crucial for compliance. Ensure that all required documents, such as shareholder passports, proof of residence, Memorandum of Association, Articles of Association, and a detailed business plan, are accurate, complete, and up-to-date. For corporate shareholders, additional documents may be required. Keeping records of financial transactions and contracts is also essential.
Obtain Necessary Licenses
Offshore companies must secure appropriate licenses from the relevant authorities before commencing operations. Ensure that your business activities align with those permitted under the chosen jurisdiction and renew licenses annually to avoid penalties or disruptions.
Adhere to Taxation Rules
While Dubai offers zero corporate taxes for most offshore companies, it is important to comply with international tax laws such as OECD guidelines on Base Erosion and Profit Shifting (BEPS). Avoid engaging in activities that could lead to accusations of tax evasion or money laundering.
KGRN Offshore Company Formation Services
At KGRN, we are trusted and registered agents specializing in offshore company formation in Dubai, serving clients worldwide. With years of experience, our expert team of in-house lawyers, accountants, auditors, and management consultants collaborates closely with each client to ensure a seamless process.
We provide comprehensive, end-to-end offshore company formation services in the UAE, covering every aspect of administration. Our offerings include preparing corporate and business documentation, opening bank accounts, and providing directors, company secretaries, and nominee shareholders as needed. On your behalf, KGRN will handle all communications with relevant authorities, ensuring smooth operations.
KGRN’s guidance is pivotal at every stage of your offshore company formation journey in Dubai, from selecting and registering your company name to conducting due diligence and arranging reference letters. Typically, your physical presence is not required to establish your offshore company with us.
Our offshore company formation services in the UAE come with the added benefit of not being bound by registration conditions related to leasing premises, providing guarantees, or employing staff. However, if needed, we can facilitate business operations and maintain all communications through our registered and approved firm.
In addition to offshore company formation, KGRN offers a wide range of auxiliary services, including accounting, audit and assurance, payroll, taxation, and outsourced CFO and PRO services, covering every aspect of your business’s daily operations.
