One of the most integral parts of setting up any business in the UAE is deciding what company structure you want. The Emirati government offers various options, including Mainland, Free Zone and Offshore companies depending on the locality and nature of the business. However, there are several factors you need to consider before deciding on a business structure. The Offshore company formation in UAE is a profitable and sustainable business type that offers several benefits. In this article, we will take a look at the offshore company benefits, and how the process of offshore company formation in UAE works.
What is an Offshore Company?
In the United Arab Emirates, a corporation that is located in “offshore jurisdictions” or “tax havens,” as opposed to the nation’s mainland and free zones, is referred to as a “offshore company.” These offshore jurisdictions provide foreign investors looking to conduct business internationally or safeguard their assets with a number of advantages and perks. Due to its advantageous location, stable economy, and conducive business climate, the United Arab Emirates has grown in popularity as a venue for the establishment of offshore businesses.
Here are some essential qualities and traits of offshore businesses in the UAE:
Legal Separation: The legal separation that an offshore company in the UAE offers is one of its main benefits. A further layer of security is offered by the fact that the company’s assets and liabilities are separate from those of its owners or shareholders.
Tax Benefits: Offshore businesses in the UAE are frequently excluded from corporation and income taxes, which attracts individuals looking to lawfully reduce their tax liabilities.
Offshore jurisdictions often provide a high level of privacy and confidentiality. It is possible for shareholders’ and directors’ names to remain private, strengthening confidentiality.
Flexible Ownership Structure: Offshore businesses in the United Arab Emirates (UAE) let foreign people to control 100% of the business without the need for local sponsors or partners. This is especially advantageous because it gives the investor total control.
Ease of Setup: Establishing an offshore business in the UAE is a very simple and quick process. It has little administrative requirements, allowing investors to launch their firms rapidly.
No Physical Office Requirement: Offshore entities are not needed to have a physical office space in the UAE, in contrast to mainland businesses, which lowers operational costs.
Wide Range of Permitted Activities: Offshore businesses are allowed to carry out a range of activities, including holding assets, owning real estate, doing international business, and investing.
Access to the UAE Banking System: Offshore businesses in the UAE can open bank accounts with national and international institutions, which makes conducting international business simpler.
Establishing an Offshore Company in Dubai
The authorized signatory of the company must submit an application for incorporation to the Registrar of offshore companies. However, the process of offshore company formation in UAE required the services of a registered agent. These companies have the power to open bank accounts within the UAE and even abroad. While the process of setting up an offshore company might be complicated, obtaining help from a business set-up service can help make the process a lot easier.
Formation of Offshore Company Benefits
The formation of an Offshore Company provides several benefits and advantages, and here’s a quick look at the most prominent ones;
- Several monetary advantages including tax benefits
- Does not face regulations and guidelines issued by State Laws, and has the right to own multi-currency accounts.
- Has the power to undertake international operations and transactions without any limitation or undue complication
- Easy and quick registration process when compared to the other Emirati business structures
- Since it does not require an Emirati sponsor, the business owners can retain 100% shares in the company.
- Allows for total confidentiality and hence information regarding the shareholders, Board of Directors and others need not be made public.
- Does not have to allow financial audits from various authorities mandatorily.
Disadvantages of Offshore Company Formation in Dubai
While the offshore company benefits far outweigh the cons, these business structures also have a few drawbacks. Here’s a quick look at the main disadvantages of starting an offshore company in the UAE;
- Offshore companies cannot trade within the UAE or hire a local complex for such purposes.
- The completion of the process of offshore company formation in UAE requires an agent.
- Works profitably for only certain types of businesses
Why Set Up an Offshore Company in Dubai?
- Provides massive operational freedom and allows 100% foreign ownership
- Access to Double Taxation Avoidance Agreements with over 115 countries
- Gives the business an option to buy properties in approved areas
- Minimum capital requirement or set-up cost, making this an economical option
- Serves as a gateway for international trade and potential market expansion
- Provides businesses with access to a business-friendly administrative system
- Gain better access to global funding through international investors
Documents required
Shareholders;
- Passport
- Proof of residence
- Bank reference letter
- Curriculum Vitae
- Details of the company, including its name, activities and ultimate beneficiaries
Corporate entity;
- Trade license
- Incorporation certificate
- Shareholders’ resolution
- Memorandum of Association
- Passport of all directors, shareholders and secretary
- Certificate of Good Standing
- Incumbency certificate of the parent company
What is the process of Offshore Company Formation in Dubai?
- First and foremost, entrepreneurs must choose an appropriate field of business. The entrepreneurs should meet with business consulting services before they make a final decision. This is so because not all business types will work under an offshore company structure.
- Next, the applicants must decide on a company name for their venture. They will have to ensure that whatever name they choose abides with Emirati company naming laws and regulations. Additionally, the rules specify that the name of the company must end with the word Limited.
- Once they have a company name, the entrepreneurs must open a bank account in the name of the company. This account may either be within the UAE or abroad, depending on the needs of the business. Such an account is mandatory to apply for a certificate of incorporation.
- Next, the business owners will have to meet with a legal expert to draft the company’s Articles and Memorandum of Association.
- Once they have all the required documents, the entrepreneurs can file an application for incorporation with the RoC. Along with the application, the business owners will also have to submit the required supporting documents and certificates. After verifying the details provided, the RoC will then issue a Certificate of Incorporation to the business owners.
Things to Know About Offshore Company Formation in Dubai
- Must have a minimum of one shareholder and a maximum of five shareholders
- Does not require a local representative or sponsor
- JAFZA companies require at least two directors while RAKIA company formation requires only one director
- Does require Nominee services
- The class of share allowed for Offshore companies is registered shares
- Does not have to pay any UAE corporate tax, income tax, capital gains tax or sales tax.
- Must maintain a proper and accurate accounting system which must undergo annual audits
- However, there is no requirement to file these audited statements to Authorities, unless specifically mandated
- Annual requirements for a UAE offshore company include the following;
- Annual Renewal
- KYC information to the agent on time
What are the restrictions for offshore companies in Dubai?
Offshore companies in Dubai are not allowed to conduct business within the UAE, sell products or services to UAE residents or businesses, and lease or own property within the UAE. Additionally, offshore companies are not permitted to operate in industries such as banking, insurance, and financial services.
How KGRN Can Help?
KGRN Chartered Accountants have decades worth of experience helping companies with business set-up services. Our team of experts can support, aid and guide fledgeling entrepreneurs set up the company of their dreams in the UAE. We have a team of experienced and dedicated professionals who have a lot of expertise when it comes to commercial and industrial law in the UAE. Our specialities in Business Setup Services include the following;
- Tailor-made services that suit your particular needs
- Detailed insights into the industry that help you set up the business
- Transparent deals and offers which are economical
- Exhaustive support throughout the entire process of setting up the offshore company
- Handpicked professionals who have an excellent track-record
- Professional guidance that comes updated with the changing business methodologies
- Help in formulating business strategies that help you reap profits
If you are searching for an offshore company consultant or service provider in Dubai, we can help. It’s the best option for someone like you. KGRN is here to assist you in building the offshore company of your dreams in the free zones of Dubai. Let’s Get in Touch Right Away!
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