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 UAE?

An offshore company is a special type of business entity that receives a certificate of incorporation, instead of a business license. Such offshore companies have the right to operate within a particular jurisdiction and can undertake international operations and transactions. The process of offshore company formation in UAE offers several tax benefits, investor-friendly policies and schemes.

Establishing an Offshore Company in UAE

The authorised 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;

  1. Several monetary advantages including tax benefits
  2. Does not face regulations and guidelines issued by State Laws, and has the right to own multi-currency accounts. 
  3. Has the power to undertake international operations and transactions without any limitation or undue complication
  4. Easy and quick registration process when compared to the other Emirati business structures
  5. Since it does not require an Emirati sponsor, the business owners can retain 100% shares in the company.
  6. Allows for total confidentiality and hence information regarding the shareholders, Board of Directors and others need not be made public. 
  7. Does not have to allow financial audits from various authorities mandatorily. 

Disadvantages of Offshore Company Formation in UAE

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;

  1. Offshore companies cannot trade within the UAE or hire a local complex for such purposes.
  2. The completion of the process of offshore company formation in UAE requires an agent.
  3. Works profitably for only certain types of businesses

Why Set Up an Offshore Company in the UAE?

  1. Provides massive operational freedom and allows 100% foreign ownership 
  2. Access to Double Taxation Avoidance Agreements with over 115 countries
  3. Gives the business an option to buy properties in approved areas
  4. Minimum capital requirement or set-up cost, making this an economical option
  5. Serves as a gateway for international trade and potential market expansion
  6. Provides businesses with access to a business-friendly administrative system
  7. Gain better access to global funding through international investors 

Documents required

Shareholders;

  1. Passport 
  2. Proof of residence
  3. Bank reference letter 
  4. Curriculum Vitae 
  5. Details of the company, including its name, activities and ultimate beneficiaries 

Corporate entity;

  1. Trade license 
  2. Incorporation certificate 
  3. Shareholders’ resolution 
  4. Memorandum of Association
  5. Passport of all directors, shareholders and secretary 
  6. Certificate of Good Standing 
  7. Incumbency certificate of the parent company 

What is the process of Offshore Company Formation in the UAE? 

  1. 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. 
  2. 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.
  3. 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.
  4. Next, the business owners will have to meet with a legal expert to draft the company’s Articles and Memorandum of Association. 
  5. 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 the UAE

  1. Must have a minimum of one shareholder and a maximum of five shareholders
  2. Does not require a local representative or sponsor 
  3. JAFZA companies require at least two directors while RAKIA company formation requires only one director
  4. Does require Nominee services 
  5. The class of share allowed for Offshore companies is registered shares
  6. Does not have to pay any UAE corporate tax, income tax, capital gains tax or sales tax.
  7. Must maintain a proper and accurate accounting system which must undergo annual audits
  8. However, there is no requirement to file these audited statements to Authorities, unless specifically mandated
  9. Annual requirements for a UAE offshore company include the following;
  • Annual Renewal 
  • KYC information to the agent on time

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;

  1. Tailor-made services that suit your particular needs
  2. Detailed insights into the industry that help you set up the business
  3. Transparent deals and offers which are economical
  4. Exhaustive support throughout the entire process of setting up the offshore company
  5. Handpicked professionals who have an excellent track-record
  6. Professional guidance that comes updated with the changing business methodologies
  7. Help in formulating business strategies that help you reap profits