Offshore company formation is one of the most popular forms of business setup in UAE, as it’s a great way to conduct business activities outside of the UAE while still benefiting from flexible tax regulation, regulatory, and privacy policies.
UAE Offshore business setup is usually done through RAK offshore company formation and JAFZA offshore company formation.
This guide will walk you through the basics of offshore company formation in the UAE, its benefits, and the differences between the offshore jurisdictions available.
What is offshore company formation?
An offshore company is a legal business entity registered in a jurisdiction with favorable tax laws and regulations, typically to conduct business activities outside that jurisdiction.
Business owners usually decide to expand their businesses through offshore setup to enjoy certain advantages such as tax exemptions. Therefore, naturally offshore company formation happens in countries with more flexible tax regulations such as the UAE.
Offshore companies are mostly registered with the intention of:
- International trade
- Formation of holding companies
- Owning real estate
- Company redomicile
- Registration of copyrights and patents
- International consulting services
Advantages of setting up an offshore company in UAE
- 100% foreign ownership: You can register and run your business without any need for a local Emirati sponsor.
- Fast setup: The RAK offshore company setup process usually takes about 5 days after document submission. JAFZA company setup usually takes about 2 weeks.
- Flexible for work premises: Physical offices are not required for JAFZA and RAK offshore company formation or to apply for visas, making it highly cost-effective.
- Tax advantages: Offshore companies are exempt from corporate taxes, income taxes, and VAT. This makes the UAE an attractive destination for businesses that want to maximize profits and minimize tax liabilities.
- No minimum share capital: No minimum share capital is required for offshore incorporation in the UAE.
- Asset Protection & Confidentiality: Shareholder and director details are not publicly accessible, ensuring privacy for business owners. Offshore companies can also hold assets such as real estate, intellectual property, and securities.
- Global Business Opportunities: Offshore companies in the UAE can conduct business internationally, open bank accounts in the UAE and abroad, and take advantage of the UAE’s strategic location. The UAE’s strong financial infrastructure and trade agreements with numerous countries provide offshore companies with easy access to global markets.
- No annual auditing: Offshore companies are exempt from annual auditing in almost all UAE Emirates.
Offshore Jurisdictions in the UAE
There are two main offshore jurisdictions in the UAE that provide options for company formation:
Jebel Ali Free Zone Authority (JAFZA) Offshore
JAFZA Offshore in Dubai allows for 100% foreign ownership, and unlike other offshore jurisdictions, it permits property ownership in designated areas in Dubai.
JAFZA Offshore companies can also act as holding companies for investments and subsidiaries.
Jebel Ali Free Zone (Jafza) is considered the world’s largest free zone and contributes to over 23% of Dubai’s GDP. JAFZA was initially home to only a few small offices and warehouses. However, it has continually expanded and is now home to over 7,000 global companies, sustaining the employment of over 135,000 people globally.
JAFZA facilitates industrial units, retail and E-commerce businesses, trading opportunities, and residences for onsite employees.
Jebel Ali Free Zone is best for businesses looking to cut their costs and increase their profits through an accessible supply chain.
RAK International Corporate Centre (RAK ICC)
RAK ICC in Ras Al Khaimah Emirate offers flexibility, lower setup costs, and quicker processing times than other offshore jurisdictions. It is ideal for holding companies, international trading, and intellectual property holding.
RAK offshore company setup also allows re-domiciliation, migration & continuation from various other offshore jurisdictions.
5 types of company structures can be incorporated by RAK ICC, including:
- A Company Limited by Shares
- A Company Limited by Guarantee
- A Restricted Purposes Company
- A Segregated Portfolio Company
- An Unlimited Company
Ras Al Khaimah (RAK) is one of the fastest-growing Emirates in UAE. The Ras al Khaimah government launched the RAK ICC in 2006, for the registration and incorporation of International Business Companies.
RAK ICC operates in full compliance with international standards and best practices.
Challenges of offshore company formation in the UAE
Like all good things, setting up an offshore company in the UAE also comes with a few challenges. While most of them have solutions, it’s important to be aware of them from the beginning.
No trade within the UAE
Offshore companies in UAE can not engage in any business or trade within the UAE or any of its free zones and are often used as holding companies or for asset management. They can’t also hire staff within the UAE.
This is because offshore companies only receive certificates of incorporation instead of trade licenses which effectively prohibits them from any commercial activity within the UAE or with its residents.
If you plan to do business within the UAE, a mainland or free zone company might be a better option.
Visa limitations
Offshore companies in UAE can not apply for work visas and UAE residency through company setup, neither for their owners nor for the employees and staff.
Business activities limitations
Offshore companies can not engage in certain business activities based on their jurisdiction. Their main activities have to be included in this list:
- International Trade
- Property Holding
- Intellectual Property (“IP”) Holding
- Shipping Business
- Online Advertising Business
- General Trading
- Distribution And Service Center Business
If your main business activity is included in the list below, you can not register an offshore company:
- Insurance Business
- Media Business
- Aviation Business
- Banking and finances
Banking challenges
UAE banks are known for their strict compliance policies, especially in relation to offshore companies.
Offshore companies can open corporate bank accounts in UAE but it’s usually very challenging to access credit and funding facilities.
How to Form an Offshore Company in the UAE
The process for forming an offshore company in the UAE is straightforward, especially when working with a local business consultant or service provider such as Nexus Partners who specializes in offshore formation.
Here’s an overview of the typical steps:
- Choose Your Offshore Jurisdiction
Depending on your business goals and budget, you’ll need to choose between JAFZA Offshore or RAK ICC. JAFZA is ideal for businesses that want a presence in Dubai and the ability to own property, while RAK ICC is often favored for its lower costs and quicker setup.
- Prepare the Required Documentation
Offshore company formation requires various documents, including passport copies of shareholders, directors, and beneficial owners, as well as proof of address and other identification documents. You may also need to submit a business plan depending on the nature of the company.
- Appoint a Registered Agent
Offshore companies in the UAE must work through a registered agent to complete the setup process. The registered agent will submit your application to the relevant authority, ensuring that all paperwork is in order.
- Company Name Registration
You will need to select a unique name for your offshore company. The name must comply with the UAE’s regulations and cannot be similar to any existing company name in the jurisdiction.
- Receive Your Offshore Company License
Once your application is approved and your fees are paid, you will receive your offshore company license. With this license, you can begin conducting international business activities, open bank accounts, and hold assets.
FAQs
How much does JAFZA offshore company cost?
JAFZA company formation costs start from about AED 18,000.
What documents are required for JAFZA offshore company formation?
JAFZA authorities might request some or all of the documents (attested and notarized) below based on every company’s conditions.
- Certificate of Registration
- Memorandum & Articles of Association
- Board Resolution or & Power of Attorney
- Specimen signature of the manager
- License Copy
- Share Certificate
- Chamber of Commerce certificate
- Leer from company to open a branch in Jafza
- Board Resolution
How much does RAK offshore company cost?
RAK company formation costs start from about AED 11,000.
What documents are necessary for RAK offshore company formation?
- Certificate of Registration
- Memorandum & Articles of Association
- Board Resolution or & Power of Attorney
- Specimen signature of the manager
- License Copy
- Share Certificate
- Chamber of Commerce certificate
- Leer from company to open a branch in Jafza
- Board Resolution
Do I get a visa through offshore company formation?
No, an investor’s visa is only available through free zone business setup and mainland company registration.
Should I be present for the setup process?
No. The whole process can be done remotely both for JAFZA offshore company formation and RAK offshore business set up by the registered agent.
Does Ajman also provide an offshore business setup?
Recently offshore business setup has also become available in Ajman. Ajman offshore business setup has relatively lower costs and has similar features to RAK offshore businesses.
How Nexus Partners can help with offshore company setup
Contact us today for expert assistance in offshore company formation and take advantage of the UAE’s business-friendly environment.
Since both JAFZA and RAK offer appealing offshore business setup solutions, it’s best to seek advice if you’re not familiar with their details and can not choose.
Nexus Partners’ consultants can give you valuable insights into the best jurisdiction for you. In addition to that, with many successful setup projects and various partners in this field, Nexus Partners are completely familiar with handling challenges and the regulation traps showing themselves along this way.
You can easily book a consultation with us completely free of charge to understand more about JAFZA offshore company formation and RAK offshore business setup.
We’ll help you every step of the way, ensuring that your offshore entity is established seamlessly and in full compliance with the regulations.