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Does Opening An Offshore Company In The UAE Still Make Sense?

You can register an offshore company in Dubai, the UAE, within 1 day. But have offshore companies become obsolete? Let’s try to find out.

An offshore company in the UAE is a company registered by a state agency in one of the emirates that has no right to do any business in the mainland UAE. It cannot make any business agreements with resident entities in the country.

The opportunity to register an offshore company in the UAE is widely discussed but our experience shows that some people confuse offshore companies with companies registered in the UAE Free Zones. Below we discuss offshore zones in the UAE, the company registration opportunities available in the country, and the prospects for opening an offshore bank account for your company.

Key Takeaways

  • UAE offshore companies offer significant tax benefits, including no corporate, capital gains, or repatriation taxes.
  • There are specific zones in the UAE, like Jebel Ali Free Zone (JAFZA), Ras Al Khaimah (RAK), and Ajman, where offshore companies can be registered.
  • Offshore companies in the UAE can engage in international trade, own property in certain areas, and open bank accounts but cannot conduct business within the UAE mainland.
  • Property ownership by offshore companies in Dubai is influenced by the laws of the owner's citizenship, which can help circumvent local inheritance laws.
  • Choosing the right emirate for offshore company registration depends on your business objectives and requirements.

Offshore companies in the UAE

There is a widespread opinion that the United Arab Emirates and Dubai in particular is one large offshore zone but this opinion is wrong. Most companies registered in the country are resident companies that carry out business activities and offer their services in the mainland UAE.

The opportunity to open an offshore company in the UAE is attractive because such companies are tax-free in the country. They don’t pay neither the corporate tax, nor the capital gains tax, nor the capital repatriation tax, nor any other tax.

No business license is issued to an offshore company in the UAE, only a registration certificate. Because all business activities are licensed in the country, offshore companies cannot engage in commercial operations in the UAE.

Three economic zones register offshore companies in the UAE. Such a company can be registered in Dubai, Ras Al Khaimah, and Ajman. The corresponding names of the zones are Jebel Ali Free Zone (JAFZA), RAK International Corporate Centre (RAK ICC), and Ajman Free Zone. The administrations of these zones register offshore companies in addition to onshore (resident) companies.

It does not make very much difference which of the zones you choose for your offshore company in the UAE. However, the registration processes differ a little bit and the same goes for the requirements that the company has to meet. The table below shows in what aspects offshore company registration in Dubai differs from offshore company registration in Ras Al Khaimah.

OFFSHORE COMPANIES IN THE EMIRATES: a comparative analysis
Zone JAFZA RAK ICC
Company type IBC (International Business Company) IBC
Taxes None None
Opportunities for using double taxation avoidance agreements  None None
Company registration timeframe 2 weeks 1 day
Opportunities for buying a ready-made offshore company None None
Requirements to the charter capital
Minimum declared 1 dirham 1,000 dirhams
Minimum deposited 1 dirham 1 dirham
Requirements to the shareholders
Minimum number One One
Citizenship restrictions  None None
Availability of shareholders’ information to third parties Information confidential Information confidential
Requirements to the place where shareholders’ meetings are held  None None
Requirements to company directors
Minimum number   Two One
Citizenship restrictions None None
A corporate entity acting as a company director  Impossible Impossible
Availability of company directors’ information to third parties Information confidential Information confidential
Requirements to the place where Board of Directors’ meetings are held  None None
Reports and audit
Record keeping Required Required
Audit requirements  None None
Report submission requirements  None None
Access to reports for third parties  None None
Resident visas to the UAE
Opportunities for acquiring resident  visas together with registering an offshore company  None None 

Offshore companies in Dubai

Let us point out several features of offshore companies registered in Jebel Ali Free Zone (JAFZA). Offshore company registration costs more in Dubai than it does in other emirates. The reason for that must be the fact that only companies registered in JAFZA can own property in Dubai. This opportunity is unavailable in other Free Zones in the UAE.

It is important to realize that the property of a deceased company owner is inherited in accordance with the laws of the country of the person’s citizenship. This allows avoiding the jurisdiction of Islamic laws that have strict regulations on inherited property. Thus, if you are planning to buy property in Dubai, please consider the opportunity to register it in the name of your offshore company in Jebel Ali Free Zone rather than your personal name. This will have a direct bearing on the property rights for your heirs.

Opening an offshore company in Dubai takes 10 to 15 days, while a company can be registered in RAK or Ajman within 1 day. Besides, personal presence of the company founder is required. However, a company can also be registered by a trusted agent with a Power of Attorney. Shortly speaking, registering an offshore company in Dubai makes good sense if you are planning to buy real property in the emirate.  

Offshore companies in Ras Al Khaimah and Ajman

If this is not your intention, registering a company in RAK or Ajman is simpler and cheaper. You can set up a company within a day and your personal presence is not required. If you are thinking of purchasing property in one of the emirates, establishing a company in the vicinity would also be a good idea.

Things that UAE offshore companies can and cannot do

Now when we have highlighted the differences between offshore companies registered in different emirates, let’s consider what they have in common. All offshore companies in the UAE are allowed and prohibited to do the following: 

ALLOWED:

  1. International trade operations, consultation services, holding companies, marine vessel management; all business activities shall be conducted outside the UAE;
  2. Owning property in development projects approved by RAK ICC, Jebel Ali Free Zone, and Ajman Free Zone administrations;
  3. Opening bank accounts in the UAE and foreign countries;
  4. Acting as a (the) founder of another company in the UAE or beyond. 

PROHIBITED:

  1. Renting an office in the mainland UAE;
  2. Do business in the country and receive bank transfers from companies registered in the UAE;
  3. Apply for resident visas (impossible rather than prohibited);
  4. Providing banking, financial, and insurance services without a license.

Please bear these regulations in mind when planning to open an offshore company in the UAE.

Offshore bank accounts

You can open an offshore bank account for your company registered in the UAE in a local bank or in a foreign bank. Please note that not all banks in the UAE open accounts for offshore companies. At the same time, some of them do and the banks are quite reliable.

If you have an offshore company registered in some other jurisdiction and you would like to open an offshore bank account in the UAE, it is possible to do that. You will have to supply a complete package of corporate documents translated into English (if necessary) and legalized. 

Which emirate should you choose for opening an offshore company in the UAE? This depends on your prevalent goals.

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