Offshore Company formation UAE is all about the offshore companies in the UAE, their benefits and disadvantages. Get to know them quickly.
The offshore company was first formed in Dubai in the year 2003. Since then UAE has become the ideal place to start any business or MNCs. Offshore Companies are duly supported by the government of UAE.
In addition to the tax and custom free benefits, an offshore company also receives financial benefits. Hence UAE is the most dynamic country to set up company headquarters.
Furthermore, the UAE provides all the basic and advanced business amenities since it is the fastest-growing country in the world.
The word “offshore” is the benefits of financial, tax, and legally based on executing, managing, and operating in foreign countries.
The offshore Company operates outside the registered country. Also when it manages and operates outside the country in which the shareholders and owners reside.
An Offshore company is owned by an individual or corporate body. The business entity can not operate its substantial business activity in the country of origin.
An offshore company is also known as a non-resident company. And it can not own an office space inside the UAE. They are formed under the no-tax jurisdiction law. The owners have complete confidentiality over financial matters.
In addition, all offshore company has the right to eliminate different types of tax such as capital gains, value-added tax (VAT), profits on business earnings, death duty, etc.
Foreign entrepreneurs can serve Africa and the Middle East without administrative obligations. Finally, an offshore company is a wholly-owned LLC that has no accounting or tax obligations.
Also, the UAE offshore companies will not be issued an operating license. But only an incorporation certificate will be provided. So the offshore company formation UAE is easy and simple.
Features of Offshore Company Formation UAE
Flexibility
- An UAE, non-UAE or corporate resident can be the director or shareholder
- Also, you can maintain UAE or worldwide deposits and bank accounts
- Own real estate property in the UAE with prior authorization from the RAK Investment Authority.
Obligations
- No obligation to maintain books and records of the company
- You will not need a physical office
- Further, no need to carry the business inside the UAE
- A Residency visa is not required
- Finally, the director and shareholder needs not to be present physically for company incorporation
Others
- In addition, you will need a special license for conducting any insurance and banking business
Activities of Offshore Company Formation UAE
- International Trading
- Professional Services
- Shipping and ship management
- Advisory Services
- Owning Real Estate
- Holding, buying and selling stakes of Company
- Registering Copyright and Patents
- International Consulting Services
- General trading activities
- Investments and joint investments
- Commission Agents or intermediary brokers (IBs)
Rules And Regulations
- The company’s capital can be any amount divided into any denominations
- And, there must be at least one shareholder and director
- You need not deposit the capital in the bank
- Also, the full share must be paid when allocated.
- There must not be any bearer share or differential class of shares.
- In addition, you can open a corporate bank account in UAE
- And a UAE Freezone registered agent must be appointed by the company
- Audited financials can be requested in case of any suspicion.
- Finally, you cannot pursue a business or use words like banking, media, insurance, reinsurance, MENA, royal, emirates, and corporation.
- At last, your company name must end with the suffix “Limited or Ltd”
Benefits or Advantages
Though there are a number of reasons to choose UAE offshore companies, here are some general benefits.
- 100% Ownership
- Physical office not required
- UAE residents can also incorporate an offshore company
- And, Secure and confidential records of directors and shareholders
- No need for audited financial statements
- Also, you will not need to have agreements with other countries for any taxation information exchange
- No need of physical presence for registration
- You can own real property and yachts in the UAE
- In addition, strict laws and legislations
- The most cost-effective and cheap
- No requirement of minimum share capital
- Further, shares in offshore companies are easily and freely transferable
- Also, UAE offshore company provides a gateway for expanding international market
- And it gives access to a business-friendly and stable legal system
- The regulatory regime is flexible to access
- Offers neutral tax on international earnings
- Access to global funding
- In addition, it provides a vehicle to protect and separate assets.
- Also, you are permitted to open a multi-currency account in UAE.
- UAE has Double Tax treaty agreements with over 40 different countries.
- Finally, the documents are bilingual (English and Arabic)
Restrictions or Disadvantages
- Further, trading or commercial operations inside the UAE is not allowed
- An offshore entity can not rent local premises, employ staff, and secure residents or work visas for staff.
- Also, incorporating an offshore company can be expensive.
- And, banks provide poor customer service support
- To reduce global withholding tax, you can not use the double taxation treaty
- Also, you cannot invest in the UAE real estate
- And, Banking and financial services are restricted in UAE
Exceptions
- Own or rent a real estate property which is designated by Ras Al Khaimah Free zone Authority
- Finally, you can trade inside the UAE with an appropriate license from the competent authorities.
What does the Agent do?
- Filing with the Registrar of Companies (ROC)
- Also, obtaining an incorporation certificate
- Getting the office facility registered in Dubai with PO Box
- And, license renewal
- Further, opening a multi-currency bank account in Dubai
- Drafting the Memorandum and Articles of Association (MAA)
- Finally, preparing registration forms
7 Things to Remember
- UAE provides jurisdictional benefits for UAE offshore companies. Therefore choose the best jurisdiction wisely that suits your business.
- An offshore company will not be issued with a business license. But they are provided with an incorporation certificate. So if you need a license to choose another jurisdiction.
- The company cannot carry any business activity in the UAE. But the main function of the company is to hold a vehicle of assets for the shareholders. Therefore you can make monetary transactions.
- Offshore authorities guarantee confidentiality but you must ensure the legitimacy of your business
- KYC (know your Customers) process is followed to stop theft, frauds, and money laundering. So you will need to provide investor’s bio-data, passport copy, address proof, and a reference letter from the bank.
- Some jurisdictions are subjected to CID approvals. But Ras Al Khaimah Free Trade Zone (RAKTZ) and Ras Al Khaimah Investment Authority Offshore are easier and faster.
- Offshore company registration can only be done by a company registration agent. Also, you will need a bank account for offshore company registration in the UAE.
Myths of Offshore Company Formation UAE
- Tax evasion and avoidance– You will have to pay reduced overall liabilities
- Illegal and Risk– The offshore authority governs and guides the companies within the jurisdiction
- Costly– Offers affordable module with quickest ways
- Law– Confidentiality, secure transactions, and laws to ensure upfront dealings.
Registration of Offshore Company Formation UAE
1. Registration of Individual Shareholders
Documents Required
- Notarized passport copy of the shareholder
- Original residence proof (current utility bill)
- Original bank reference letter
- CV or Biodata of shareholder
- 3 to 5 suggested company names of your choice
- Some suggested activities of the company
- Details of ultimate beneficiaries
2. Registration of Corporate Entity shareholders
Documents Required
- Apostilled or attested copy of trade license or incorporation certificate
- And, attested original resolution of the shareholder
- Further, apostilled or attested MOA (Memorandum of Association) of the parent company
- Passport copy of directors, shareholders, and secretary
- Attested parent company’s certificate of good standing
- And, attested incumbency certificate of the parent company (with names of directors and shareholders)
- Finally, the same documents will be asked up to the last level of the parent company to know the initial beneficiary owners (when the parent company is again owned by another corporate)
Note: All the documents must be in English or Arabic only.
Types Of Offshore Company formation UAE
In the UAE there are four main Offshore jurisdiction.
- Dubai Offshore Company- Jebel Ali freezone Authority (JAFZA)
- Ras Al Khaimah Offshore Company (RAK)
- Ajman Offshore Company
- Abu Dhabi Offshore Company
1. JAFZA Offshore Company Formation UAE
Dubai is one of the Emirates among seven in the United Arab Emirates. It is very popular for tourism and cash flow. Therefore many people from all over the world look for the formation of an offshore company for the short or long term in life.
JAFZA was first created in 1985. The offshore company was introduced in 2003. In addition to the Jabel Ali Port, it is surrounded by industrial areas. Also, the port is one of the world’s biggest. Therefore it is the best place to start an international business.
Finally, Jebel Ali is located in Dubai. Also, it is just an hour’s drive from Abu Dhabi. And there is an international airport just outside the port area.
Finally, Dubai is the solution when you think about stepping out of your home territory to start a business in a foreign land.
Features
- Stringent privacy laws
- Reliable Confidentiality
- 100% Ownership
- Only oil producing company and foreign banks will have to pay tax
- Also, no need for any capital share
- No restriction on profit and capital expatriation
- And, a stable banking system
- Effective investor rights
- Virtual Office facility
- Further, no need for public disclosure
- The director can also act as company secretary
- No Exchange controls
- Allowed to open a multi-currency bank account
- Finally, the registrar can appoint inspectors to investigate the affairs. (inspection fees will be paid by the owner of the company)
Activities Allowed in JAFZA
- Holding company with assets abroad
- And, E-commerce
- In addition, holding and management of the real estate in Dubai
- Trading
Activities Prohibited in JAFZA
- Banking
- Financial
- Insurance
- Professional services
- Advertising
- Gaming
- Media
- Intellectual property
- Movie production
- Military
- Education
Benefits of JAFZA
- Minimum of two directors are required
- No minimum capital required
- And, fully pay the Shares must be fully paid
- Minimum one shareholder corporate or individual
- No Share Bearers and different classes of shares
- Furthermore, you are not allowed to rent office space.
- UAE approved agent must provide the registered office address.
- The company name chosen must be available and relevant to the business activity.
- And, there is no limit on citizenship or resident status for shareholders or directors.
- Also, you can directly own local Dubai real Estate with approvals of freezone and developer
- Lastly, Hold shares of freezone and offshore (LLC)
Documents Required
- Original last 6 months banks statement for address proof
- In addition, a duly stamped bank forms
- Article and memorandum of associates
- And, Passport copies of shareholder and directors
- Recommendation or approval letter from the bank.
- Most importantly, Curriculum Vitae
Restrictions
- Investing in Real Estate
- Opening a bank account in the UAE
- Most importantly, must not operate a business within the UAE
- Not eligible for residency Visa
2. Ras Al Khaimah Offshore Company Formation UAE
Ras Al Khaimah (RAK) has the highest number of industries in the UAE. It is situated approximately an hour’s drive from Dubai.
RAK launched offshore company formation UAE in the year 2006. Finally, Ras Al Khaimah offshore company is regulated by the freezone Authority International Regulations 2006.
In addition, RAK manufactures 26% of the total GDP of the UAE. Also, it is known for its investor-friendly environment. And the competitive cost is the reason for attracting foreign investors.
Also, the total cost of offshore company formation UAE in RAK is between 25% to 50% lower as compared to other emirates. Therefore RAK is the place for maximizing the company’s return investments.
Features
- Minimum one individual or corporate shareholder is permitted.
- At least there must be one individual or corporate director for the company.
- There must be a secretary, who can also be the director of the company.
- No need for minimum capital share.
- The company must keep financial records for the first 7 years. But there is no need for filling it with the RAK authorities.
Benefits
- 100% foreign ownership
- No need for local shareholding
- You can hold shares in freezone and onshore(LLC) companies
- Documents need not be attested for any use in UAE, Saudi Arabia, Qatar and Bahrain
- You can hold a multi-currency bank account in the UAE.
- It takes just one week for incorporation after the documents are submitted for registration
- The details of the shareholders and directors are not disclosed in the public register.
Documents Required
- Passport Copy of the shareholders and directors certified by lawyers or accountants or sovereign employee
- And, 2 original address proof documents
- A Bank or any professional reference letter
- In addition, professional history bio-data or curriculum vitae
- Also, a Business plan including business activities
Restrictions
- Can not rent a physical office in the UAE
- You will not be provided with any residence visa
Procedure
- Choose a company name ending with limited or ltd
- Get approvals from the government authorities
- All the documents must be submitted to the RAKIA registrar
- Apply for the right license
- Do the required payments for the registration and license
3. Ajman Offshore Company Formation UAE
Ajman Offshore companies are allowed in the Ajman freezone area. The freezone authority is the prominent freezone that allows most of the industrial activities.
The Emirates of Ajman contributes 87% of the GDP of the UAE. Further, it was first established in the year 1988. And it has received autonomous status by the ruler of Ajman, His Highness Sheikh Humaid Bin Rashid Al Naumi.
Furthermore, developing business and infrastructures are one of the reasons for its recognition in UAE. Also, it is located just 25 minutes away from Dubai International Airport.
Finally, an Ajman offshore company is a company, division, or group that are engaged in offshore business activities. These activities are legal and are incorporated under the laws of the jurisdiction. And any local economic activities are not allowed in Ajman offshore.
Benefits of Ajman Offshore Company
- 100% ownership
- 100% repatriation of capital and profit
- Also, 0% personal and corporate tax
- Cheaper company setups
- No need for renting an office space
- Avoid annual audit
- And, no need for paid-up share capital
- Easy registration process
- No foreign currency restrictions
- In addition, there are complete privacy and confidentiality
- Takes less time for completion of registration
- And, sell or purchase property with freedom
- With pre-approval, you can own a property in the UAE
- Globally recognized Ajman freezone
- In addition, you can open a bank account in Ajman
Documents Required
If you have decided to proceed with the Ajman offshore company formation, you will have to submit the mentioned documents.
- Passport copies of the shareholders
- In addition, Original residence proof of the shareholders
- Curriculum Vitae of the shareholders in English
- Also, Memorandum of Association (MOA)
- Duly filled application form for offshore company incorporation
- And, a Reference letter from the bank
- Further, your business name and plan with cost-benefit analysis
Finally, submit your documents to the Ajman freezone authority. Within one or two days you will be ready to start.
Activities Allowed
- Consulting services
- Advertisement services
- Holding company
- Investment and joint investment company
- Property owning company
- International services
- General Trading
- Intermediary/Broker
- Shipping and ship management companies
Features
- Forming an Ajman offshore company will give you quick release of Certificate
- In addition, you get multiple visa option
- There are low barriers to entry
- Also, there can be multiple shareholders for an offshore company
- The administration cost of Ajman Company is very low
- Also, you can own a virtual office for your offshore company
- Finally, protect the company’s assets
What We Do?
- Firstly, Registered office (For one year)
- Secondly, A registered agent (For one year)
- And, AFZA Offshore Fee
- Then, Preparation of memorandum and articles
- Also, Preparation of registration forms
- Further, Certificate of incorporation
- Certificate of incumbency
- UAE resident secretary for registration
- Filing with the registrar of companies
- Payment of filing fees
- Registering of directors
- Registering of shareholders
- Company stamp
- Visit authority
4. Abu Dhabi Offshore Company Formation UAE
Abu Dhabi is the capital city of the United Arab Emirates. Furthermore, the city has become one of the best places to start an international business. And, it has an advantage of location as well as the support of the government.
In addition, Abu Dhabi is the place for entrepreneurs and international investors. Also, the international offshore company plays an important role in the development of the country’s economy.
Benefits
- Reduce Tax Liabilities
- Safe and secure way of conducting international business
- And, sell off the company to avoid the property transfer fees.
- In addition, Abu Dhabi’s offshore company shareholder can be from 1 to 50.
- Simple incorporation and flexible legislative services.
- Also, easy and simple banking procedures
Features
- Minimum one director and the directors can be up to 50 in number
- Freedom to open a corporate bank account
- And the management can own 100% of the company
- Also, no requirement of the audit report
- Most importantly, taxation can be levied
- In addition, no need for being present physically in the UAE for the incorporation of the Abu Dhabi offshore company
Renewal of Offshore Company UAE
Renew your offshore company every year. The renewal may cost you less amount than the initial company registration.
In addition, you will be provided with a “Good Standing” certificate. And it serves as the formal proof of the offshore company’s renewal.
Usually, the bank receives the renewal certificate each year. They update the records of the company and keep the account in an active state.
Fees
- Government Renewal Cost
- Registration Agent fees
Concerned government authorities are responsible for collecting annual fees. An offshore company doesn’t issue a license, so you will not need to renew any license. But you will have to renew the activities you do under an offshore legal entity.
At last, if you fail to renew your offshore company, your bank account may be blocked. And you will have to pay fines. So to avoid all the consequences of fines and blocks, renew your certificate annually.
Procedure To Renew a offshore Company
- Firstly, choose a registered agent (your company registration agent may also inform you in advance)
- And, then you will have to pay the renewal fees, which will then be proceeded for renewal
- Finally, you will receive the “Good Standing” Certificate as renewal proof
- Generally, this certificate is with the banks but you can order the certificate through your registered agent.
In case, you are not ok with your previous agent who registered your company, you can always choose another best agent.
Late renewal
- Heavy penalties
- Time-consuming
- Extra paperwork
- Physical Presence
- Tedious closing procedure
Liquidation or Closing Offshore Company UAE
Annually renew your offshore company. And renew it a year later of company incorporation or before the date of incorporation.
Without renewing the company can not perform its regular activities.
So you will have to either close it or renew it at any cost. This will protect you from any type of serious risk to the directors and shareholders.
Therefore, it is not wise to let the company lapse. Here are five consequences of not liquidating your company post expiry of the validity.
- Most importantly it is considered as illegal activity
- Also, lose good standing of company
- In addition, blocked Business Transactions and frozen bank account.
- Personal liability and liable for any existing debts
- And restricted to reopen any new company in the future. Entry Ban of Shareholders and Directors to UAE and Some times even to the Gulf regions
Documents needed For Closure
- Closing statement from the bank
Time Required
- 1 Month
8 Steps To close an offshore company
- Close the bank account
- Immigration clearance or visa cancellation
- Clearance from a regulatory authority
- Third-party clearance like DU or Etisalat, DEWA, A/C, etc
- Also, Publish in the local press of notice at the beginning of the closure procedure for 15 days.
- In addition, transfer the assets (if any) to the shareholders or directors
- Appoint a registered agent for approval of closure from the authorities
- Finally, termination or De-Registration confirmation certificate from the registration authority
Final Words
In conclusion, choosing offshore company formation UAE is the wisest idea you will ever have. Due to its various benefits, it is the best for foreign investors in 2020.
So get a quotation from us and without wasting any time start your business as quickly as possible.
Also do not forget to comment on your query or view about this article. And share this article to your friends who are planning to start a business in the UAE soon.
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