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The Complete Guide to Offshore Company Formation in Dubai

Jan 5, 2023 | Entrepreneurship

Do you want to establish an offshore company in the UAE? If so, you have come to the right place. In this article, we will provide you with all the information you need to know about offshore company formation in Dubai. We’ll cover what an offshore company is, the steps involved in setting one up, the documents required to get started, and the benefits of doing so. So, whether you are an entrepreneur or business owner looking to expand your business overseas, or if you are simply interested in learning more about this topic, read on!

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What Is An Offshore Company?

For those looking to set up a business in the United Arab Emirates, UAE Offshore company formation is typically the most popular option.

But just what is an offshore company?

An offshore company is a legal business entity that operates outside the country of its home jurisdiction. Offshore companies offer businesses and individuals a wide range of benefits, including tax savings, confidentiality, asset protection, and greater international access.

For many people, establishing offshore entities in countries that impose minimal or no taxes on profits is an attractive choice. The United Arab Emirates has become increasingly popular for this reason, as businesses can take advantage of the famously low and no-tax conditions.

Limited liability companies (LLCs), limited companies, and limited partnerships are all permissible business structures that can be established as Dubai offshore companies.

Now, let’s see what steps are involved in establishing your own offshore company in Dubai.

How to Establish an Offshore Company in Dubai

If you are looking to set up an offshore company in Dubai, there are several steps you need to take.

Choose An Offshore Jurisdiction

First and foremost, you need to choose a suitable offshore jurisdiction that meets your needs (scroll to read more about jurisdictions). For a successful UAE offshore company incorporation, enlisting a local offshore agent registered under one of the three notable authorities is essential.

Choose A Corporate Name & Submit Your Application

Then, select a corporate name for your offshore company and register it with the local authorities. Naming your UAE offshore company must include the words “Limited” or “Ltd” to signify its legal identity as an offshore entity. Next, complete an application and gather supplemental documents (see required documents below).

Get Professional Help from Offshore Company Formation Specialists

Establishing an offshore company in Dubai is straightforward and efficient, taking just several weeks to complete. To ensure a smooth application process, it’s best to work with a Dubai offshore company formation specialist who can handle all the necessary admin. Our consultants can lend a hand with other associated tasks such as obtaining visas for investors and employees, as well as opening corporate bank accounts.

Documents Required to Set Up Your Offshore Company

In addition to the above steps, you will need to prepare certain documents prior to setting up an offshore company in Dubai. These documents include:

  • A copy of the offshore company’s Articles of Association
  • Passport copies and CVs of the registered shareholders
  • Relevant Emirates ID cards
  • A comprehensive business plan
  • A certified copy of recent bank statements (6 months to be documented)
  • Proof of address via utility bill
  • 3 potential brand or business names for the company
  • Details of the business activity for the company

A stock photo of a man filing documents- these are required for an offshore company formation.

Unique Features Of An Offshore Company in the UAE

An offshore company is different to other company types, with certain features that characterise them. These include:

Offshore Corporate Bank Account Access

In the UAE, establishing an offshore bank account is a simple process. A corporate bank account will protect your business operations and help to manage your money. Both corporate and individual banking options are available in the UAE for streamlining offshore accounts without hassle. Holding an offshore bank account for your company is beneficial in the long term for your business as it allows for increased international trading.

The Know Your Customer (KYC) Process

When forming an offshore company in the UAE, you must adhere to a stringent Know Your Customer (KYC) process. As a business owner, your responsibilities include providing documents such as passport copies, proof of address, bank reference letters, and data of investors to the jurisdiction’s governing authority. The KYC procedure helps banks verify investor data while curbing any attempts at identity theft, financial fraudulence or money laundering activities that may occur.

Jurisdictional Benefits

When it comes to offshore company incorporation in Dubai and the UAE, there are three limited jurisdictions available. Each offers businesses its own distinctive benefits that can be tailored to your particular corporate needs. So, it’s essential to assess all three options before deciding which one is right for your organisation.

UAE Jurisdictions Available For Offshore Company Formation

Of all seven Emirates, there are only three that have the authority to establish offshore companies. These are Ajman Free Zone, Ras Al Khaimah and Jebel Ali Free Zone.

A stock image of Dubai.

Ajman Free Zone

Ajman free zone has competitive and cost-effective offshore incorporation services that ensure your business is well-poised to succeed. Here are some features of the Ajman free zone that make it a worthwhile consideration for your offshore business.

  • Establishing an Ajman offshore company is a highly economical option and requires a minimal expenditure on operational costs.
  • Making alterations to your business structure is simple, with changes such as a new corporate shareholder to be made within just seven days.
  • A minimum of one director and one shareholder are required for offshore incorporation and conveniently, this role can be fulfilled by the same individual.

Ras Al Khaimah International Corporate Centre (RAK ICC)

Boasting an exponential growth rate, Ras Al Khaimah has become one of the most thriving Emirates in all of the UAE. RAK and Ajman share many of the same features, making them both powerful jurisdictions for international businesses looking to start an offshore company.

RAK ICC is hailed as an outstanding choice, for the following reasons:

  • Establishing a RAK offshore company is made even easier with no local shareholding requirement.
  • RAK offshore companies are cost-effective and can be incorporated within 7 days of application.
  • RAK offshore companies are authorised to purchase shares of local UAE businesses.
  • Like Ajman, one director and one shareholder are required for offshore incorporation.
  • It is now possible for RAK offshore companies to invest in real estate within the UAE without having a business licence.
  • Having a RAK offshore company gives you the ability to open and manage multi-currency bank accounts in the UAE for conducting international transactions with ease.
  • With the assistance of a UAE national, you can register your RAK offshore company without being physically present in the UAE.
  • There’s also no obligation to submit an annual audit report.

Jebel Ali Free Zone (JAFZA)

Jebel Ali is a vital trading centre located in Dubai and just an hour away from Abu Dhabi. It was the first free zone in the UAE region and is known as the Jebel Ali Free Zone (JAFZA). Here, businesses of all sizes have access to world-class infrastructure and services that can help them expand their trade opportunities both locally and internationally.

A JAFZA offshore company offers many of the same advantages as a RAK offshore firm, with some slight differences:

  • Offshore company incorporation in JAFZA comes at a higher price than Ajman or Ras Al Khaimah.
  • Shareholders must reside in or visit the UAE to physically complete the offshore company incorporation process.
  • A JAFZA offshore company must have a minimum of one shareholder, one secretary, and two directors to be incorporated.
  • It is necessary to submit an audit report of your finances and operations to the JAFZA authorities.

Advantages of Establishing An Offshore Company in Dubai

There are several benefits to offshore company formation in Dubai. Let’s take a look at why offshore companies are so popular for international business.

  • They offer significant tax savings due to the UAE’s offshore tax laws.
  • UAE offshore companies offer greater international business opportunities, allowing entrepreneurs and businesses to access new markets and customers.
  • Investors involved in offshore company formation are not mandated to have a physical business location, affording shareholders greater flexibility.
  • Offshore companies offer asset protection from creditors and legal claims due to their corporate veil of legal liability.
  • They also provide increased financial privacy and enhanced confidentiality for business owners.
  • Offshore companies are authorised to open multi-currency bank accounts that not only allow for international business transactions but also ensure the protection of funds.

Disadvantages of Establishing An Offshore Company in Dubai

Offshore companies may be beneficial in many ways, but beware, they also come with a few downsides. Let’s take an overview of some of the disadvantages of offshore company formation in Dubai.

An image of a business man working on an offshore company formation.

Not Eligible For Business Licences

An offshore company in the UAE is known as a ‘paper’ company, which is entirely foreign-owned. As such it is not eligible for a business licence or trade licence (unlike an onshore company).

Without a business licence, companies in the UAE are limited in their activities. Holding companies are listed as offshore entities for this reason. They cannot operate any profitable businesses within the UAE and cannot employ anyone residing there either. Moreover, these organisations cannot do business with people living in the UAE.

Limitations On Buying Real Estate

Real estate ownership in the Middle East is a prosperous venture for many investors and entrepreneurs. Importantly, offshore companies established in RAK International Corporate Centre and Jebel Ali Free Zone are allowed to buy real estate assets. However, this does not apply to the Ajman free zone.

Restrictions On Trade Outside Of The UAE

Business activities within offshore companies are restricted to a select few commercial activities. When it comes to offshore companies, there is a range of business activities they can engage in. These include:

  • International trade
  • Shipping business activities
  • Property holding & intellectual property (IP) holding
  • Online advertising business
  • General trading and distribution
  • Service centre operations

With these opportunities available for offshore companies to explore and pursue; success is almost guaranteed.

Importantly, offshore companies cannot engage in insurance, aviation and media business operations as well as conducting any business proceedings with other companies in the Middle East.

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Offshore Company Formation – FAQs

What company structures can be formed as an offshore company incorporation?

The permitted company structures for offshore companies are:

  • Limited liability companies (LLCs)
  • Limited companies
  • Limited partnerships

How much does setting up an offshore company in the UAE cost?

Establishing an offshore company here is comparably more expensive than in other countries. Setting up an offshore business in the UAE provides you with numerous advantages and would require more investment; it is estimated to cost well over AED1000.

Is there a minimum investment capital requirement for offshore companies?

Thanks to the updated Companies Law in 2009, offshore companies are now able to determine the share capital of their limited liability company. This means that there’s no strict requirement to substantiate your start-up capital before commencing your business.

Is an offshore company the same as a free zone company?

No, an offshore company is different from a free zone company. Companies that are established in a free zone are issued a commercial licence to conduct business in the UAE.

A stock photo of Dubai.

Establish An Offshore Company in Dubai Today

Dubai remains the leading economic hub of the Middle East, luring foreign investors to capitalise on its various business formations such as offshore companies. Its success in this regard has enabled it to maintain a strong foothold over other competitors in the region.

Forming an offshore enterprise in the UAE is a great way to save money in the initial stages of your business while you focus on international growth in the long term. One of the best things about setting up an offshore company in the region is the ability to have a registered company without the costs associated with a physical space in Dubai. You can make the most of the city’s location, business-friendly culture and tax exemptions, quickly and easily with an offshore company.

Get Your Business Started with Virtuzone

By following the steps outlined above and gathering the necessary documents, you can easily set up an offshore company in Dubai. However, it is highly recommended that you seek professional advice from a qualified company formation specialist to help with the setup process.

With the right expertise and guidance, you can ensure that your offshore business is a success. For more information about the offshore company incorporation process in Dubai, or setting up a business on the mainland, get in touch with us today!

Book a free consultation and let us help you get started with your Dubai business venture!

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