The popularity and interest in offshore companies is growing in the UAE as investors, SMEs and multinational corporations look to capitalise on the UAE’s favourable business environment.

An offshore company also known as an international business company (IBC) is a legal business entity that is established to operate outside the jurisdiction of its ultimate ownership. Generally, traditional offshore jurisdictions are those that levy little or no taxes on the capital gains of a company allowing the business to minimise its tax burden and maximise its profits.

By migrating business operations to the UAE, company owners can take advantage of the Emirates’ tax incentives, strategic location and modern infrastructure.

What are the benefits of setting up a UAE offshore company?

Tax Advantages

Offshore structures provide an effective way to minimise your tax burden. In the UAE, offshore companies benefit from exemption from income tax as well as no customs duties and no VAT, capital gains or withholding tax.

The UAE’s extensive double taxation treaty network with over 100 countries also ensures that business are protected from paying tax on UAE income in their country of origin.

Business Confidentiality

UAE offshore companies are not required to publish financial records or ownership information in the public domain. The only instance in which this information would have to be made available to a third party would be in the case that government or legal authorities suspect that the company is engaged in illegal activity.

Asset Protection

UAE offshore companies are permitted to hold a variety of assets including real estate, intellectual property, securities and shares in local UAE companies. Information on the ownership of an offshore company in the UAE is also confidential which helps to protect the company’s assets from creditors or other third parties.

Other provisions such as lawsuit protection ensure that the company’s assets and other possessions are protected in the event of a legal judgement against the company.

Simplicity

A UAE offshore company is very simple to set up. There is no requirement for physical office space, no minimum share capital requirement and very few other regulatory obligations. The setup can be done in as little as 3-7 working days and the company need only have one director and one shareholder.

International Market Expansion

Offshore structures favour international expansion in several ways.

Using a UAE offshore company is a great cost-effective way to expand a business globally. You can use a UAE bank account to carry out transactions in any currency and save on expensive foreign exchange rates. It is also a good way to make connections in the GCC market and beyond and encourage partnerships and bilateral investments.

By diversifying your business portfolio and expanding overseas you’ll also raise awareness of your brand and build its authority in the industry.

Which jurisdictions offer offshore companies in the UAE?

The two main offshore jurisdictions in the UAE are Jebel Ali Free Zone (JAFZA) and Ras Al Khaimah International Corporate Centre (RAKICC).

JAFZA

JAFZA is located just outside Dubai, surrounding the Jebel Ali Port, one of the world’s largest shipping ports. It allows 100% foreign ownership, the allowance to own freehold property in Dubai (subject to developer approval) and a swift and seamless incorporation process.

Offshore companies in JAFZA can also open a local bank account and hold shares in UAE onshore and free zone businesses.

RAKICC

RAKICC, located approximately an hour’s drive from Dubai, is one of the fastest growing UAE government owned corporate registries and the lowest cost jurisdiction for UAE-based offshore companies. It offers fast incorporation, economical operational costs and complete confidentiality.

What types of activities can be carried out with an offshore company?

Offshore companies can be used for almost any kind of transactional activity as long as it’s conducted outside the boundaries of its registered jurisdiction. They can buy and sell goods and services, open and hold bank accounts, hold physical or digital assets, intellectual property and carry out normal business activity.

What challenges are associated with offshore companies?

Despite the flexibility of offshore companies and the freedom they afford to conduct almost any business activity. They do have certain limitations. Since an offshore company is a fully foreign owned legal entity, it is not eligible for a trade or business licence as a mainland business is. This means that offshore companies cannot carry out any business activities within the UAE or conduct business with any person residing in the UAE. For this reason, offshore companies tend to be primarily used as holding companies.

There are also some business activities that offshore companies cannot carry out. These include banking, insurance and real estate. Other limitations are that an offshore company cannot have physical office space in the UAE or obtain resident visas.

Final Thoughts

Despite many people’s scepticism, the use of offshore companies is a great way to protect assets, retain the confidentiality of your business and benefit from the UAE’s stable business and banking environment and significant tax advantages. However, it is not appropriate for all businesses and won’t provide some of the freedom and flexibility that onshore companies have. It is therefore wise to seek the advice of a reputable corporate services provider who can advise you on the best structuring approach for your business.

How can PRO Partner Group help?

At PRO Partner Group we have built enduring relationships with key government bodies, and we have direct access to government departments, regulatory authorities and freezone authorities with our on-the-ground team of experts in each department.

We will streamline the process of offshore company setup and provide ongoing support and administration. We always ensure that every step is taken to accelerate the application and deliver outstanding results.

If you need assistance with setting up a UAE offshore company or any other related company setup, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar or KSA, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at info@propartnergroup.com or complete the contact form below and we will be delighted to assist you.