Establishing an Offshore Company in the UAE: A Comprehensive Guide

The UAE has become a global hub for businesses seeking to optimize operations, reduce taxes, and expand internationally. Establishing an offshore company in the UAE offers a host of benefits, including tax efficiency, confidentiality, and access to a thriving economy. Here’s everything you need to know about offshore company formation in the UAE.

What is an Offshore Company?

An offshore company is a business entity registered in a jurisdiction different from where its operations are primarily conducted. In the UAE, offshore companies are legally allowed to conduct business outside the country while benefiting from UAE’s robust regulatory framework and favorable tax policies.

Why Choose the UAE for Offshore Company Formation?

The UAE is a preferred destination for offshore companies due to its strategic location, business-friendly regulations, and economic stability. Key advantages include:

• Tax Benefits: Offshore companies in the UAE enjoy 100% exemption from corporate and income taxes.
• Confidentiality: Shareholders' and directors' details remain confidential, ensuring privacy.
• Asset Protection: Offshore companies provide a secure structure for asset protection and wealth management.
• Ease of Operations: The UAE offers simple regulatory requirements and streamlined procedures for incorporation.
• Banking Facilities: Offshore companies can open multi-currency bank accounts in the UAE, making international transactions seamless.

Key Offshore Jurisdictions in the UAE

The UAE hosts three primary offshore jurisdictions:

• Jebel Ali Free Zone (JAFZA): Renowned for its robust infrastructure, JAFZA offshore companies can own property in designated areas in Dubai and engage in holding activities.
• Ras Al Khaimah International Corporate Centre (RAK ICC): Offers cost-effective solutions for international businesses with a focus on asset protection.
• Ajman Offshore: Popular for its affordability and swift registration process, ideal for small and medium-sized enterprises.

Domestic Tax Implications for Offshore Companies

In the UAE, offshore companies can be registered in Free Zones such as RAK International Corporate Centre, Jebel Ali Free Zone, or Ajman Free Zone. These companies are allowed to conduct business only outside the UAE and cannot obtain a business license within the country.

However, many believe that the UAE’s 9% corporate tax does not apply to such companies. This is a misconception. Offshore companies are considered residents and must register for corporate tax purposes for the following reasons:

1. These companies are registered within the UAE, making them tax residents of the country. According to Article 11 of the Corporate Tax Law No. 47 of 2022: "A resident of the UAE includes a legal entity that is registered or otherwise created or recognized in accordance with applicable UAE law, including in Free Zones."
2. The UAE Ministry of Finance recognizes these companies as being established under UAE law.
3. Offshore companies are specifically registered in designated Free Zones within the UAE.

The UAE tax authorities have officially stated that offshore companies must register for corporate tax purposes.

Steps to Establish an Offshore Company in the UAE

1. Choose a Jurisdiction: Select the offshore jurisdiction that aligns with your business objectives.
2. Engage a Registered Agent: Offshore companies must be registered through approved agents.
3. Prepare Documentation: Commonly required documents include:
   • Passport copies of shareholders and directors.
   • Proof of residence.
   • A detailed business plan.
4. Submit Application: The registered agent will submit the application to the relevant offshore authority.
5. Receive Incorporation Certificate: Once approved, you’ll receive the certificate of incorporation and other necessary documents.

Permitted Activities for Offshore Companies

Offshore companies in the UAE can engage in activities such as:

• Holding investments and assets.
• Owning intellectual property.
• Conducting international trade.
• Acting as a holding company.

Limitations of Offshore Companies

While offshore companies offer numerous advantages, they are restricted from:

• Conducting business within the UAE mainland.
• Leasing office space in the UAE.
• Issuing UAE residency visas for owners or employees.

Costs of Setting Up an Offshore Company

The cost of establishing an offshore company in the UAE varies by jurisdiction. Typically, it includes:

• Registration fees.
• Registered agent fees.
• Annual renewal costs.

For example, setting up in RAK ICC can cost approximately AED 10,000 to AED 15,000 annually, while JAFZA offshore companies may incur higher costs due to their added benefits.

Why Partner with Ninjaz for Offshore Company Formation?

At Ninjaz, we specialize in providing swift and premium corporate services tailored to your business needs. With our expertise and tech-enabled platform, we make the process of setting up an offshore company in the UAE hassle-free. From documentation to banking assistance, we ensure seamless execution at every step.

Ready to Take the Leap?

Establishing an offshore company in the UAE is a strategic move for businesses looking to expand globally. Contact Ninjaz today to start your journey or visit our website for more details.