Offshore Companies in UAE should not be confused with UAE Free Zone companies. An Offshore Company is a legal business entity that is set up with the intention of operating outside its registered jurisdiction and/or the location of its ultimate ownership.
The two principal jurisdictions offering Offshore Companies in the UAE are Ras Al Khaimah (RAK) and the Jebel Ali Free Zone (JAFZA). Both are “tax-free” jurisdictions that levy no income tax or corporate tax and permit 100% foreign ownership. The UAE has Double Tax Treaty agreements with over 40 other countries.
Offshore Companies are permitted to open multi-currency accounts in the UAE and carry out business internationally. They may not, however, carry on business with a person resident in the UAE or have physical premises within the UAE.
Both RAK and JAFZA have their own specific benefits. RAK is the more cost-effective of the two, but JAFZA is the only Offshore Company that is legally permitted to own property situated in Dubai.
UAE Offshore Companies should not be confused with UAE Free Zone Companies. Free Zone Companies are onshore entities permitted to carry out business in Dubai with certain restrictions. They are similarly subject to the 0% rate of corporate tax but they enable their shareholders, directors, and employees to obtain residency in the UAE.
As a matter of local company law, both RAK International Companies (RAK ICs) and JAFZA Offshore Companies MUST appoint an approved registered agent (Sovereign Corporate Services is approved for this purpose).
JAFZA Offshore Company Incorporation
The JAFZA was created in 1985. It is an industrial area surrounding the Jebel Ali Port, one of the world’s biggest shipping ports, which allows the international companies based there to enjoy the special privileges of the free zone. These include exemption from corporate tax for 15 years, no personal income tax, no import or export duties, no restriction on currency, and easy labor recruitment.
Jebel Ali is located just outside Dubai and is about an hour’s drive from Abu Dhabi, the UAE’s capital city. Al Maktoum International Airport, which is planned to be the largest airport in the world in both freight and passenger volume, is constructed just outside the port area.
The Jebel Ali Free Zone Authority (JAFZA), in conjunction with the Dubai Government, introduced the Offshore Company in 2003 under the Jebel Ali Free Zone Offshore Companies Regulations 2003.
Key benefits of opening a RAK offshore company
100% Foreign Ownership – The JAFZA Offshore Companies Regulations require no local shareholding;
Local Real Estate Ownership – The JAFZA Offshore Company is the only offshore company that is permitted to directly own local Dubai real estate. Most properties in Dubai can be owned by JAFZA offshore companies but both Free Zone and developer approval are required;
Shares in Local Companies – Despite a general prohibition on Offshore Companies conducting business with persons resident in the UAE, the authorities do allow Offshore Companies to hold the shares of both Free Zone and Onshore (LLC) Companies. Documents for use in the UAE, Bahrain, Saudi Arabia and Qatar do not need to be attested;
Local Bank Account – An Offshore Company can hold multi-currency bank accounts in the UAE to carry out routine international transactions;
Shareholder/Director details – The names of shareholders and directors do not have to be disclosed on a public register;
Inspection – The registrar has the power to appoint inspectors to investigate the affairs of an Offshore Company. The owner of the company may be liable for all inspection fees.
RAKEZ Offshore Company Incorporation
Ras al Khaimah, situated approximately an hour’s drive from Dubai, is one of the fastest growing of the seven Emirates that form the UAE. RAK has the highest level of industrialisation in the UAE, with manufacturing at 26% of the GDP. It has built its reputation on a business-friendly investment environment and competitive costs. The cost of doing business in RAK is 25 to 50% lower than the UAE average, allowing companies to maximize their return on investment.
In September 2006, the Ras al Khaimah government launched the International Company structure, also known as the RAK Offshore Company. These are regulated under the Ras Al Khaimah Free Trade Zone Authority International Companies Regulations 2006.