Offshore company formation in dubai

The United Arab Emirates (UAE)’s huge metropolis of Dubai has grown to be a draw for global investors and businesspeople wishing to establish offshore corporations. Dubai is a tax-free and low-regulation business haven that gives complete anonymity to foreign businesses because of its political stability, adaptable regulatory framework, and business-friendly culture. We will lead you through every aspect of establishing an offshore business in Dubai in this extensive guide, from comprehending the concept to the detailed procedure and benefits it provides.

What is an Offshore Company in Dubai?

A business entity incorporated in one of Dubai’s free zones or any other UAE emirate is known as an offshore company in Dubai. An offshore company’s main objective is to carry out business activities outside of the United Arab Emirates. Offshore businesses, sometimes referred to as Dubai Offshore International or Dubai Offshore corporations, have various advantages over other business structures. These advantages include restricted liability, tax exemptions, and 100% foreign ownership. It’s crucial to remember that offshore businesses in Dubai are usually used for trading, holding assets or property, or acting as a vehicle for foreign investments. They are not allowed to conduct business within the United Arab Emirates.

Offshore vs. Freezone Companies

Before delving into the process of setting up an offshore company in Dubai, it’s essential to understand the distinction between offshore companies and freezone companies. Freezone companies are allowed to establish their businesses in a physical space and can conduct business in Dubai and the UAE. These companies can also apply for visas for themselves and their employees. On the other hand, offshore companies are not permitted to conduct business or trade in Dubai or the UAE, nor are they eligible to apply for a residency visa. Offshore companies in Dubai are typically used for consultation services, holding companies, and shipping companies.

Advantages of Setting up an Offshore Company in Dubai

Setting up an offshore company in Dubai offers numerous advantages that make it an attractive option for international businesses. Let’s explore some of the key benefits:

1. Tax Exemptions

Dubai serves as an offshore company’s tax refuge. The UAE exempts offshore businesses from a number of taxes, such as withholding tax, capital gains tax, and value-added tax. Many foreign enterprises choose Dubai because of its zero-tax policy. Furthermore, businesses are guaranteed not to pay taxes twice according to the Double Tax Avoidance Agreement (DTAA), particularly if their revenue originates from a different nation or area. More than 100 trading partners have joined the Dubai-Tuna Agreement (DTAA), which offers further tax advantages to offshore businesses.

2. Asset Protection

Asset protection is offered by incorporating an offshore business in Dubai in the case of future litigation or bankruptcy. Your assets as a business owner are protected from any personal liability since they are legally distinct from the offshore corporation.

3. Full Ownership of Your Business

Dubai-based offshore businesses are free to have complete ownership. Dubai does not have the same restrictions on local directors or shareholders as several other nations. You, as the director, are free to run your company entirely without intervention from a local partner or corporate body. In addition, homes in specific districts of Dubai can be owned by shareholders, offering even more investment potential.

4. Total Privacy

If privacy and anonymity are important to you, Dubai is an ideal choice. Offshore companies in Dubai are entitled to total privacy. Unlike in some jurisdictions where company details are public, offshore companies in Dubai are not required to publish information about their directors and shareholders, ensuring confidentiality and privacy.

5. Simple Set-Up Process

The process of incorporating an offshore company in Dubai is relatively simple and straightforward. Depending on the nature of the company, it usually takes about four days to set up and does not require any minimum capital requirements. All you need is a director and shareholder to initiate the company formation process.

6. No Accounting Obligations

Unlike traditional companies, offshore companies in Dubai are not subject to local accounting or tax obligations. Your business does not require a physical presence in the country, and a virtual office space is sufficient to meet the legal requirements. This alleviates the burden of maintaining complex accounting systems and ensures a more streamlined operation.

RAK Offshore or RAKEZ Freezone Company Formation?

When considering setting up an offshore company in Dubai, you have two options to choose from: RAK Offshore and RAKEZ Freezone. Each option caters to different business needs and objectives. Let’s take a closer look at these two company formation options:

RAK Offshore

Operating out of Ras Al Khaimah (RAK), RAK Offshore is a non-resident firm. Businesses looking for asset protection, confidentiality, and tax benefits should choose it. RAK Offshore businesses are exempt from onshore commercial restrictions and are able to transact business worldwide and keep assets.

RAKEZ Freezone

Investors can choose from a variety of business ventures and industry areas in the RAKEZ Freezone. It is a reasonably priced choice that provides tax exemptions, 100% ownership, streamlined incorporation procedures, and inexpensive setup fees. For companies that need local operations and access to suppliers, consumers, and infrastructure in the United Arab Emirates, RAKEZ Freezone is a good fit.

It’s important to take your demands and priorities into account when choosing between RAK Offshore and RAKEZ Freezone. RAK Offshore can be the ideal option if protecting your assets and conducting business internationally are your top priorities. RAKEZ Freezone, on the other hand, is a better choice if you need local operations and access to the UAE market.

How to Start an Offshore Company in Dubai

Now that we’ve covered the key advantages and options for offshore company formation in Dubai, let’s delve into the step-by-step process of setting up an offshore company:

1. Choose a Business Structure

Choosing the right business structure is crucial, as it will determine your management requirements and paperwork. Dubai offers several business structure options, including:

• Offshore Foundation: Suitable for non-profit organizations, social clubs, and associations operating their business.
• Offshore Trust: Applicable for beneficiary planning, offering security, legal protection, and privacy.
• Limited Liability Company (LLC): A legal entity created in a country other than the individual’s home country, providing liability protection and exemption from income taxes.
• International Business Company (IBC): Companies that operate overseas, exempted from taxes and duties.

2. Submit Required Documents

To initiate the offshore company registration process, you need to provide certain documents. The required documents typically include:

• Certified copy of your passport
• Copy of the original bank reference or 6 months of bank statements
• Utility bill for proof of address
• Bank reference letter
• CV
• Three options for company name reservation
• Company’s business activity details

The process of registering an offshore company usually takes around 4 to 5 working days. However, if you require an urgent registration, an express registration option is available, completing the process within 48 hours. It’s important to note that the specific requirements may vary depending on the jurisdiction and free zone you choose. Therefore, it’s advisable to check the requirements of the relevant authorities beforehand.

3. Open an Offshore Bank Account

Opening an offshore bank account is essential for the smooth functioning of your offshore company in Dubai. It facilitates business transactions and provides a secure financial infrastructure. When choosing a bank, consider factors such as affordability, speed, and security.

To open an offshore bank account, you typically need the following documents:

• Director’s registration
• Incorporation certificate
• Financial statement
• Proof of operating address
• Proof of registered address
• Shareholder certificate

Ensure that all documents are clear and submitted in PDF, JPG, or PNG format. The specific requirements may vary depending on the bank and the regulations pertaining to offshore companies in Dubai.

Cost of Setting up an Offshore Company in Dubai

The cost of setting up an offshore company in Dubai can vary based on various factors, including the type of company, services required, and service provider fees. According to estimates, the average cost of setting up an offshore company in Dubai ranges from approximately $3,000 to $10,000 USD. It’s important to note that the actual cost may be higher or lower depending on the specific circumstances of the company being set up.

Requirements for Offshore Company Formation in Dubai

The requirements for offshore company formation in Dubai depend on the jurisdiction where the company is being formed. However, some general requirements for offshore company formation in the UAE include:

• Minimum one shareholder and director
• Appointment of a registered agent
• Registered office address in the UAE
• Drafting and submission of the Memorandum of Association and Articles of Association to the registrar
• Valid identification document/passport copy of the shareholder(s)
• Financial statements are usually not required
• No minimum share capital requirement
• Offshore companies can only conduct business outside the UAE and are not allowed to trade within the local market

Conclusion

Setting up an Offshore Company in Dubai presents a gateway to a world of opportunities for entrepreneurs and investors. The strategic geographical location, political and economic stability, and investor-friendly environment make Dubai an ideal destination for offshore business endeavors. The process, from selecting the right offshore jurisdiction to finalizing the legal framework, is streamlined for efficiency and compliance, ensuring a smooth transition into the UAE’s vibrant business landscape.

Navigating the intricacies of offshore company formation can be challenging, but with the right guidance, success is within reach. Alwahda stands as a reliable partner, offering expert assistance in setting up your offshore business in Dubai. Our experienced consultants provide personalized solutions, ensuring a seamless and effective procedure from beginning to end.