- Offshore company formation in UAE – brief information about jurisdiction
- What types of companies can foreigners open in the UAE?
- UAE local company
- Onshore company in UAE free zone
- Offshore companies in UAE
- UAE offshore zones
- What are the advantages of Dubai offshore company formation?
- Features of offshore business setup in Dubai
- How to safely and quickly register a company in an offshore jurisdiction
The present world is undergoing a powerful process of globalization, with borders between many nations becoming blurred. Major banks are opening branches on different continents, and registering an offshore company is possible absolutely legally. Among the multitude of low-tax zones and jurisdictions, the United Arab Emirates (UAE) remains one of the leaders. Opening UAE offshore company will provide you with numerous benefits since this jurisdiction offers more favorable conditions than many European countries.
Let us delve into the process of how foreigners can swiftly, securely, and lawfully establish a UAE offshore entity in 2023-2024, and take advantage of tax preferences while avoiding conflicts with regulatory authorities in their home country and abroad.
The registration process for an offshore company should commence with an analysis of countries, legislative norms, and existing limitations. To determine the most advantageous and convenient jurisdiction for opening an offshore entity in your specific case, we recommend contacting our experts for further consultation. By availing yourself of the assistance provided by experienced professionals, you can make informed decisions and receive expert guidance throughout the process.
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Offshore company formation in UAE – brief information about jurisdiction
- The United Arab Emirates consists of seven emirates: Abu Dhabi, Ajman, Dubai, Ras al-Khaimah, Umm al-Quwain, Fujairah, and Sharjah. The most popular emirate in the UAE is Dubai, where you can establish an offshore company, purchase real estate and obtain a UAE residence visa, or become an investor with a steady passive income.
- Dubai is the largest trading and financial hub in the entire Middle East region. The emirate hosts numerous free economic zones, including those offering to open offshore company Dubai.
- While the official language of the UAE is Arabic, English is widely used in business circles.
- The country maintains a favorable tax regime for both local and international companies.
- As of June 1, 2023, UAE tax regulations have been modified, and the corporate tax rate for local companies is set at 9%. This tax applies to most companies in Dubai and other emirates if their annual profit exceeds 375,000 dirhams and the source of income is located within the country.
- Foreign founders setting up a company in UAE can obtain a long-term residence permit (residence visa).
- However, the right to a UAE residence visa does not apply to UAE offshore company formation.
- The United Arab Emirates has established a significant number of free trade zones (FTZs), including zones tailored to specific business sectors. Freelancers, trading companies, and other foreign entities engaged in international activities and seeking tax benefits similar to those offered in classic offshore jurisdictions can open a company in UAE and enjoy a favorable tax regime.
- 100% foreign ownership of companies is allowed in the Emirates, and residents of any foreign country can establish a business.
- The UAE does not have currency controls, rules regarding controlled foreign companies, and taxes on luxury, inheritance, or personal income.
How much does it cost to open an offshore company in Dubai? Which free zone offers the best conditions for offshore company formation in UAE? Read the review of top options for foreign investors.
What types of companies can foreigners open in the UAE?
As foreign entrepreneurs constitute a significant source of revenue for the state budget, the government of the Emirates offers various options for conducting business. Currently, foreigners can freely establish three main types of companies in the UAE. Each of these variations has its advantages as well as minor drawbacks.
Whether you choose to open an offshore, local, or international company in the United Arab Emirates, our experienced specialists can provide support throughout the process and offer complimentary consulting on all related matters!
UAE local company
A local company in the UAE can be registered in any part of the country and does not have any restrictions on conducting business. However, such structures cannot be registered in free economic zones since different conditions apply to free zone companies in the Arab Emirates compared to local entities.
As of June 1, 2023, new tax requirements have been introduced for local enterprises in the Emirates:
- 0% tax if the annual profit is less than 375,000 UAE dirhams
- 9% corporate tax on profits exceeding 375,000 UAE dirhams
- tax rates for companies in the oil and gas sector and foreign banks can reach up to 55%.
Previously existing restrictions on residency for business owners in the UAE no longer apply to many structures. Having a local partner is not mandatory for the majority of companies, except for government entities and companies owned by federal or local (emirate) governments.
There are also no citizenship or residency restrictions for directors of local companies in the UAE. However, companies in strategic sectors are required to have a local director.
Other requirements for registering a local business structure in the UAE include:
- The company must have a local office in the country and comply with substance requirements.
- The company needs to maintain financial reporting and undergo auditing.
- Local companies in the UAE can apply DTT (Double Taxation Treaties) rules and obtain a UAE tax resident certificate.
Advantages of UAE local companies:
- access to credit products from local banks
- numerous benefits
- eligibility for UAE residence visa.
Onshore company in UAE free zone
Companies established in UAE free zones are referred to as onshore companies and can enjoy various privileges. Here are the key points to understand and consider when registering an onshore company in one of the UAE free zones:
- Free zone companies have the right to operate within the free zones as well as outside the UAE.
- Onshore companies are not allowed to conduct business on the mainland of the UAE unless through a local agent or distributor.
- Free zone resident companies are fully exempt from corporate tax for up to 50 years. After the introduction of the 9% corporate tax, the exemption for UAE free zones remains in place, provided there is no activity on the mainland or with local UAE companies.
- 100% company foreign ownership is allowed in UAE free zones.
- There are no restrictions on the repatriation of profits and capital for foreign investors.
- There are no citizenship or residency requirements for directors and shareholders.
- Payment of the authorized capital is required. The minimum capital requirement may vary depending on the specific free zone.
- A physical office presence in the Emirates is mandatory.
- Different emirates may require preparing and submitting financial reports and audits for companies in free zones.
Free zone companies in the UAE have the right to request a certificate of tax residency and benefit from double tax avoidance agreements. Additionally, free zone company founders gain access to UAE residency permits (residence visas) under fulfilling certain conditions.
Are you unsure about which type of ownership to choose for registering your business in the UAE? Read about differences between LLC and sole proprietorship or immediately seek personal advice from specialists.
Offshore companies in UAE
Offshore company formation in Dubai is not associated with illegal tax evasion. On the contrary, such an offshore entity in the UAE is a legitimate form of business activity that is both permissible and advantageous in all respects.
Offshore companies UAE enjoy the following benefits:
- full exemption from corporate taxes
- zero taxes on capital gains
- free movement of assets between accounts within the UAE and abroad
- 100% foreign ownership of the company without the need for local shareholders or directors
- no requirements for reporting or auditing (with the exception of offshore companies UAE in the Jebel Ali Free Zone)
- offshore companies in the Emirates are not obligated to have an office or demonstrate physical and economic substance in the country.
In addition to the merits of UAE offshore companies, it should be noted that such international structures do not fulfill all residency requirements and, consequently, cannot obtain a certificate of tax residency or avail themselves of the UAE’s Double Taxation Avoidance Agreements (DTAAs).
UAE offshore zones
Opening UAE offshore company is only possible in certain emirates (alongside local companies and free zone companies):
- Dubai – Jebel Ali Free Zone (JAFZA)
- Fujairah – Fujairah Free Zone
- Ajman – Ajman Free Zone
- Abu Dhabi – Masdar City Free Zone
- Ras Al Khaimah – RAK International Corporate Centre (RAK ICC).
For up-to-date information on the UAE’s free zones where you can register an offshore company in 2023-2024, please consult with our experts.
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What are the advantages of Dubai offshore company formation?
The offshore industry refers to tax-free territories that have long existed in many countries, including in Europe. Unlike traditional offshore jurisdictions, the UAE has never had a reputation as a tax haven, which places this country a step above and makes it safer in terms of enhanced control and avoiding distrust from partners or banks.
The main advantages of offshore Dubai company formation are as follows:
- A foreigner can be the sole owner of the offshore entity.
- The UAE, particularly Dubai, does not practice corrupt patterns, bribery, nepotism, or the creation of artificial barriers for entrepreneurs. This is crucial for the effective operation of businesses abroad.
- All income of an offshore company in Dubai is exempt from taxation at the place of incorporation.
- There are no currency restrictions imposed on foreign businesspersons.
- Dubai is home to international ports and airports, which is especially important for international trade and business relations with foreign partners.
- The free zones in the UAE have well-developed infrastructure in the form of new and comfortable office buildings, warehouse facilities, residential complexes, and more.
- Non-resident UAE companies can conduct business while remaining in their home country, without the obligation to create jobs or establish an office in the Emirates. An offshore company UAE can be legally used to expand the business and optimize taxes.
- Data confidentiality is reliably protected, and information about the founders of offshore companies in Dubai and the UAE is disclosed only by court order or upon request from tax and other authorities of a foreign state.
- UAE authorities are not required foreign companies to submit financial reports, but internal documentation should be maintained in case of unexpected audits.
Note: Offshore companies cannot conduct business with UAE residents and are not eligible for UAE residency visas. However, they can open a bank account in any country worldwide, and our specialists can provide comprehensive assistance in this regard.
Features of offshore business setup in Dubai
To open an offshore company in Dubai or another emirate of the UAE, you have to meet the following conditions:
- Find at least one founder, director, and, if necessary, a secretary. The UAE government does not impose any nationality or citizenship requirements on individuals holding these positions.
- Have the authorized (not to be confused with startup) capital in accordance with the requirements set by the emirate.
- Come up with an English name for your company and have it approved by the registrar.
- Find a local agent in the UAE who will assist in registering the offshore company.
- Choose a free zone for registering your offshore company based on the nature of your business.
- Prepare the required documents for company registration in the UAE, which include:
- copies of all passport pages.
- proof of residential address (a bill for any service that shows your actual address)
- CV in English signed on the front side
- poof of financial wellbeing, such as a bank reference letter.
- Prepare the company’s articles of association.
- Open a bank account in the UAE or abroad.
- Receive offshore company documents and commence your activities.
The registration procedure for an offshore company in Dubai’s free zones and other emirates may have slight differences, and it is advisable to consult with experienced experts beforehand.
If you want to move an existing business to the UAE, read more about relocation here.
How to safely and quickly register a company in an offshore jurisdiction
The process of registering a non-resident company in Dubai’s offshore zone and other UAE emirates requires a comprehensive understanding of the entire procedure and the corresponding knowledge. Any mistakes can lead to rejection in the registration, and it is essential to grasp the nuances, such as the difference between an onshore company in the UAE free zones and an offshore company.
Otherwise, you may become entangled in your company’s structure, tax requirements, and other aspects, which can have a negative impact on your operations and even result in uncorrectable mistakes in choosing the company type, business direction, suitable UAE free zone, and applicable tax benefits.
You can expedite and simplify the process by seeking assistance from our experienced professionals.
By turning to us, you will have the opportunity to:
- register an offshore company in the UAE and open a bank account in one of the Emirates banks or another jurisdiction
- avoid the burden of verifying document compliance, as our experienced experts will handle this task
- benefit from the tax and economic advantages available to UAE offshore companies
- purchase a ready-made business in the UAE
- receive free consultation from professionals and access additional services according to your preferences (see available services in the UAE and other countries here).
If you wish to establish an offshore company in Dubai or any other emirate, please feel free to reach out to our specialists or leave your contact information for further communication!
