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6 differences between Offshore and Free zone business setup in UAE | Offshore & Free zone

  • February 17, 2018
  • Posted by: MSZ Consultant
  • Category: Business Setup, Free-zones in UAE, Offshore Companies, Pro Services in Dubai, United Arab Emirates, Visa processing
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6 differences between offshore and free-zone you need to know before a business setup in the UAE

Investors have the liberty to choose from the mainland, free zone and offshore business setups in UAE. Although, businesses/companies in the mainland jurisdictions may not be incentivized like free zone and offshore.

Similarities between offshore and free zone:

  • Complete foreign ownership of an entrepreneur
  • Complete repatriation of profits

 

Differences between offshores and free zones in UAE:

  OFFSHORE FREEZONE
   1. VAT and other related taxes
  • VAT and other taxes are still not applicable to offshore companies.
  • After the recent implementation of value-added tax (VAT) in UAE.  Nearly 20 free zones are exempted from the VAT
    2. Office space
  • It is not mandatory for an offshore company to rent an office or office-space in the county
  • Office space is mandatory for companies in any of the free zones
    3. Employment visas’
  • No employment permits/visas granted
  • Employees and Shareholders of a free zone company can easily get UAE residence visa
   4. Privacy and Secrecy
  • The names and identities of owners, directors, and shareholders of offshore companies are not made public
  • No advantage of secrecy in the free zones

 
   5. Business activity
  • Are not permitted to execute any kind of business activity in UAE. However, they can execute business activities outside the UAE
  • Import & export of products and goods are permitted in UAE. Nonetheless, restrictions are laid on carrying out business in the UAE local market

 
   6. Minimum share capital
  • There is no minimum share capital requirement
  • Minimum share capital n should be deposited in the bank