Differences between Offshore and Free zone business setup in UAE

Investors have the liberty to choose from the mainland, free zone and also 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 offshore and free zone business setup in UAE:

  OFFSHORE FREE ZONE
   1. VAT and other related taxes
  • VAT and also 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 also Shareholders of a free zone company can easily get UAE residence visa
   4. Privacy and Secrecy
  • Names and identities of owners, directors, and also  shareholders of offshore companies are not made public
  • No advantage of secrecy in the free zones

 

   5. Business activity
  • 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 also 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 should be deposited in the bank
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