What is an Offshore Company?
An offshore company is a legal business entity that is formed to operate outside of its registered jurisdiction. Businesses developing here are given an option of two jurisdictions, the Ras Al Khaimah (RAK) and the Jebel Ali Free Zone (JAFZA). These sectors are free from taxation and offer 100% foreign ownership for foreign investors, making it a fantastic choice for businesses hoping to streamline their finances.
Ras Al Khaimah is situated in the northern tip of the UAE and sees a regular influx of foreign investors. This region is well known for its liberal and progressive business policies, state-of-the-art infrastructure, and thriving economy.
Jebel Ali Free Zone is one of the oldest free zones in the UAE and has become a hub for thousands of local and international companies.
Offshore company formation is advantageous for entrepreneurs hoping to enter the international market from the onset. They’re regularly used for foreign trades outside the UAE, holding companies, estate planning, and asset security. Establishing an offshore company is a convenient, tax-efficient, and cost-effective corporate structure that offers businesses a way to market their products or services anywhere in the world.
The Benefits of Forming an Offshore Company in Dubai
There are numerous reasons that starting an offshore company can be lucrative for investors.
• 100% ownership with no need for local sponsorship
• Tax neutrality for all overseas profits. No income tax, capital gains, or corporate taxes
• Offshore businesses provide a great entry point for international expansion
• An accommodating regulatory environment
• A stable and business-friendly legal system
• Access to convenient global financing solutions
• Provides a vehicle for securing patent rights
• Easy business setup
Steps Involved in Forming an Offshore Business
Business setup in Dubai’s offshore is designed to be a simple, straightforward process. However, it will benefit investors to carefully research the steps involved and the documents that will be required. The process for applying can be found below:
1. Select a company name
You will need to submit a name request to the Department of Economic Development (DED). Your chosen business name must not already be claimed by another company and must not include profanity.
2. Gather required documents
Before you submit your application, you will need to gather all the required documentation. This documentation includes:
• Copies of passports for shareholders and directors
• Proof of address for shareholders and directors
• A thorough business plan
• Memorandum of Association and Articles of Association
• CVs for shareholders and directors
3. Choose your activity
Choosing the business activity you wish to conduct will significantly impact which jurisdiction will make the best location for your company. You will want to conduct thorough market research to decide what business activity is most profitable for you.
4. Submit documentation
At this stage, you’ll submit your completed application along with the necessary documents to the governmental authorities, who will review them and issue approvals.
5. Open an offshore bank account
You will need to contact a local banking institution to open a business bank account. By opening an offshore bank account, your company will now be able to carry out business.
6. Pay fees and receive business license
After processing has been completed, you will need to pay the necessary fees. Once the fees have been paid, your documentation should be returned to you along with your new business license.
For Overseas Companies
1. Develop a business plan
You and your shareholders will need to develop a clear business plan outlining the goals of your new company.
2. Gather documentation
You will need to gather documentation showing that an official agent has been appointed for company formation. This will include:
• An original certified reference letter from the company’s bank
• A copy of the Certificate of Incorporation for the parent company, notarized and attested
• Memorandum of Association and Articles of Association for parent company
• Attested board resolution to form a subsidiary in Dubai
• A certificate of good standing
• Copies of passports for all owners, shareholders, and employees
• Proof of residence for the company’s authorized representative
3. Submit application along with required documents
Your company will need to submit the necessary documentation along with your initial business application.
Why Businesses Choose Dubai’s Offshore
There are many reasons why forming a business in Dubai’s offshore jurisdictions can be a lucrative endeavor.
In Dubai’s offshore, company information is restricted from public access, ensuring that the details of your transactions and portfolio are kept private.
2. Limited Liability
Offshore companies are typically formed as Limited Liability Companies (LLC), reducing a business’ legal liability in the event of liquidation.
Businesses operating in offshore jurisdictions enjoy 100% ownership of their assets.
4. Tax Exemptions
Like Dubai’s free zones, offshore jurisdictions have no income, personal, or corporate tax responsibilities. This gives businesses the power to streamline their finances and operate more efficiently.
5. Streamlined Setup Process
The UAE has placed a significant focus on engineering an easy-to-use application process for investors.
Business Activities for Offshore Companies
Investors moving to the region to conduct business will find a large variety of business activities to choose from. These include, but are not limited to:
• International Trading
• Property Holding
• Intellectual Property holding
• Shipping Businesses
• General Trading
However, there are also several activities not permitted in offshore jurisdictions. These include:
• Insurance companies
• Media companies
• Aviation businesses
Additionally, offshore companies are dedicated to offering services to international clients and cannot conduct business within the UAE.
Frequently Asked Questions
When forming a company for the first time, you will undoubtedly have several questions regarding the process. Below, we’ve gathered a few of the most commonly asked questions by our potential clients:
1. How much does it cost to form an offshore company in Dubai?
The cost of registration is determined by the type of business you intend to conduct, as well as other factors. The overall cost of forming a business in the UAE will include fees for legal document preparation, company registration, and payment of any taxes or fees.
2. How long does company formation in Dubai take?
Typically, business setup procedures will take roughly one week for RAK and four for JAFZA jurisdictions, respectively. The turnaround time for these processes can also vary depending on the type of company applying and the business activities they choose to conduct.
3. Is my presence required to form an offshore company in Dubai?
The need for your in-person attendance will often rely on the type of offshore company you intend to register. RAK offshore companies are not required to be physically present. However, JAFZA does require your physical presence.
4. What is the most effective method of opening an offshore bank account in Dubai?
It’s a necessity for companies forming in an offshore jurisdiction to open a bank account. These sectors offer numerous high-profile banking institutions to help you get your business accounts off the ground.
5. Why is forming an offshore company in Dubai appealing to so many investors?
Many businesses travel to the region to avoid ever-increasing tax rates, maximize their finances and streamline profits. Offshore company formation is desirable to investors because it provides businesses with the ability to maximize the overall profitability of their endeavor.
MSZ Consultancy is Your Prime Choice for Offshore Company Formation!
MSZ Consultancy is proud to offer expert consultative services to new businesses entering the Emirates. We have the experience and know-how to help investors and companies navigate the confusing terrain of business formation while providing inside knowledge on the customs and regulations throughout all seven Emirates. And business setup in Dubai is not our only service! Our specialists are knowledgeable in license applications, legal structuring, visa requests, PRO services, and more! Whether you’re a new investor seeking an opportunity in one of the many free zones, or you’re a part of a much larger established corporation, our dedicated team of legal and business experts can help you streamline your business and find success. Give us a call today at +971 52 544 1248 and let our team of specialists help supercharge your business potential!