A Guide to Open an Offshore Company in the UAE

The United Arab Emirates has long been a strategic hub for businesses worldwide.  Strategically located near major global shipping routes, it serves as a key center for international trade and business activities.  Moreover, the UAE is in close proximity to East Africa, the Middle East, and Europe, making it a central location for international trade.   Offshore company formation in the UAE is popular due to its strong financial and business-related infrastructure, including the freezones.

Why Open an Offshore Company in the UAE?

Setting up an offshore company in the UAE has various advantages. Here’s a quick overview of the benefits:

1. Reduced Tax Burden

Under Article 11 of the UAE Corporate Tax Law (Decree 47), any entity incorporated or recognized under UAE law, including all offshore registries such as RAK ICC and JAFZA, is classified as a Resident Juridical Person for tax filing purposes. The standard 9% corporate tax rate applies only to taxable net profits exceeding AED 375,000 per year. Thus, if your offshore company's net annual profit remains below the above-mentioned threshold, your statutory tax rate under the standard regime is 0%.

2. Full Repatriation of Profits

The UAE allows full repatriation of profits. However, to ensure these funds are transferred legally and tax-efficiently, you must align the structure with your home country’s tax residency laws.

3. 100% Foreign Ownership

You can open an offshore company in the UAE with 100% foreign ownership. There is no mandatory requirement for a local shareholder or a director. This makes the UAE an attractive hub for foreign direct investment and attracts investors and entrepreneurs from all over the world.

4. Lower Operational Cost

You do not require a physical office or a residency to open an offshore company in the UAE. You can simply use the address of the registered agent to set up a firm in the UAE.

5. IP Protection

You can protect your intellectual property, such as patents and trademarks, by transferring them under the name of your UAE company and registering it locally with the UAE Ministry of Economy. This safeguards your assets against any infringement or illegal replication.

6. Global Credibility

The UAE is a reputed jurisdiction, recognized worldwide for its business-friendly environment and robust infrastructure. This reputation enables easier international trade.

Key Jurisdictions to Open an Offshore Company in the UAE

Offshore company formation in the UAE  is mostly preferred in three locations. They are as follows:

1. Jebel Ali Free Zone (JAFZA)

JAFZA offshore company formation is among the most popular for non-residents to expand internationally and reduce their tax burden.  The freezone authority registers the company, but it does not qualify as a freezone company.  There are numerous benefits to opening an offshore company in this jurisdiction, including asset holding in designated freehold areas, 100% foreign ownership, no requirement for a physical office, and no minimum capital requirement.

2. Ras Al Khaimah International Corporate Center (RAK ICC)

A business company (BC) is the most common structure to set up an RAK offshore company. An offshore company in RAK can be a trading company, holding company, and so on. Moreover, an RAK company can hold a stake in the subsidiaries incorporated in the UAE mainland or the UAE freezones.

3. Ajman Free Zone

Another viable location to open an offshore company in the UAE is the Ajman Free Zone. This type of company can act as a holding company, special purpose vehicle (for ring-fenced projects), or a trading company. It cannot trade domestically within the UAE; however, it can easily trade internationally without restrictions.

Documents Required to Open an Offshore Company in the UAE

Depending on the shareholders (individual or corporate), you must submit the following documents:

For Individual Shareholders:

• An attested passport copy of the owner/shareholder
• Residential proof
• Original bank reference document
• Details of the owner/shareholder
• UBO declaration form
• Source of wealth and fund

For Corporate Shareholders:

• Board resolution
• Memorandum of Association of the parent company
• Articles of Association of the parent company
• Certificate of Incorporation
• Passport Copies of directors and shareholders

Steps to Open an Offshore Company in the UAE

The UAE has a very streamlined process for offshore company formation. You can follow the steps below to begin company registration:

Step 1: Get in Touch with a Business Consultant

An offshore business consultant makes it easier to navigate the regulatory requirements. They are well-versed in a changing landscape and ensure the firm does not miss out on any significant formalities.

Step 2: Select a Company Name

A company name must comply with the naming conventions established by law. The registrar will verify your company’s name to ensure that it does not include certain prohibited words. A business consultant ensures your firm’s name follows the guidelines.

Step 3: Submit Application Form & Documents

Fill out and submit the application form with all the required details, including the business owner’s contact details, the company’s registered address, and contact details. Attach the key documents mentioned above along with the application form.

Step 4: MOA, AOA Approval

You must also draft the Memorandum of Association (MOA) and Articles of Association (AOA) and submit them for approval. The concerned authorities will review your documents and grant you approval.

The approval time may vary depending on the requirements of your offshore company in the UAE. However, you will be able to conduct business operations only after you receive approval from the authorities.

Step 5: Open a Bank Account

Once all the formalities for your offshore company setup in the UAE are complete, open an offshore bank account. It allows you to carry out business transactions easily.

How Can BSW Help?

BSW helps you open an offshore company in the UAE and ensure you remain compliant. We assist you every step of the process, ensuring every document is up to the mark and meets the local business requirements. Our business advisors are well-versed in the local laws and are promptly available to solve every business query. If you are looking forward to opening an offshore company in the UAE, please contact us today- we’d be happy to help you.