Offshore Company Setup Dubai
As a prime business incorporation ground, Dubai offers a variety of opportunities for investors and business owners. Over the years, the zone has attracted both new and experienced business owners alike. Dubai has become a trending tourist destination, enabling investors to invest in the business. At the same time, it has created a separate platform for investors who want to invest in offshore businesses.
Choosing the right offshore Jurisdictions
The Emirati government has created different zones to attract foreign investors. Investments are widely accepted in these offshore zones:
- Ras-Al-Khaimah (RAK)
- Jebel Ali Free Zone Authority (JAFZA)
The business investors have got the complete flexibility to open multi-currency accounts and operate the business operations internationally.
You must not mix up UAE offshore firms with UAE free zones. A free zone company is an onshore entity that can conduct business in Dubai with certain restrictions. They are also subject to 0% corporate tax, but they allow their shareholders, directors, and employees to obtain UAE residency.
Benefits of Forming Offshore Company in the United Arab Emirates
With state-of-the-art infrastructure, duty exemptions, and top-notch amenities, free zones are the most ideal locations for setting up businesses. In addition to those factors, Dubai free zone companies offer many more benefits, such as:
- International trade is made easier using an offshore company, which is tax free
- The shareholders and directors of the offshore company do not have to register their names and details with the public records office
- Tax obligations are exempt for offshore companies in Dubai
- Getting an offshore bank account in Dubai is easy with a Dubai company.
- 100% foreign ownership
- Full repatriation of funds and multi-currency transactions
Uses of an offshore company
Offshore companies are very flexible corporate entities. This allows it to be integrated into numerous business arrangements. Proper use of an offshore company can achieve tax reduction and increased confidentiality. On the other hand, it is incorrect to assume that an offshore company incorporated in a no-tax jurisdiction is exempted from all of the complex tax regulations in force in high-tax jurisdictions. Contrary to popular belief, having an offshore company by itself does not exempt its owner from all personal tax obligations in their home country. If an offshore company is utilized cleverly, the business can lower, defer, or completely eliminate some taxes which would otherwise be payable. In an offshore jurisdiction, revenues can accumulate in a tax-free environment, allowing startups to grow faster and become more competitive.
Even so, implementing an offshore strategy practically will almost always face some obstacles due to anti-avoidance laws in the country where the beneficial owner resides or conducts business.
Thus, when considering offshore incorporation, we recommend consulting either an accountant or tax advisor in the client’s country of residence and in the country where the business operations will actually take place. With offshore companies, the laws in the offshore jurisdiction often have to be considered along with the laws and regulations of other countries, notably the countries where the offshore company will have its sales, contracts and assets.
Offshore companies may act as brokers – as sales agents, distribution companies, and import-export firms. In most cases, the company would purchase directly from the manufacturer or wholesaler and arrange for the goods to be delivered directly to the end user. When goods originate in one country, are sold in another, but the principal is located in a third country, this can be of particular interest. An importer can use an offshore procurement company to source goods abroad, and a producer can use an offshore sales company to distribute the goods. Profits on the difference between the purchase and sale price may be accumulated tax-free. Profits can be re-invested in further development of the business without incurring taxes.
Offshore Company Requirements
Offshore corporations are easier to create than they are often thought to be. Offshore corporate services are similar to many modern financial centers in terms of establishing a company but often quicker, less hassle with lower rates. Forming a company entails preparing and submitting:
- Memorandum of Association
- Articles of Association
- Know Your Customer (KYC) documents
- Corporate Application Document
- Name, Date of Birth, Social Security or National Insurance Number
- Notarized Bank Statement
- Banking Reference Letter
- Professional Reference Letter
- Copy of Passport for Identity verification
- Copy of Utility Bill to confirm your physical address
The Memorandum of Association describes the company’s external affairs and complements the Articles of Association, which describe the company’s internal dynamics and structure, including the purpose, the positions, duties, and financial obligations, as well as meeting minutes and day-to-day activities. These documents are sent off to the appropriate jurisdictions Corporate Registers Office.
A Certificate of Incorporation, the legal document that signifies the formation of a new company, is issued once the Registrar has approved these documents. Upon incorporation, a newly formed company will undergo additional requirements, such as the appointment of its first director, the first meeting and the appointment of company officers, the registration of directors (in which nominee services may be used), issuance of shares, and opening any international bank accounts.