What exactly is an Offshore company?
The offshore company format allows business owners to operate a business outside their home country. Although this concept doesn’t require you to have a physical presence in the operating country, you must be registered in the country you want to operate in. Why has offshore company formation in Dubai gained much traction over the years for business owners around the world? Dubai is a magnificent city with multi-hued aspects such as low-tax or no-tax jurisdictions that intend to minimise tax payments and increase business owners’ revenue. Moreover, with an offshore company, you have the flexibility to trade internationally; you can invest in international stocks and hold assets. Additionally, you don’t need a physical office in Dubai to carry out all these activities.
Once you have an offshore company registered in Dubai, you will be granted certification of incorporation, a memorandum of association, and articles of association.
Why you should go for an Offshore Company?
The words “offshore business” and “offshore company” have no precise legal, tax or general business meaning. The word “offshore” often means nothing more than anywhere other than the place of the physical location of the person using the word (i.e. overseas). We use the words “offshore business” and “offshore company” as terms of definition in connection with matters such as the structuring of international business and family wealth management or tax planning. There may be substantial benefits obtained through moving your business and assets into an offshore entity.
Perhaps you’re worried about your future, about the potential of a crippling liability action, perhaps you’re trading internationally and have income arising in different parts of the world, or perhaps you are concerned about inheritance taxes on your death.
An offshore company formation in Dubai is a very flexible corporate entity commonly used in international tax planning and can be integrated into a wide variety of business arrangements. Tax minimisation, asset protection and confidentiality are just a few benefits which can be achieved by a proper application of an offshore company. A clever use of an offshore company can reduce, defer or eliminate some tax that would be otherwise payable in a high-tax jurisdiction but does not relieve its beneficial owner from all personal tax liabilities in his home country. The incorporation of an offshore company or non-resident company can be used for various purposes.
One of the most common is the use of an offshore company as a holding company to hold interests in other companies in various jurisdictions, to hold trademarks, copyrights and other intellectual property rights, as well as to serve as the holding company for licensing of franchises. The income from taxable jurisdiction flowing to the offshore company (holding company) is not taxable. Interest in offshore company formation in Dubai has been popularised by the ability of the offshore corporate entity to mitigate taxes to its beneficiaries.
There are two main offshore jurisdictions in the UAE
For offshore companies, you can consider two prime jurisdictions: Jebel Ali Free Zone (JAFZA) and Ras AI Khaimah(RAK). These jurisdictions are the most attractive locations for offshore companies because there are no import or export duties. However, you must consult a reputable tax advisor for further tax compliance.
Jebel Ali Free Zone (JAFZA)
Suppose you are looking to operate an offshore company. In that case, Jebel Ali Free Zone can be your favourite jurisdiction due to its ambient business atmosphere and infrastructure, which make it easy for entrepreneurs to operate their businesses efficiently. It offers a wide range of services that include tax exemptions and easy legal procedures. With this, you have the liberty to operate freely.
Features of the JAFZA offshore company
- For a JAFZA offshore company, you will need a minimum of one shareholder, and all shareholders must have all the company documents attested.
- Must have a minimum of two directors
- Your company director can be the company secretary.
- Maintain accounting records for the past 10 years.
- You can enjoy 100% ownership with no requirements of local shareholdings.
- Benefits of multi currency bank accounts
- An offshore company can hold a share of the free zone, as can onshore and LLC companies.
Ras AI Khaimah (RAK)
Business owners who want to establish their company in the UAE can continue in Ras AI Khaimah because, as one of the seven Emirates, RAK offers numerous benefits for a great lifestyle that include tax exemptions, flexible regulations, and strategic locations. Companies operating in RAK can expand their business activities outside the UAE.
Features of the RAK offshore company
- Including corporate shareholders, a minimum of one shareholder is required.
- Minimum one director
- Company Secretary
- Accounting data from the past 7 years from the date of operational activities
- 100% foreign ownership
- Within a week, you will receive important applications and documentation for company registration.
- There is no need to share the details of the director and shareholder in the public register.
Advantages of offshore company formation in Dubai
This is an integral part if you are proceeding with company formation to decide the legal structure of your company because it insinuates that there are rules and regulations to which your company has to abide. Nature and business requirements define the legal structure of your company. Some of the popular and common legal structures for company formation in UAE are given below:
- Limited Liability Company (LLC)
- Free Zone Company
- Mainland Company
- Offshore company
3. Register a trade name for your business
A trade name for your company refers to defining the name of your company, which should be different and unique. Reserve all the copyrights for your trade name and beware that you are not using any trade names similar to those of other companies. You get the trade name through the respective authority of the Department of Economic Development (DED). Consider some of the terms and conditions while naming your company:
- Use abbreviations for the particular legal structure of your company, such as (LLC)
- Conform to the rules; do not use inappropriate words that create foment to the general public at large
- The trade name must define your business activities
- You cannot use any other company name because that will be an infringement of rights and can cause legal obligations for you
- Get approval for your trade name and trademark from the Department of Economic Development and the Ministry of Economy
4. Strategic location and business space
While setting up a business in UAE, you have more than 40 free zones to choose from. This provides you with the opportunity to select one location that suits your business activity and goals. Consider all the essential aspects, such as public utilities, communications, and high-speed internet facilities.
5. Obtain approval
Complete all the requirements before getting approval, such as completing the business application form, business plan, copy of your trade license, passport copy of all your shareholders, signature specimen from the appointed manager, letter defining the business plan and certificate of reference from a bank as financial reports.
6. Registration and payment of fees
This is the final process, which comes only after you have completed all the steps. This is the final assurance of paying a fee and securing a license for your company. The license type and the company structure will determine the costs of license issuance.