UAE offshore company setup options and offshore company formation guide
For businesses not creating a permanent establishment in the UAE, an offshore business is an ideal, tax efficient, and cost-effective corporate structure for conducting international trade from the Middle East. However, opening local multi-currency corporate bank accounts for this type of UAE entity may present challenges.
What is an offshore company in the UAE?
A UAE offshore company is a wholly foreign owned LLC often described as a non-resident “paper” company. It offers a simple administrative structure for foreign businesses and entrepreneurs to manage global operations, particularly in regions like Africa and the Middle East.
The three principal jurisdictions offering offshore companies in the UAE are in order of reputation the Jebel Ali Free Zone (JAFZA), Ras Al Khaimah (RAK), and the Ajman Free Zone.
Interested in forming an offshore company in the UAE? We will help you with your business setup.
What is special about the UAE offshore companies?
- Location: An offshore company is set up outside the mainland of the UAE, usually in a free zone
- Business activities: UAE offshore companies are used for i) forming an international trading company for international business ii) setting up a holding company for holding assets iii) setting up an IP holding company for managing copyright and patents and iv) setting up international consulting services. UAE offshore companies are not allowed to conduct business within the UAE
- Ownership: UAE offshore companies can be set up with one director and shareholder, and these individuals can be of any nationality and place of residence
- Offshore privacy: Offshore companies in the UAE are structured to offer privacy protection, maintaining the anonymity of directors and shareholders. This level of privacy makes them appealing to those who value confidentiality
- Regulations: An offshore company is ruled by one of these regulations i) JAFZA Offshore Companies Regulations, ii) RAK ICC Business Companies Regulations 2018 iii) AJMAN Free Zone regulations
- Taxation and exemptions: If properly structured, offshore companies in the UAE are exempt from local taxes, including corporate income tax. Because they cannot conduct business within the UAE, these entities will neither be subject to the local VAT
- Corporate banking: Offshore companies can open corporate bank accounts in the UAE for their international transactions. However, they may face challenges when liaising with the bankers
Advantages of forming a UAE offshore company
- An offshore company is quick and simple to set up, particularly when compared to setting up other business types in the UAE such as a free zone or mainland entity
- The shareholders and directors in the UAE offshore company will not be required to register their names and details for public record
- Compared to other tax neutral entities, setting up an offshore company is a cheap and easy way to get a corporate bank account in the UAE
- UAE offshore company documents are either in English or bilingual (English and Arabic), thus recognisable globally by the banks, Governments, suppliers, and investors
Disadvantages of an offshore company in the UAE
- The offshore company is not allowed to trade with other emirates in the UAE
- The offshore company is not allowed to rent local premises, employ staff, or secure residence or work visas for employees in the UAE
- Compared to other tax neutral entities, forming an offshore company in the UAE can be expensive
- Banks are reluctant to open a corporate bank account for an offshore company with no permanent establishment in the UAE
- UAE banks may not provide the required customer service for the offshore companies, unless a high minimum deposit and balance is maintained
- The UAE’s double taxation agreements cannot be used by offshore companies to reduce global withholding tax
A comparison between different UAE offshore companies
There are three different options for forming an offshore company in the UAE: Jebel Ali offshore company setup in Dubai, Ajman offshore company setup and Ras Al Khaimah (RAK) offshore company setup.
While the most reputable solution is Jebel Ali offshore company, both Ajman and RAK offshore companies can be used for conducting international trading outside of the UAE, holding companies, estate planning, and asset protection vehicles. Ajman and RAK are also low-cost no-travel options to set up international business companies when compared to the costs of forming a Jebel Ali offshore company.
Our preferred option is either the JAFZA or the RAK offshore company because of their reputation. Furthermore, a RAK offshore company also allows to maintain a registered office in Dubai. Refer to the below table to view a detailed comparison.
| UAE offshore company formation options | Jebel Ali offshore company | RAK offshore company | Ajman offshore company |
|---|---|---|---|
| Type of company | LLC | LLC | LLC |
| How long to set the company up? | 4 weeks | 2 weeks | 2 weeks |
| How long to open company bank account? | 8 weeks | 10 weeks | 15 weeks |
| Issued share capital required | US$1 | US$1 | US$1 |
| Can have a corporate bank account in the UAE? | Yes | Yes | Yes |
| Tenancy agreement required before incorporation? | No | No | No |
| Do you visit the country for company incorporation? | Yes | No | No |
| Do you visit the country for UAE bank account opening? | Yes | Yes | Yes |
| 100% foreign ownership allowed | Yes | Yes | Yes |
| Resident director or shareholder required? | No | No | No |
| Can conduct business within the UAE? | No | No | No |
| Legal registered office needed? | Yes | Yes | Yes |
| Can rent office premises | No | No | No |
| Can the entity hire expatriate staff? | No | No | No |
| Documents to be legalized by Client | Yes | No | Yes |
| Can invest in UAE real estate | Yes | Yes | Yes |
| Legal considerations | |||
| Minimum number of directors | 2 | 1 | 1 |
| Minimum number of shareholders | 1 | 1 | 1 |
| Company secretary needed? | Yes | No | Yes |
| Resident company secretary? | No | No | Yes |
| Corporate company secretary allowed? | No | Yes | Yes |
| Individual shareholders allowed | Yes | Yes | Yes |
| Corporate shareholders allowed | Yes | Yes | Yes |
| Public register of shareholders and directors | No | No | No |
| Tax and accounting considerations | |||
| Annual accounting and tax obligations | No | No | No |
| Accounting records to be kept? | Yes | Yes | Yes |
| Statutory audit required | Yes | No | Yes |
| Corporate tax registration required? | Yes | Yes | Yes |
| Annual tax return to be submitted | No | No | No |
| Can access double tax treaties | No | No | No |
| Can apply for immigration visas | No | No | No |
Check out offshore company formation for other offshore jurisdictions
