Offshore company formation in the UAE is an attractive alternative to classic offshore companies available in a prestigious onshore jurisdiction. This vehicle is less popular than other corporate entities in the Emirates, such as mainland or free zone companies. However, in some cases, it can be quite a favourable option when structuring an international business.
Highlights of UAE offshore companies
- An offshore company in the United Arab Emirates represents a special type of business entity. It should not be confused with an Emirati free zone or local company. Essentially, it is a variant of a “classic” offshore company comparable to those in the BVI, Seychelles or the Cayman Islands.
- Despite the incorporation in the UAE, offshore companies may operate only outside the country.
- The UAE offshore companies may engage in any lawful business that does not require special licenses or permits. The applicable legislation may provide for specific restrictions.
- Residents of any country can own and manage an offshore company.
- A company must have a duly appointed shareholder, director, manager and secretary.
- A real (physical) office within the Emirates is not required.
- As a rule, there is no minimum share capital requirement.
- Profits of UAE offshore companies are exempt from taxation in the Emirates (but may be taxed in the country of the company’s operations or controlling persons’ residence).
- There is no obligation to prepare audited financial statements (except for JAFZA companies).
- Registration and annual renewal of an offshore company are more straightforward and cheaper than those of mainland or free zone companies.
- To register a company, its directors and shareholders are not required to visit the UAE in person.
- High level of confidentiality: information on directors and shareholders is not available to the general public.
Limitations of UAE offshore companies
- The UAE offshore companies may not conduct their business within the Emirates. A company can carry out its business activities only outside the country of incorporation.
- Offshore companies usually may not lease premises in the UAE, invest in local properties, hire local employees, or apply for residence visas for foreign employees.
- In most cases, it will be quite difficult for an Emirati offshore company to open an account with a UAE bank (although there are no restrictions for opening local bank accounts).
- Offshore companies are, by definition, non-resident and cannot claim benefits under double tax treaties.
- UAE offshore companies are more expensive to register and renew compared to their more “traditional” competitors such as Seychelles or the British Virgin Islands.
How are UAE offshore companies used?
An UAE offshore company is suitable for those who do not aim to create a full-fledged operating business in the Emirates, but who are interested in this jurisdiction in itself or as an element in the international corporate structure. Despite the impossibility of operating within the country, a UAE offshore company can be used:
- as a holding company;
- as a tool for owning assets (including intellectual property rights);
- to invest in mainland or free zone UAE companies;
- for international trade in goods;
- for provision of services (including international consulting);
- for agency activities and other purposes.
Which emirates register offshore companies?
Setting up an offshore company in the UAE is available only in some emirates and free zones. Currently, an offshore company in the UAE can be established in:
|Jebel Ali Free Zone (JAFZA)
|Ras Al Khaimah
|Ras Al Khaimah International Corporate Centre (RAK ICC)
|Ajman Free Zone (AFZ)
It is worth noting that despite being incorporated in a free zone registering authority, an offshore company will not have the status of a “free zone company” and will not be able to operate in this free zone (as well as in the rest of the UAE).
Below are the main features of each of these options.
Offshore company formation in Dubai (JAFZA)
An offshore company in JAFZA (the emirate of Dubai) is the most advanced option of an offshore entity in the UAE, existing since 2003. Recently, such companies have been allowed to own real estate in Dubai as part of the agreement between the Free Zone Authority and Dubai Land Department. Another unique feature of JAFZA offshore companies is the possibility of converting into a free zone company.
|Jebel Ali Free Zone Offshore Companies Regulations 2023. The Federal Decree-Law No. 32 of 2021 is not applicable.
|Forms of companies
|Offshore companies are registered as limited liability companies. A company name must include the word “Limited”.
|JAFZA (Dubai) offshore companies can conduct any lawful activity outside the UAE. Doing business with UAE residents is prohibited. However, within the UAE, offshore companies may
|Shares and capital
|There are no minimum capital requirements.
The company’s shares must be fully paid up when allotted.
A company may not issue bearer shares.
|The company must have a registered agent located in JAFZA or Dubai.
|JAFZA offshore company must have a registered office to which correspondence is sent to the company.
This address can be either the office of the registered agent or the office of the company itself, located in JAFZA or another place in the UAE permitted by the Authority.
|A company must maintain accounting records sufficient to show and explain its transactions, disclose its financial position and prepare financial statements.
A company must keep its accounting records for ten years from the date of their execution. The place where the records are kept is determined by the directors.
The registrar may request accounting records from the company or its registered agent.
|Financial statements and audit
|A company must prepare audited financial statements in accordance with generally accepted accounting principles approved by the Registrar.
|Foreign (non-UAE) companies, if permitted by the law of their country of incorporation, may re-domicile and continue as JAFZA offshore companies.
Outbound re-domiciliation from JAFZA to other jurisdictions is also allowed.
|An offshore company can be converted into a JAFZA free zone company and be issued a license to operate in this free zone.
Offshore company setup in Ras Al Khaimah (RAK ICC)
Offshore companies continue to exist in the emirate of Ras al-Khaimah. The word “offshore”, however, is no longer used. Companies are called “international” and have a single status. Previously, two similar types of companies existed in parallel – “offshore” and “international” companies with two different registries, which were later merged into RAK ICC.
|Ras Al Khaimah International Corporate Centre Business Companies Regulations 2018.
|Forms of companies
|An offshore company in Ras Al Khaimah can be established in the form of:
|A company may conduct any lawful business and enter into any transactions. However, a company may not:
It is also allowed to have assets in locations permitted by RAK ICC and to own shares in legal entities doing business in RAK ICC.
|Shares and capital
|There is no minimum capital requirement.
A company may issue shares of various classes.
A company is prohibited from issuing bearer shares.
|Registered office and agent
|A company must have a registered office and registered agent in the UAE.
|A company must maintain accounting records and supporting documentation (invoices, contracts) for at least five years. The records must reflect all company income, expenses, assets and liabilities. Records may be at the registered agent’s office or another location, within or outside RAK ICC, at the directors’ discretion.
|Offshore companies in Ras al Khaimah submit an annual (non-financial) return confirming the company’s activities and the relevance of the information submitted to the Registrar.
|RAK ICC allows both inbound and outbound re-domiciliation.
Offshore company formation in Ajman (AFZ)
The offshore company regime of the Ajman Free Zone is the newest in the UAE: it only appeared in 2014. The registering authority is the Ajman Free Zone Authority (AFZA).
Ajman companies have all the “standard” features of offshore companies, from a ban on activities within the UAE to zero taxation. It is mandatory to have a local registered agent (in AFZ or Dubai) and a registered office, which is usually the registered agent’s office. A company does not need to rent a physical office in the UAE.
Regarding the possibility of owning property in the UAE and shares in local and free zone companies, rules similar to RAK ICC and JAFZA apply.
The required minimum share capital is AED 10,000 (around USD 2,700).
There are no requirements for preparing or submitting financial statements, but keeping financial records for ten years is mandatory.
- Offshore companies in the UAE are designed and suitable for international business and have no right to operate within the Emirates.
- Offshore companies are fully exempt from taxes in the UAE.
- You can set up an offshore company in the UAE in three emirates: Dubai, Ras al Khaimah, and Ajman.
- The cost of offshore company formation in the UAE will be less than the cost of formation of a mainland or a free zone company. However, it will exceed the cost of incorporating “classic” offshore companies in other (non-UAE) jurisdictions.
- If an Emirati offshore company is not suitable for you for one reason or another, we recommend considering free zone or mainland UAE companies.
Open an offshore company in Dubai (UAE) with Uniwide Advisors
Uniwide Advisors provides professional company formation services in the UAE. With us, you can:
- Get comprehensive advice on the creation and annual maintenance of any type of company in the UAE;
- Set up an offshore, free zone, or mainland company in Dubai or any other emirates.