Registering an offshore company in Dubai can be highly attractive due to the tax benefits, high level of confidentiality and low administration and maintenance costs required to operate an offshore firm. If you are planning to register company in Dubai, it is important to know the type of businesses that exist and the requirements for offshore company registration in Dubai. This article summarizes important points about offshore company registration in Dubai that you may not have been aware of.
#1 There are 3 popular choices to choose from
The United Arab Emirates (UAE) has three main jurisdictions where foreigners can choose to set up their offshore companies. They are the Jebel Ali Free Zone (JAFZA), Ras Al Khaimah (RAK) and Ajman Free Zone (AFZ). The costs for a new business set up in Dubai will differ depending on which jurisdiction you choose to set up your company in. While the benefits of all the offshore companies are largely similar, there are some ways in which they differ, and hence it is important to do some research before you choose the jurisdiction best suited to your business model.
#2 You will need to have a registered agent
All offshore companies in the UAE must be incorporated with a registered agent, who will act as the correspondence between the offshore company and the state register. A registered agent is officially defined to be a person or corporate body who is recognised by an accreditation body in the UAE to provide corporate advice and other legal services. Since the public registry only helps to verify the accuracy of the submitted documents, the registered agent will play a very important role in providing the correct legal expertise to the company owners and assisting in the preparation of the required documents.
#3 An offshore company in Dubai is not permitted to trade within the UAE
Offshore companies in Dubai are only allowed to conduct international trade outside of the UAE and purchase and manage real estate within the UAE. They are not allowed to conduct business activities inside the UAE.
If you wish to trade with local residents, you will need a trading licence, which can be acquired from the Department of Economic Development in the UAE. However, you can only apply for a trading license if you are operating an onshore company. All offshore businesses are not allowed to hold a trading license, but can open a Dubai offshore bank account.
#4 An offshore company in Dubai is not allowed to have a physical location within the UAE
While offshore companies are allowed to purchase properties in the UAE, they are not allowed to have their own office in the UAE. Since offshore companies cannot conduct trade within the UAE, they are not expected to have a local office or apply for residential visas for their employees. The registered address of the offshore company will instead be the address of the registered agent.
#5 Can be wholly foreign-owned
The UAE allows 100% foreign ownership for all offshore companies in the region. This means that there is no nationality requirement for all employees and directors in the company when you register business in Dubai.
#6 No corporate taxes
Currently, corporate income taxes are only enforced on certain foreign oil companies and branches of foreign banks. Most companies registered in the UAE are not required to file corporate tax returns and this includes offshore companies in Dubai. Furthermore, the three Dubai free zones in which offshore companies are set up, the Jebel Ali Free Zone (JAFZA), Ras Al Khaimah (RAK) and Ajman Free Zone (AFZ) are all considered “tax-free” jurisdictions that do not impose any form of income or corporate tax.
#7 High level of confidentiality
Information about the company such as the names of the shareholders and directors is not required to be shared with the public. All documents and details about the company are kept strictly confidential. This helps to protect foreign entrepreneurs from unfair or aggressive competitors in the same industry.
#8 Does not need to file annual reports
It is a common misconception that offshore companies in the UAE do not need to keep audited accounting records. This is not true. Although offshore companies in the UAE are not required to file accounts with any state authorities, they are required to audit and issue an annual report to all shareholders in the company. The auditor must be from the approved list of recognized financial auditors registered by the Dubai Financial Services Authority (DFSA). The law also requires that companies keep accounting records for at least 10 years. However, these records do not need to be submitted to the authorities.
How to proceed with offshore company registration in Dubai?
This article provides a summary of some of the more important points to take note of when you choose to register a business in Dubai. However, business incorporation in Dubai is not an easy process because of the large amount of paperwork required and the time needed to source for a reputable registered agent.
Tetra Consultants will provide you with a fast and easy way to register company in Dubai through our service package, which includes offshore company registration in Dubai with the Dubai Registrar of Companies, provision of a registered agent and a registered address, opening of a corporate bank account and annual accounting and tax services.
Contact us now for a free non-obligatory consultation to find out more about how to set up an offshore company in Dubai.
Prepared by: Lim Yi Xuan and Jessica Zhou