Setting Up An Offshore Company In Dubai:
A Step-By-Step Guide

Setting up an offshore company in Dubai can be an attractive business opportunity due to its tax benefits, business-friendly regulations, and strategic location. Dubai is known for offering a solid infrastructure and a favorable environment for international trade and investment. Here’s a step-by-step guide to setting up an offshore company in Dubai:

Step 1: Understand What an Offshore Company Is

An offshore company in Dubai refers to a business entity that is incorporated in one of the free zones or offshore jurisdictions, but it does not carry out business within the UAE. These companies are typically used for international trading, asset protection, holding companies, or managing investments. Offshore companies in Dubai are exempt from various taxes and duties.

Step 2: Choose the Right Offshore Jurisdiction

Dubai offers several offshore jurisdictions, each with its benefits and limitations. Some of the most common offshore jurisdictions include:

1. Jebel Ali Free Zone (JAFZA): This is one of the largest and most well-known offshore areas for setting up a company in Dubai.
2. Ras Al Khaimah International Corporate Centre (RAK ICC): Offers lower setup costs and is known for its simplified registration process.
3. Dubai International Financial Centre (DIFC): Ideal for financial services businesses, it has its own regulatory framework.
4. Ajman Offshore: Offers a cost-effective setup with flexible regulations.

Step 3: Select Your Business Activity

While offshore companies in Dubai can engage in a variety of activities, it’s important to select a business activity that aligns with the jurisdiction’s regulations. Common activities for offshore companies include:

• Holding companies
• Trading companies (exports and imports)
• Intellectual property and asset management
• Investment firms
• Consulting firms

Ensure that your selected business activity is allowed within the offshore jurisdiction.

Step 4: Choose a Company Name

Choosing a unique and compliant company name is essential. The name must:

• Not infringe on any trademarks or be similar to existing company names.
• Be in line with the guidelines of the selected offshore authority.
• Not contain any offensive words or phrases.

You will likely need to submit the name for approval by the offshore registry.

Step 5: Prepare Required Documents

The documentation needed for setting up an offshore company in Dubai will typically include:

• Passport copies of shareholders and directors.
• Proof of address (utility bills, bank statements).
• Resume/CV or bio of the shareholders and directors.
• Completed application forms.
• A board resolution (for corporate shareholders).
• A no-objection letter (for UAE residents, if applicable).

Ensure all documents are notarized, translated into English (if necessary), and legalized where required.

Step 6: Open an Offshore Bank Account

While setting up an offshore company, you will need to open a corporate bank account to facilitate transactions. This requires the submission of certain documents, including:

• Proof of company registration.
• Personal identification of the company directors and shareholders.
• Business activity details.
• Proof of company address.

Some jurisdictions may require a minimum deposit to open an account.

Step 7: Submit Your Application for Registration

After preparing the necessary documents, the next step is to submit them to the relevant offshore authority for company registration. This will typically involve:

1. Application form submission.
2. Payment of registration fees.
3. Verification of company name and activity.
4. Approval from the offshore authority.

Once everything is approved, you will receive your offshore company certificate.

Step 8: Obtain Your Business Licenses

Depending on the business activity you plan to pursue, you may need to apply for specific licenses or permits. Some jurisdictions in Dubai, like DIFC, may require specialized licenses for certain industries such as financial services, while others may have broader license types.

Step 9: Complete Your Corporate Structure

Now that your offshore company is registered, you will need to finalize the corporate structure. This includes:

• Appointing directors and shareholders.
• Preparing the company’s Memorandum of Association (MOA) and Articles of Association (AOA).
• Registering with the relevant authorities (this may vary by jurisdiction).

Step 10: Comply with Ongoing Requirements

Once your offshore company is set up, ensure compliance with ongoing regulations, which may include:

• Submitting annual financial statements or audits (depending on the jurisdiction).
• Maintaining a local registered office address (in most cases).
• Renewing the business license on an annual basis.
• Keeping accurate records for tax and legal purposes.

Additional Considerations:

• Tax Benefits: Offshore companies in Dubai enjoy several tax advantages, including no income tax, capital gains tax, or VAT. However, you should consult with a tax professional to understand international tax implications.
• Privacy and Confidentiality: Offshore companies in Dubai offer a high level of confidentiality. Shareholder and director details are often kept private, which can be beneficial for asset protection.
• Legal Structure: Offshore companies are typically not permitted to do business directly within the UAE market. If you wish to conduct business in the UAE, you may need to set up a mainland company in addition to the offshore entity.

Offshore Company in Dubai: Detailed Guide with RAK ICC and JAFZA Offers

Dubai offers a diverse range of business structures, including offshore companies, mainland companies, and free zone companies. Offshore companies differ from these other types in terms of business operations, tax exemptions, and ownership regulations. Here’s a deeper dive into offshore company setup in Dubai, particularly focusing on two key jurisdictions: RAK ICC (Ras Al Khaimah International Corporate Centre) and JAFZA (Jebel Ali Free Zone Authority).

What is an Offshore Company?

An offshore company is a business entity established in a foreign jurisdiction (Dubai in this case) with the intention of operating outside that jurisdiction. These companies are often used for asset protection, wealth management, international trade, and holding companies. They cannot engage in business activities directly within the UAE but can operate internationally, making them attractive for international trading and investment purposes.

Mainland vs Offshore vs Free Zone Companies

1. Mainland Company:
   • A mainland company is registered under the UAE’s Department of Economic Development (DED). It is allowed to do business in the local UAE market and internationally.
   • The UAE law requires that at least 51% of the company shares are owned by a UAE national, although certain businesses allow 100% foreign ownership under specific conditions (e.g., the new reforms for tech or specific sectors).
   • Mainland companies are not limited by geographical zones, so they have greater flexibility in terms of market access.
2. Free Zone Company:
   • A free zone company is established in a designated area that allows 100% foreign ownership and is exempt from many taxes, but they are often restricted to operating only within their free zone and international markets (not directly within the UAE).
   • Free zones have tailored services for specific industries (e.g., DIFC for finance, DMCC for commodities) and often provide simplified procedures for company registration.
3. Offshore Company:
   • Offshore companies are primarily intended for international business and asset management.
   • They cannot conduct business within the UAE but can operate internationally and hold assets.
   • Offshore companies enjoy complete tax exemptions, 100% foreign ownership, and confidentiality of shareholders and directors.
   • These companies are ideal for investment holding, managing intellectual property, or operating international trading activities.

RAK ICC (Ras Al Khaimah International Corporate Centre)

RAK ICC Advantages:

1. Low Setup Cost:
   • RAK ICC is known for offering affordable registration fees and low annual maintenance costs compared to other offshore jurisdictions in Dubai.
2. Ownership Flexibility:
   • Shareholders can be individuals or corporate entities.
   • 100% foreign ownership is permitted.
3. Quick and Simple Registration:
   • The registration process is streamlined, allowing businesses to set up quickly, often within 2-3 weeks.
4. No Capital Requirements:
   • There are no minimum capital requirements for offshore companies in RAK ICC, which makes it appealing for smaller businesses.
5. Asset Protection:
   • RAK ICC offers strong privacy protection for shareholders and directors, ensuring confidentiality. It is often used by high-net-worth individuals for asset protection purposes.
6. Tax Exemptions:
   • Zero tax on income, profits, and capital gains. There is also no VAT or other indirect taxes applicable to offshore companies.
7. Banking Options:
   • RAK ICC offers good banking services, and offshore companies can open bank accounts with various UAE and international banks.

RAK ICC Process:

1. Choose the Business Activity: Define the business scope, like asset management, holding company, trading, etc.
2. Select Company Name: Ensure the name is unique and complies with RAK ICC guidelines.
3. Submit Documents:
   • Passport copy of shareholders and directors.
   • Proof of address (utility bills, bank statements).
   • Corporate documents (for corporate shareholders).
4. Company Registration: After submitting documents, RAK ICC processes the application, and your offshore company is established.
5. Opening Bank Account: After incorporation, apply for a corporate bank account.
6. Obtain Licenses: Depending on your activities, a license will be issued, allowing you to carry out business activities outside the UAE.

JAFZA (Jebel Ali Free Zone Authority)

JAFZA Advantages:

1. Large Business Community:
   • JAFZA is one of the largest free zones in the UAE, and it hosts thousands of companies from a variety of sectors.
2. Strategic Location:
   • Located close to the Jebel Ali Port, which is the largest commercial port in the Middle East, JAFZA provides easy access to global trade routes, especially for international trading companies.
3. 100% Foreign Ownership:
   • Companies in JAFZA can be 100% foreign-owned, making it an ideal choice for international investors.
4. Tax Exemptions:
   • JAFZA offers tax-free operations for a specific period (typically 50 years), with no personal income tax, no corporate tax, and no VAT.
5. Infrastructure:
   • JAFZA offers world-class infrastructure, including warehouses, office space, and easy access to Dubai International Airport.
6. Full Business Flexibility:
   • Companies established in JAFZA can carry out a range of business activities, including trading, manufacturing, and services, as long as they meet the free zone’s regulations.
7. Banking and Financial Services:
   • JAFZA companies can access a wide range of banking services and open corporate accounts with UAE and international banks.

JAFZA Process:

1. Choose the Business Activity: Define the business activity (e.g., trading, import/export, services).
2. Company Name: Choose a unique company name that fits JAFZA’s naming conventions.
3. Prepare Documents:
   • Passport copy of shareholders, directors, and managers.
   • Proof of address for shareholders/directors.
   • Proof of business activity and any required licensing.
4. Submit Application: Submit the registration application along with the required documents to JAFZA for review and approval.
5. Incorporation: Once approved, you’ll receive your company’s certificate of incorporation.
6. Open Bank Account: After registration, set up a corporate bank account with JAFZA’s banking partners.
7. Operating License: JAFZA will issue the relevant operating licenses based on the business activities.

Key Differences

• RAK ICC is typically chosen for its low cost and quick setup, making it ideal for holding companies or asset management. It’s best for those looking to operate internationally with minimal overhead.
• JAFZA is suited for businesses with international trade requirements or those looking to access global shipping networks, given its proximity to the Jebel Ali Port. It’s also more ideal for larger businesses or those requiring more operational flexibility.

Conclusion

Both RAK ICC and JAFZA are excellent choices for establishing an offshore company in Dubai, but each has its own strengths. RAK ICC is perfect for small and medium-sized enterprises (SMEs) or those needing a cost-effective and quick setup, while JAFZA is better suited for businesses involved in international trading or manufacturing. Consider your business model, budget, and expansion plans when selecting the right jurisdiction.