In recent years the United Arab Emirates has established itself as an economic powerhouse in the region and it is Dubai among all the Emirates that is leading this economic vanguard that is no longer being fueled by oil exports alone and has become the go-to point for foreign investors.
One way Dubai and the rest of the Emirates have managed to do this is through the creation of many free zones in the country. Thanks to low taxes and other economic incentives these free zones are attracting huge foreign investment and thousands of offshore companies are setting up their businesses in Dubai.
So, for those looking to set up their own offshore business in Dubai, we have prepared this guide that will not only tell you all the advantages of setting up your offshore company in Dubai but will also guide you through the process of setting up your own offshore company in Dubai.
What is a Dubai Offshore Company?
Despite being located on UAE soil, free zones are considered outside the jurisdiction of the UAE, and any businesses set up in these zones are considered offshore. As such offshore businesses enjoy almost nonexistent taxes and better asset protection, provided they follow the laws set by the government.
Benefits of Offshore Company in Dubai
There are many benefits that make having an offshore company in Dubai a smart business. Considering that there are different types of zones with a variety of different benefits, it is difficult to list them all here. But here is a list of the most common perks that offshore companies enjoy in Dubai.
Tax Benefits
Dubai is known for its low taxes and the businesses in the free zones enjoy zero taxes as long as certain conditions are met. Even though Dubai has no income tax etc. businesses on the mainland still have to pay VAT and Corporate taxes, but in the free zone companies are exempt from them.
Those individuals and businesses who have to pay taxes in their home countries can take advantage of the Double Tax Treaties that the UAE has with over 100 different countries. This allows them to pay no or very little tax.
Complete Ownership
On the mainland to set up your business you need to have a sponsorship from a UAE citizen who is your business partner with a 51% stake in the business. But in the free zones, you enjoy complete ownership of your business despite being a foreigner.
Ease of Setup
The main purpose of having offshore companies is to attract foreign investment and to make this happen the government has made it very easy for businesses to be set up in the free zones. The UAE government has made it so, that there are very few bureaucratic hurdles and the whole process is smooth and fast.
East of Administration
Not only is it easy to set up an offshore company but it is also very easy to run as there is very little oversight above you and very few restrictions to deal with. As long as you follow the rules and regulations set by the UAE government, running your business will be very easy.
Confidentiality
One of the many perks of an offshore company is the anonymity and confidentiality. Partners and shareholders don’t have to worry about their company data being leaked or shared and the only time when they are asked to share this data is when there is some kind of criminal action or terrorist threat.
Asset Protection
With confidentiality also comes the protection of assets owned by the offshore business. As the business is located offshore and outside Dubai’s jurisdiction it does not have to worry about its assets being seized or operations put on hold because of frivolous lawsuits etc.
No Currency Restrictions
Another benefit of being an offshore company in Dubai is that there is no restriction on which currency is being used and how the currency is being moved and there are no threats of revenue or profits being seized.
Access to First-rate Infrastructure
Having little to no government oversight is good but not if it comes at the cost of the infrastructure a country provides. In Dubai, offshore companies have access to infrastructure that is comparable to many first-world countries and this makes day-to-day operations very smooth.
Costs associated with an Offshore Business Setup Dubai
To set up your offshore business in Dubai you need to have the right permits, licenses, insurance, office space, etc. and the costs of the whole process add up. Generally, the cost of setting up an offshore business starts at around AED 13,000 and depending on your business can vary greatly.
How does Offshore Business Setup in Dubai work?
The process of setting up an offshore business in Dubai is very similar to how it is set up on the mainland, except you don’t have to deal with sponsorship issues. Considering that there are so many different free zones and types of businesses, these steps may vary from case to case but the basic blueprint is as follows.
1. Selecting the right business activity
In order to start the whole registration process for your offshore company in Dubai, you first need to find and select the right business activity.
2. Selecting a name for the business
Next, you need to select a name for your business and you need to make sure that it meets the standards set by the UAE government.
3. Finding the right registration agent
To register your offshore company in Dubai you will need to hire a registration agent to help you guide through the process and help with the registration process.
4. Creating an onshore corporate account
To handle any kind of financial dealings you will need to open a corporate account in one of the banks in Dubai.
5. Finding an Office Space and getting a lease
Now that you have a free zone you need to secure a physical space for your business by signing a lease.
6. Gathering all the necessary documents
Before filling out the application to register your company it is important that you gather all the necessary documents that you will need.
7. Registering with the Free zone
Finally, you will need to file the application to register your company with the free zone of your choosing, like the Dubai Multi Commodities Centre (DMCC) or the Ras Al Khaimah International Corporate Centre (RAK ICC), etc.
