The terminology” offshore company or offshore corporation, are used in two different ways. The major and general definition is a company that deals in Offshore business activities. The other definition is that it is a legal entity which is made by using jurisdiction laws, which forbid the local business and economic activities. Such companies are established outside the jurisdiction, with the purpose of tax savings. It is, by the way, the most common reason of forming offshore companies. Tax heaven countries like the British Virgin Islands, Cayman Islands, etc are the destinations to open the offshore companies. While few countries like Singapore, and Hong Kong are also popular for this.
As we said above that there are two distinct ways to open such companies. The first one is for dealing the offshore business activities and the other one is to save taxes, prohibit the local business and economic activities and to manage a few activities which are not allowed. IBC is a term used for offshore companies that can do the business legally with the facility of tax exemption, with the condition they will not be doing the business with the people living in that area. The offshore company is always established with an aim to operate outside, its jurisdiction. It can also be described as operating outside in the location where it has the ownership. Money Laundering is also accused here by using such companies.
But it does not mean that Offshore companies are only established from a Tax Exemption point of view or to perform some activities which are not allowed legally. The positive and right purpose of such companies is also to manage the business and economic activities.
Offshore Companies in UAE
First of All, try to understand that Offshore companies are not like the Free Zone Companies. Free Zone companies are on-shore companies though having similarities with Off-Shore Companies. The concept of offshore companies has been explained above, in both ways, good and bad. These are the benefits of setting up offshore companies in the UAE.
- Getting Access to international and global trade
- Getting Access to new markets, soft tax systems, tax exemptions etc
- Getting Access to a market where new and better business opportunities can be found.
It takes one week almost to set up an offshore company in RAK. JAFZA might take 4-5 weeks. For JAFZA Off-shore company establishment, a physical presence is required. There is no such requirement to be here in RAK, UAE for establishing the Off-shore company. Off-shore companies are unable to issue the VISAS like other Free Zone On-share or LLC companies. It is not mandatory to have a compulsory bank account in UAE.
It’s a superb profitable manner and the opportunity to have an Off-shore company in UAE. Tax benefits, access to new markets and territorial support provide great support to businesses here. Just a reliable and trusted agent is a very serious requirement. This agent has to be a registered agent e.g. Law Firms, Top Consultants etc
Principal Jurisdictions in UAE
1) Jebel Ali Free Zone (JAFZA)
o Both allowed 100% foreign ownership.
o No Tax.
o Multi-Currency Accounts can be opened.
o At JAFZA, a minimum of one shareholder is required. Corporate Shareholders are allowed, as per JAFZA Off-Shore policies.
o At JAFZA, a minimum of two directors is the requirement but corporate directors are not allowed, as per JAFZA Off-Shore policies.
o Secretary is mandatory to hire.
o There is no requirement for setting the Share Capital for JAFZA Offshore companies.
o Annual Reporting is a must.
2) Ras Al Khaimah (RAK)
o At RAK, a Minimum of one shareholder is required. Corporate Shareholders are allowed.
o One Director as a minimum and corporate directors are not allowed.
o Secretary is a must.
o No, Share capital limit.
o Must Annual Reporting.