Dubai Offshore Company Formation | Your Guide To Register
Dubai offshore company formation: A thorough and easy-to-understand guide to registering a Dubai offshore company including all regulations, benefits, limitations, and disadvantages
Dubai offshore company formation: A guide to establishing a Dubai offshore company
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What is an offshore entity?
An offshore company may be defined either as:
- A legalized company that is incorporated outside of its principal operations’ jurisdiction, or
- One incorporated in a small, low-tax jurisdiction (specifically, an offshore financial center)
The United Arab Emirates (UAE), particularly Dubai, is considered one of the best offshore jurisdictions for a number of reasons. This region differs from other countries like Switzerland, Belize, Seychelles, Cyprus, Panama or the English tax haven, the Isle of Man (UK).
Important information is provided throughout this page, including its many benefits, certain limitations, and some disadvantages.
Regulations have been drawn up to deliver the efficiency and convenience of a Dubai offshore company but, at the same time, maintain esteem with authorities and/ governments in the international financial arena
- All shares are required to be fully settled once earmarked or distributed; differential classes of shares or bearer instruments are not allowed
- An offshore company must have at least two directors and a secretary. The latter may be one of the company’s directors and must be a resident of the UAE
- A corporate bank account must be opened in one of the local banks in Dubai
- The offshore company must appoint its business agents (consultants, auditors, and legal firms) from among those listed in the registry of approved professional agents, which is maintained by the relevant Dubai offshore authorities
The number of benefits to individuals and corporations related to Dubai offshore company formation is numerous.
Here are some of them:
- As in most other offshore jurisdictions, Dubai Offshore provides total tax exemption. The region supports minimum taxation, in some instances
- Certain rules pertaining to “thin capitalization” are not imposed. For clarity: a “thinly capitalized” company is one with a very high gearing – that is, the company’s capital is composed of a much bigger proportion of debt vis-à-vis its equity
- Absolute foreign ownership is allowed. Investors need not call Dubai home
- Simplicity in setting up and maintaining a company, which is evident in its less stringent reporting requirements. The terms and conditions of recordkeeping are very limited which decreases any related fees and costs
- High levels of asset protection, security and privacy are guaranteed. This protects personal information like the investment details, other partners or how profitable you are
- Disclosure of information is only possible in cases when there is clear involvement of illicit or unlawful activities. Any pertinent information will be requested, in this case
- Likewise, the names of the company’s principals are kept out of public records
There are certain restrictions in place:
- Accounts are subject to being audited and must be submitted to relevant Dubai offshore authorities
- A company is not allowed to engage in certain markets, such as insurance, advertising, banking and consultancy
- Offshore companies in Dubai are prevented from renting local premises
- Shareholders of a company are required to physically visit the offshore location
There are a few disadvantages attributed:
- In some of the offshore locations/zones in Dubai, due diligence tends to be very strict
- Other restrictions are applied to certain types of business for regulatory reasons
An Offshore Company formation is considered for the following legitimate purposes:
- Avoidance of tax
- Protection of assets and intellectual property
- Confidentiality (for lawful undertakings)
- Captive insurance
- Succession planning
- The opportunity for international trading (particularly where the company’s owners have no fixed residence)
In a Dubai offshore company formation, any or all of these general features may be necessary:
- Memorandum of Association and By-Laws
- Certificate of Incorporation
- Registered office
- Directors and managers
- Shadow directors
- Registered agent
- Company secretary
- Statutory records
A relatively new offshore location in Dubai, the Ras Al Khaimah (RAK) Free Trade Zone, has practically the same regulations, features, benefits and limitations as those mentioned earlier.
Another feature sometimes considered by corporations planning on Dubai offshore company formation is the jurisdiction’s permission for a company to relocate.
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