UAE Offshore Company Formation – Which Free Zone to Choose?
February 03, 2020
An ‘Offshore Company’ is a legal business entity that is set up with the intention of operating outside its registered jurisdiction and/or the location of its ultimate ownership. The three principal jurisdictions offering offshore companies in the UAE are Ras Al Khaimah (RAK), Ajman Free Zone and the Jebel Ali Free Zone (JAFZA). All are “tax-free” jurisdictions that levy no income tax or corporate tax and permit 100% foreign ownership. The UAE has double tax treaty agreements with over 40 other countries.
There are three free zone authorities in Dubai that offer an Offshore Company license formation:
- JAFZA Offshore Company Formation
The Jebel Ali Free Zone Authority (JAFZA), in conjunction with the Dubai Government, introduced the Offshore Company in 2003 under the Jebel Ali Free Zone Offshore Companies Regulations 2003. It is an industrial area surrounding the Jebel Ali Port, one of the world’s biggest shipping ports, which allows international companies based there to enjoy the special privileges of the free zone. These include exemption from corporate tax for 15 years, no personal income tax, no import or export duties, no restriction on currency, and easy labor recruitment.
- RAK Offshore Company Formation
Ras Al Khaimah, situated approximately an hour’s drive from Dubai, is one of the fastest-growing of the seven Emirates that form the UAE RAK has the highest level of industrialization in the UAE, with manufacturing at 26% of the GDP. It has built its reputation on a business-friendly investment environment and competitive costs. The cost of doing business in RAK is 25 to 50% lower than the UAE average, allowing companies to maximize their return on investment. In September 2006, the Ras Al Khaimah government launched the International Company structure, also known as the RAK Offshore Company. These are regulated under the Ras Al Khaimah Free Trade Zone Authority International Companies Regulations 2006.
- AJMAN Offshore Company Formation
Strategically situated at the entrance of the Arabian Gulf, Ajman Free Zone is well placed to serve the eastern and western markets to set up a business. Ajman’s proximity to Sharjah and Dubai provides easy accessibility to the two international airports and four ports. In 2014, Ajman Free Zone expanded to include formations of offshore international companies, often known as International Business Companies (IBC’s) located in the Emirate of Ajman. To that end, the Ajman Free Zone Offshore Companies Regulations of 2014 (the “Ajman Offshore Regulations“) were enacted allowing the incorporation of offshore entities in the Ajman Free Zone.