With my extensive experience as an entrepreneur in Dubai, I've had the privilege to witness the city's business landscape evolve dynamically over the years. Throughout my career, I've guided numerous entrepreneurs through various aspects of company formation, including establishing offshore entities. At Kiltons, we help entrepreneurs form their companies in the offshore jurisdictions of the country. Drawing from this wealth of experience, I'm excited to share firsthand insights and practical tips in this guide to assist you in successfully setting up an offshore company in Dubai in 2024.

What is an Offshore Company?

A business entity that is registered in the United Arab Emirates for tax reasons but conducts its commercial operations outside the nation is known as an offshore company in Dubai. Dubai offshore companies can be established as LLCs, limited companies, or limited partnerships.

There are just three Emirates out of the seven that can establish offshore companies. They are Ajman Free Zone, Ras Al Khaimah and Jebel Ali Free Zone.

There are various reasons why individuals opt to establish offshore companies in Dubai, but the primary reason is often the exemption from corporate tax on profits earned outside of the UAE. Staying in its original jurisdiction would result in higher tax payments for the company, therefore setting up an offshore company in this location could potentially lead to substantial tax savings. UAE offshore companies have minimal physical requirements, lower costs, VAT exemptions, and relaxed bookkeeping standards. They are well-suited for individuals conducting business on an international scale. On the other hand, an offshore company cannot operate or provide residency or work rights in the UAE.

Difference Between Offshore and Onshore Companies

Foreign investors in the UAE often struggle to differentiate between offshore and onshore companies. Offshore and onshore companies differ greatly from each other. First and foremost, offshore companies are not subject to the UAE's tax regime as they fall outside its territorial scope. In addition, offshore companies in the UAE cannot engage in local trading. They do not qualify for office space or a UAE residence visa. For carrying out a range of commercial operations, such as international trading, consultancy, intellectual property management, and more, offshore firms offer an excellent choice.

On the other hand, onshore businesses may be of interest to international investors wishing to establish a business in Dubai. These consist of Dubai-Mainland companies and free trade zones. For onshore companies, foreign investors can start trading in the UAE market, buy real estate, sponsor workers under the firm, establish a physical office in the UAE, apply for a UAE resident visa, and more. They can also open a corporate bank account with ease.

Benefits of setting up an offshore company in Dubai

Having an offshore company comes with several advantages.

• Tax Advantages

The significant tax advantages of establishing an offshore business in Dubai are one of its biggest attractions. Due to the absence of both corporate and personal income taxes, businesses benefit from a tax-free environment. This approach streamlines a company's financial management while optimizing profits. The absence of value-added taxes, capital gains taxes, and foreign currency restrictions further increases the financial appeal of forming an offshore business in Dubai.

• 100% Ownership

Foreign business owners can own 100% of UAE offshore companies without partnering with local agents or stakeholders. This gives you the freedom to manage your company independently, just like you would elsewhere in the globe. 

• Strategic Location

Dubai's strategic location as a bridge between the East and the West has made it a crucial hub for global trade and business. With its top-notch airports and ports, it ensures smooth global connectivity, granting convenient access to major markets in Asia, Europe, and Africa. Companies aiming to expand globally and enter diverse markets would find this strategic position extremely valuable.

• Confidentiality

Offshore businesses in the UAE are not required to keep or disclose financial records or shareholder information. Furthermore, the majority of jurisdictions will only provide this information to outside parties, such as the government or law enforcement, if they think there is a possibility of terrorist or criminal activity. Owners of offshore companies may appoint nominee shareholders to handle formal papers for even more secrecy. The nominee then returns the power of attorney to the owner.

• Asset protection: 

Offshore companies in the UAE that are not based in mainland jurisdictions are able to anonymously hold real estate, intellectual property, stocks, and securities. This kind of business structure works as a strong legal wall that shields all holdings and assets from outside enemies and legal hurdles. This can serve as a highly effective method for high-net-worth businesses and individuals to protect themselves from unnecessary lawsuits and similar issues.

• Open UAE bank accounts

UAE offshore businesses are allowed to open many bank accounts with domestic and foreign financial institutions within the nation. This makes it possible for the firm to send and receive money from people and businesses all over the world. Thus, the business may profit from one of the strongest and most reliable financial infrastructures in the world, regardless of the location of assets. 

It typically takes eight weeks to create a bank account, depending on the specific requirements of your company.

• Access to World-Class Infrastructure

Dubai's offshore businesses profit from having access to modern infrastructure. The city is home to cutting-edge technology facilities, contemporary office buildings, and effective logistical systems. In order to comply with worldwide standards, this infrastructure is continuously updated, giving companies working in Dubai the greatest resources possible for success.

• Multicultural Business Environment

Dubai is home to a multicultural workforce with a wide range of skills from all over the world. In addition to fostering a vibrant corporate culture, this multicultural setting gives access to a large talent pool. Dubai's cultural diversity promotes innovation and creativity, giving businesses in the city a competitive edge.

• Quick Formation

Due to their minimal legal requirements, ability to operate with a single shareholder, and lack of need for physical space, offshore businesses may be formed quickly, easily, and affordably. It is possible to incorporate an offshore business in the UAE in three to seven working days.

• Robust Legal Framework

One of the most appealing aspects of Dubai for offshore companies is its legal framework. The emirate offers a safe and open regulatory environment that adheres to internationally recognized standards. Businesses seeking legal stability and efficiency are drawn to Dubai due to its legal certainty.

Steps and requirements for setting up an offshore company in Dubai in 2024

To establish an offshore company in Dubai, you must follow a series of steps.

• Choose An Offshore Jurisdiction

Your first step is to find a suitable offshore jurisdiction that fulfills your needs. To successfully incorporate a UAE offshore company, it is crucial to engage a local offshore agent registered with one of the three prominent authorities.

• Choose Name & Submit Your Application

Next, choose a business name for your offshore company and complete the registration process with the local authorities. When naming your offshore company in the UAE, it is necessary to include either "Limited" or "Ltd" to indicate its legal status as an offshore entity. The next step is to finish the application and gather any supporting documents.

• Draft MOA and AOA

It is necessary for you to prepare the Memorandum of Association (MOA) and the Articles of Association (AOA).

• Open Bank Account

Opening your bank account is only possible once you have obtained approval. This will enable you to easily access lines of credit and protect your assets.

Documents Required to Setup an Offshore Company

• The following are the documents required to set up a business in Dubai Offshore.
• Copy of offshore company's Articles of Association.
• Copies of registered shareholders' passports and CVs.
• Emirates ID cards
• A thorough and detailed business plan
• Certified copy of your bank statements from the past six months.
• Utility bill for verification of residence address
• Three possible names for the company.
• Company's business activity details.

Cost of Setting up an Offshore Company in Dubai

The complexity of the business, the quantity of shareholders, and the requirement for visas all affect how much it costs to set up an offshore company. Having said that, you should generally budget at least AED 12,500 to establish an offshore business in Dubai. Although it may seem costly, keep in mind that the fees will quickly cover themselves as you won't have to pay taxes on your earnings elsewhere.

How Can Kiltons Help With Offshore Company Formation?

Establishing an offshore company in the UAE is an excellent method to cut costs during the early phases of your company while concentrating on long-term global expansion. Foreign investors often find it difficult to navigate through the intrinsic rules and regulations governing offshore company formation in Dubai. However, Kiltons, as the prominent business setup consultants in Dubai can offer assistance and guidance to entrepreneurs looking to establish an offshore company. We provide comprehensive offshore company formation and administration services in the UAE, including corporate documentation, bank account opening, director and shareholder provision, and liaising with relevant authorities. We'll also guide you through every step of the company formation journey, enabling you to have peace of mind and experience a hassle-free process. If you want to take advantage of the perks of having an offshore company, let Kiltons assist you.