There’s a good reason why foreign merchants and investors are flooding Dubai—this sprawling metropolis in the United Arab Emirates (UAE) is an ideal place to set up an offshore company.
Politically stable, boasting a flexible regulatory regime and with a business-friendly ethos, Dubai should be your first port of call for entering the global market.
This article at a glance
Dubai is a great choice to set up an offshore company – a tax-free, low-regulation business haven affording total privacy for foreign businesses. From choosing the right business structure to submitting the correct documentation, this article will show you everything you need to know about setting up an offshore company in Dubai.
Offshore vs Freezone Companies
There are two types of companies allowed to incorporate in Dubai. One is a free zone company, and the other is an offshore company.
Freezone companies are allowed to set up their businesses in a physical space and can conduct business in Dubai and the UAE. Those setting up a free zone company can also apply for visas for themselves and their employees.
On the other hand, offshore companies are not permitted to conduct business, or trade, in Dubai and UAE, nor are they eligible to apply for a residency visa. This is why offshore companies in Dubai are usually consultation services, holding companies and shipping companies.
Millennium Consultancy is a Singapore-based human resource company. They intend to make their presence known in the Middle East and want somewhere with viable business options and low tax rates. They won’t be taxed in Dubai, so they decide to set up an offshore company there.
Advantages of Setting Up an Offshore Company
There are many advantages of setting up an offshore company in Dubai. Without further adieu, let’s dive right in and see.
Dubai is a no-tax haven for offshore companies. Offshore companies in UAE are exempted from tax – including value-added tax, capital gain tax and withholding tax. Unsurprisingly, this makes Dubai a popular choice for many international businesses.
Other than the zero-tax policy, the Double Tax Avoidance Agreement (DTAA) ensures that companies are not taxed twice, primarily when they reside in their home country but their income derives from another country or region. So far, UAE has signed DTAA with over 100 trade partners, so check whether it applies to your own home country.
Protect your assets
Incorporating an offshore company in Dubai will protect your assets if you’re involved in any potential lawsuit or become bankrupt when your assets are legally separated from you as a business owner.
Full ownership of your business
Offshore companies based in Dubai aren’t required to appoint a local director and shareholder. You can be the director – fully owning your business without any interference from a local partner or business entity. Furthermore, shareholders can own properties in selected areas of Dubai.
If you want anonymity, choose Dubai. Offshore companies in Dubai are entitled to total privacy. In short, they’re not required to publish details of their directors and shareholders.
Incorporating an offshore company is simple. Depending on the nature of the company, it takes about four days to set up and does not require any minimum capital requirements. Essentially, all you need is a director and shareholder to start a company.
No accounting obligation
Likewise, your business doesn’t require a physical presence in the country itself. Virtual office space is good enough. Moreover, you’re not legally mandated to meet any local accounting or tax obligations.
How to Set Up an Offshore Company in Dubai
There are a few essential steps to take when setting up an offshore company in Dubai:
1. Choose a business structure
Choosing the right business structure is crucial for companies, as it will affect your business operation in the long run – determining your requirements for management and paperwork.
The list of business structures available in Dubai includes the following:
- Offshore Foundation
An offshore foundation is a separate legal entity with no shareholders. Non-profit organisations, social clubs and any associations use this business structure to operate their business.
- Offshore Trust
Applicable for beneficiary planning, An offshore trust is usually created outside the country of residence of an individual. As Dubai is a tax haven, it enjoys the benefit of security, legal protection and privacy.
- Limited Liability Company (LLC)
A legal entity created in a country other than the home country of the individual. An LLC is advantageous because it gives business owners liability, and no taxes will be taken out of the income received.
- International Business Company (IBC)
Companies that don’t perform business activities in UAE but operate overseas are considered International Business companies. They can be exempted from taxes and duties.
2. Submit the required document
You will need to provide the following documents:
- A certified copy of your passport
- A copy of the original bank reference or 6 months of bank statements
- Utility bill for proof of address
- Bank reference letter
- Three options for company name reservation
- Your company’s business activity
The process of registering an offshore company normally takes around 4 or 5 working days. If you need to register your offshore company urgently, there’s an express registration that takes 48 hours to complete.
Once you have the necessary documents, you can submit them to the relevant authorities of the jurisdiction you reside in. Every jurisdiction has different requirements, so check them first.
3. Open an offshore bank account
Opening an offshore bank account makes it easier for offshore companies to incorporate, and even conduct business transactions.
If you’re looking to incorporate in Dubai, you want an affordable, fast and easy finance solution with bulletproof high-tech security.
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All you need is the following:
- Director’s registration
- Incorporation certificate
- Financial statement
- Proof of operating address
- Proof of registered address
- Shareholder certificate
All documents must be easy to read and submitted in PDF, JPG or PNG format.
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Setting up an offshore company is never easy – so, have one less thing to worry about by choosing Silverbird as your cross-border payment provider.
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Setting up an account takes a few minutes. So give Silverbird a try.
Author: Renee Yang
Illustration: Kate Faldina