The UAE has an excellent reputation as an offshore tax-haven for company formation. As well as offering tax advantages and numerous other benefits, it is seen as a stable jurisdiction with a good global reputation. It is one of the few genuine tax-havens that is compliant with all international anti-money laundering standards.
The most popular type of offshore company to form in the UAE is that of an offshore LLC. It offers potential investors freedom from taxes, privacy, and asset protection. There are 7 emirates in the UAE in which an offshore LLC can be incorporated: Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah, and Umm al-Quwain. To take advantage of offshore company incorporation in the UAE, you will need to incorporate in one of the aforementioned Emirate’s ‘Free Zones’. These are areas which have favourable tax, customs, and import regulations, and allow straightforward foreign incorporation. In particular, the Free Zones are the only areas which allow for 100% foreign ownership of an offshore company in the UAE.
In this article, we will go over the various features of a UAE offshore LLC and its advantages.
Table of Contents:
The exact steps and requirements to incorporate an offshore LLC in the UAE varies in each free zone, but the general process is as follows:
The name must be registered with the relevant Registrar (depends on the jurisdiction within the UAE) and must satisfy all naming requirements and restrictions (outlined further on).
Once the name has been selected and approved, you will need to complete an application form and submit it to the relevant authorities (for example, in Dubai, this would be the Department of Economic Development). The following documents are required to accompany the application form:
Once initial approval has been granted by the authorities, you will need to draft the Memorandum of Association (MOA) and the Articles of Association (AOA). These are to be drafted in English. These include basic information about the company, its shareholders, and business plans. These must also be submitted to the authorities for approval. After these documents have been approved, the company can be officially incorporated.
Once your UAE offshore company is registered, the final step is to open a UAE offshore bank account. While this is not a strict requirement, it is highly recommended as a vehicle for depositing the LLC’s capital, and making use of the many other benefits that a UAE offshore bank account provides.
To summarise, the documents required to incorporate an offshore company in the UAE (including those needed for the MOA and AOA) are:
For an individual shareholder:
For corporate shareholders:
The UAE is a popular tax-free jurisdiction. Its residents and citizens pay zero income tax. In addition, offshore companies based in a UAE free zone will not be subject to any corporate income tax, capital gains tax, withholding tax, VAT, etc.
That being said, you may still be liable to pay personal income tax in your own country of residence on profits which are repatriated from the UAE. Therefore, in order to maximise the tax advantages of a UAE offshore company, you should consider becoming a tax resident of a low or tax-free jurisdiction.
Anonymity, Confidentiality and Disclosure
A UAE offshore LLC provides a high degree of privacy. The names of shareholders are not publicly available, and in fact are kept confidential by law. Furthermore, nominee shareholders are allowed for even greater anonymity.
Minimum capital requirements were previously 150,000 AED (approx. $40,000); however, a 2015 amendment removed the minimum capital requirements.
A minimum of one member is required who can be a natural person or corporate body. There is no maximum to the number of members permitted. An offshore LLC in a UAE free zone does not automatically grant the right for members to become UAE residents.
The members are usually in charge of managing the LLC, in which case it operates similarly to a partnership. It is also permissible for non-member managers to be employed who then report directly to the member/s. In this instance, the managers function in a similar way to the board of directors of a corporation.
To maintain the status of “offshore company” in a UAE Free Zone, the company cannot engage in any business activities within the territory of the UAE other than opening an offshore bank account and purchasing real estate. Real estate can only be purchased in specially approved areas.
Principal Corporate Legislation
The UAE Commercial Companies Law (CCL).
Type of Law
Powers of the Company
A UAE Offshore LLC has all the same powers and rights as a natural person. It is regarded as a separate legal entity from its members. Therefore, a member’s liability is limited to their investment in the company alone.
A registered local agent and local office is required. The name and address of the registered agent should be listed in the memorandum of incorporation.
A company secretary is not required.
Language of legislation and Corporate Documents
The official language is Arabic; however, English is widely spoken in the corporate world, and all legislation and corporate documents will be drafted in English.
Audit and Annual Reporting Requirements
A UAE LLC must maintain accounts and annual financial statements. These should be audited and distributed to shareholders. However, there is no requirement to file the annual reports with the regulatory authorities.
Shelf Companies available
Shelf companies are available for faster incorporation.
Time required to form offshore company
It usually takes a total of 1-2 weeks to submit all the required documents and receive final approval of company registration. However, the process can be expedited and take as little as only 3 - 4 days. The process is simple and easy to complete.
Company Name Requirements and Restrictions
According to the regulations of the UAE Commercial Companies LAW (CCL), the name of a UAE LLC must adhere to the following:
The company name can be in Arabic or English.
Access to Double Tax Treaties
Yes, the UAE has active double taxation avoidance treaties with 115 countries worldwide.
The license fee varies in each of the UAE free zones. The initial government fee is usually around USD 1,150 but can be as much as USD 8,000 in Dubai. Annual fees amount to approximately USD 1,200. This makes the UAE one of the more expensive jurisdictions for offshore company formation in terms of its initial and ongoing fees.
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