UAE Offshore Company Formation

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. 

For more>> RAK as a Tax Haven

Table of Contents:

• Advantages of a UAE Offshore Company
• Top Uses
• Key Corporate Features
• Requirements for Incorporation
• Choose A Name For The Company
• Complete And Submit An Application
• Open A UAE Bank Account
• Taxation of a UAE Non Resident Corporation
• Corporate Details

Advantages of a UAE Offshore Company

• Tax advantages: The UAE is a popular tax-free jurisdiction. LLCs can benefit from zero corporate taxes, income taxes, and capital gains tax. The UAE is also one of several countries which does not levy any personal income tax on its residents.
• 100% Foreign Ownership: It is possible for a UAE LLC to be 100% foreign owned. A minimum of only one LLC member is permitted. 
• High degree of privacy and confidentiality: The identity of shareholders is kept confidential and is not publicly available. 
• Fast and easy incorporation process: The process of setting up an offshore company in the UAE takes only a week or two to complete, sometimes as little as a few days, and is straightforward and simple. 
• The UAE is politically stable with a fast-growing economy.
• Company capital can be kept in any currency. 
• A UAE LLC provides Limited liability protection to its members, which makes it an ideal vehicle for asset protection.
• No foreign exchange controls or trade barriers.

Top Uses

• International trade
• Intellectual property
• Holding company
• Estate planning 
• Asset protection
• Tax planning
• Asset confidentiality
• Real estate

Key Corporate Features

Requirements for Incorporation

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: 

Choose a name for the company

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). 

Complete and submit an application

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:

• Name of the company
• Proof of identity (e.g. passport) of the LLC member/s
• Proof of address
• CV of the member/s
• A comprehensive business plan
• Draft and Submit the MOA and AOA

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. 

Open a UAE Bank Account

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:

• Certified passport copy
• Proof of residence
• Bank reference
• Details of beneficial owners/shareholders
• Company name
• Planned business activities of the company
• Business structure and hierarchy 

For corporate shareholders:

• Memorandum of Association (MOA)
• Parent company certificate if applicable
• Hierarchy of beneficiaries

Taxation of a UAE Non Resident Corporation

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.  

Corporate Details

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. 

Required Capital

Minimum capital requirements were previously 150,000 AED (approx. $40,000); however, a 2015 amendment removed the minimum capital requirements.

Members

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. 

Trading Restrictions

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

Civil 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.

Local Agent 

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. 

Company Secretary

A company secretary is not required.

Language of legislation and Corporate Documents 

English.

Official Language

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. 

Exchange Controls

None.

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 name should be unique, and not deemed in any way similar to an existing UAE Company name.
• The name must include the suffix “Limited” or “Ltd.” to indicate that it is a limited liability company.
• The name of the company should not “contradict” the company’s business activities.
• The name should not refer to God’s name or his qualities, either in English or in Arabic, e.g. Al Quder, Al Razzaq, Al Aleem, etc. 
• The name should not be deemed inappropriate or offensive by the governing authorities.
• The name should not fall under a restricted name category, which include:
  • Words such as UAE, Emirates, names of cities, districts, airport codes etc.
  • Names of continents, countries, or cities
  • Names of government organisations, global political organisations, religious organisations etc.
  • Names of global brands cannot be included in the company name  

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. 

License Fee

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. 

For more>>RAK Offshore Company