A Comprehensive Guide To Setting up An Offshore Company in Dubai

No matter what your business is, creating an offshore company can provide you with useful and long-term benefits. Whether it's to save on tax, hide your assets or the fact that creating an offshore company can just be the simplest way to do business. But before you start reaping the benefits, it's important to find answers to the concerning questions that you will face in the process such as, what do I need to show proof of residence for, what documents are required for a bank account opening, and so on.

These questions will save you a lot of cost and time during the business set up in Dubai process. In addition, we will provide some insight into creating a legal entity in another country while maintaining anonymity to protect your personal assets. Many people don't take this into consideration when choosing an offshore company.

What is an offshore company?

An offshore company is a legal entity that can be registered in certain countries. Offshore companies are often located in tax havens, which means they do not have to pay taxes and duties on income generated from outside their jurisdiction. Offshore companies are not restricted to any specific business activity, but can be used for any commercial activity. Examples include trading, banking, and real estate.

Some reasons you would want to set up an offshore company in Dubai:

• Tax avings: Setting up a company in Dubai means that you can reduce the amount of tax you pay on your profits by moving them through your offshore company. Offshore companies are typically exempt from corporate and income taxes, providing a favourable tax environment for business operations.
• Asset Protection: Dubai's offshore jurisdictions offer a high level of asset protection. Assets held by offshore companies are safeguarded against potential risks, such as lawsuits, creditors, and political instability in other jurisdictions.
• Confidentiality and Privacy: Offshore company structures in Dubai provide a level of confidentiality and privacy for company owners. Shareholder details and financial information can be kept confidential, ensuring a secure and discreet business environment. This means that the names of people who own the offshore companies will remain private from public records.
• Global Market Access: Dubai is strategically located, serving as a gateway to the Middle East, Africa, and Asia. Establishing an offshore company in Dubai allows businesses to access a diverse and rapidly growing market and leverage its connectivity for international trade and investments.
• Simplified Business Setup: Setting up an offshore company in Dubai is relatively straightforward, with streamlined procedures and minimal bureaucracy. The government has implemented business-friendly policies and initiatives to attract foreign investment, making the setup process efficient and time-saving.
• Flexible Ownership Structure: Dubai's offshore company formation allows for 100% foreign ownership, without the need for a local sponsor or partner. This provides full control and flexibility over business operations and decision-making processes.
• International Banking Facilities: Dubai is renowned for its robust and well-regulated banking sector. Offshore companies can access a wide range of international banking services, including multi-currency accounts, global remittances, and financing options.
• Reputation and Business Environment: Dubai has established itself as a global business hub with a favourable reputation for its stable political environment, infrastructure, and investor-friendly regulations. Setting up an offshore company in Dubai enhances the ompany's credibility and reputation in international markets.
• Proximity to Talent and Expertise: Dubai attracts a diverse pool of skilled professionals from around the world. By establishing an offshore company in Dubai, businesses can access a talented workforce and benefit from the expertise and knowledge of individuals with global experience.
• Infrastructure and Business Support: Dubai offers world-class infrastructure, modern office spaces, and state-of-the-art facilities that support business growth and development. Additionally, the city provides comprehensive business support services, including legal, accounting, and consulting firms specialised in assisting offshore companies.

Important things you need to do and know to open an offshore company in Dubai

1. Types of offshore companies you can register

There are a number of offshore companies you can register in Dubai. These include the following:

Limited liability companies (LLC) - these are the most common type of offshore company. They are well suited for small businesses, as they have fewer requirements than other types of offshore companies.

Branch offices - branch offices are not as common as other types of company in Dubai, but they can be useful if you need to register your business in more than one country at the same time.

Corporate service providers - these are companies which provide legal, accounting and other services to offshore companies. They are not required to have any physical presence in the UAE, but they must maintain an office address in the country where they are incorporated.

A private company limited by shares. This type of company is similar to a limited liability company (LLC) in the U.S. It is a separate legal entity that you own and operate, which can be easily sold or transferred to another owner. The owners (shareholders) have limited liability, which means they cannot be held liable for any debts or obligations that the company has incurred.

A private company limited by guarantee. A private company limited by guarantee is similar to a nonprofit organization in the U.S., except it can make a profit; however, its profits must be used for charitable purposes or reinvested into the business itself.

2. Legal Framework and Company Laws

The UAE has a well-established legal framework for business operations. These laws are strictly enforced by the Ministry of Justice and the courts in accordance with Sharia law. The Dubai International Financial Centre (DIFC) Authority is the regulator for offshore companies in Dubai and administers the DIFC Company Law, which includes provisions for foreign ownership and control of companies registered at the DIFC. The DIFC Authority has also established a regulatory framework that applies across all aspects of business conducted at the DIFC, including corporate governance rules which are designed to ensure best practice in financial services regulation.

3. Licensing and Permits

In order to set up an offshore company in Dubai, you will need to obtain a trade license from the relevant authority. This license is required for any commercial activity carried out in the UAE, including importing and exporting goods, manufacturing products, distributing them, or offering services within or outside the country.

There are three categories of trade licenses: general trade licenses, special trade licenses and temporary trade licenses. The type of license you will need depends on your business activities and whether you intend operating from within or outside the country's borders. If you wish to open an office in Dubai or another part of the UAE, then you will also need a commercial license for this purpose too.

4. Company Registration and Documentation

The first step in setting up an offshore company in Dubai is the registration of the company. This can be done through the Dubai Department of Economic Development (DED). The next step would be to open a bank account with a local bank. Individuals can open an offshore bank account in Dubai in their own name or use the name of their offshore company. Once you have a bank account, you will need to obtain an NOC (no objection certificate) from the DED and submit it to your bank. This will allow you to open an offshore bank account in Dubai.

5. Compliance and Corporate Governance

Under UAE law, there are certain legal requirements that must be met by all companies registered in Dubai. These include having a board of directors and shareholders meeting within six months of incorporation, appointing auditors within one year of incorporation and preparing financial statements for each financial year within nine months after its completion.

6. Intellectual Property Protection

Intellectual property protection is a top priority in Dubai and the UAE. The Dubai Intellectual Property Department (DIPD) is responsible for registering trademarks, patents and designs. The DIPD also offers advice on how to protect your intellectual property rights in the UAE.

7. Employment Laws and Immigration

The UAE has strict laws governing employment, including restrictions on foreign workers. To obtain permission to hire foreign employees, you will need a sponsor (who can be either an individual or an entity). This sponsor will also need to provide proof that there are no qualified Emirati employees for the position(s). Most companies dealing with high-value goods or services will need to employ an auditor from one of the Big Four accounting firms (PwC, Deloitte, EY or KPMG). Auditors must be registered with the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).

8. Legal Considerations for Specific Industries

The legal considerations for different industries vary across sectors. For example, retail businesses have different compliance requirements than healthcare providers do. Other industries may require specific licenses depending on their scope of operations (e.g., banks), while others may not require any licenses at all.

Seeking Professional Guidance On Setting Up an Offshore Company in Dubai

Setting up a business in Dubai is not only simple but it's an excellent way for entrepreneurs to increase their profits. Foreign companies can also find success with the lower costs associated with operating a company here. Dubai is a growing city, and many people from all over the world are finding success living and working here. Contact a trusted, reliable business consultant in Dubai to help you get started. The process is not yet user-friendly, but with help from a professional, it is quite easy. Once your company is set up, you can then begin operating your business from Dubai.