Establishing offshore companies in Dubai

In the evolving global business world, Dubai plays a prominent role as an attractive investment destination for companies wishing to expand internationally. With the increasing demand for establishing offshore companies , Dubai is considered one of the most important centers that provides an ideal work environment for this purpose. This article, in collaboration with Itqan, provides a comprehensive overview of the process of establishing offshore companies in Dubai, including the benefits, challenges, and legal and regulatory procedures. The information and guidance provided in this article will help you make the right decisions and achieve success in the process of establishing offshore companies in Dubai. .

Establishing offshore companies in Dubai

What are offshore companies?

Many commercial companies operate in countries other than those to which they belong or in which they established their business as a country of nationality, and the trend for these foreign businesses is often due to the investment incentives offered by those countries, including low taxes and packages of facilities and aid they provide.

If we take the literal translation term, what is meant by offshore companies is (far coast), or outside the borders, or beyond the seas, all of which mean outside the borders of the state. Offshore companies are companies registered according to the law of the country from which they carry out their activity and in which the company’s registrar resides.

They are also legal commercial entities or a group of companies that participate in providing and manufacturing commercial services outside the borders of their countries. Companies that invest in the fields of mining, oil fields, and gas extraction fields in the distant seas of their countries may fall under this name.

Characteristics of offshore companies

The activities of commercial companies vary depending on their field of work, and the laws of those countries that set their commercial legislation differ according to their interests. However, all offshore companies are subject to the relevant laws and regulations of the country, despite their having characteristics and advantages that may not be available to other companies, including:

• It is not subject to taxes imposed by the country in which it establishes its business
• Flexibility of trading systems that deal
• The great facilities provided to it and the global exchange and spread

In the Emirate of Dubai, it is not prohibited to own an offshore company, but it requires knowing and clarifying the true type of activity of these companies and the source of their financial flows, and knowing the ultimate beneficiary. In light of this and in accordance with the conditions approved by the legislation, it gives the investor the right to establish an offshore company, in the Jebel Ali Free Zone in Service and commercial activities.

Validity of offshore companies

• An offshore company has the powers, rights and privileges of a natural person
• The authority of the offshore company is not limited by anything stipulated in its articles of association, or by any action undertaken by its members
• Offshore companies may not conduct business with persons residing in the country
• It is not permissible for her to own an interest in real estate in the United Arab Emirates, other than the lease contracts referred to in the regulations or as approved by the Authority.
• Offshore companies may not engage in banking business
• Offshore companies may not practice insurance or reinsurance business, or be an insurance agent or broker
• It is not permitted to engage in any other activities prohibited by the regulations established by the authority or by law
• The offshore company is not treated as doing business with persons residing in the UAE
• If an offshore company wishes to practice trade or any other business in the region or elsewhere in the UAE, it must obtain a license from the competent authority.

Conditions for establishing offshore companies in Dubai

According to the regulations issued by the Jebel Ali Free Zone Authority regulating the work of offshore companies, when establishing companies, the following regulations were established:

• Any one or more persons may submit a signed application to the Registrar for a certificate of incorporation of an offshore limited liability company
• It is permissible to establish an offshore company in order to conduct any legitimate business, except for what is contrary to the conditions and stated in accordance with the regulations.
• Each offshore company has a management structure and one class of shares (of equal value)
• The company that wants to practice its activity must obtain a license for this purpose from the competent authorities
• Offshore companies are not entitled to practice banking, insurance, or anything prohibited by the competent authorities from time to time.
• Every company must issue a financial statement that is audited by a certified auditor and filed with the Registrar of Companies
• The company must have a registered office in Jebel Ali Free Zone and have a legal agent approved by the zone authority.

Signature of the application by the founders, provided that it states the following:

• The name of the thousand shore company, ending with the word “limited”
• The address of the registered office of the company and the purpose of its establishment
• work nature
• The amount of share capital proposed to be registered and divided into shares of a fixed amount
• Full names of the founder or founders, and persons serving as board members
• Any other details that the Registrar may request

Licenses to establish an offshore company:

Offshore company incorporation licenses are important in order to complete the incorporation process correctly.

There are 5 types of licenses that can be issued in order to establish an offshore company in Dubai, specifically in the free zone, and these licenses are as follows:

• Industrial license: for small industrial activities.
• Logistics license: This license is only issued in the logistics services area, in order to carry out logistical services.
• General Trading and Trading License: This license is specific to importing, exporting, storing and distributing the types of products mentioned in the license, as well as selling them in the UAE markets through local distributors.
• Service license: These licenses are for the services mentioned in the license in the Dubai South Free Zone and other places within the borders of the United Arab Emirates.
• Education license: This type of license is used for social, training, and educational services, as well as educational consulting services. This license is a must when starting to establish an offshore company in Dubai.

Procedures for registering offshore companies:

When establishing an offshore company in Dubai, the Registrar has the right to refuse to register offshore companies if he has any reason that he believes is valid for refusing this registration.

If the Registrar refuses to grant his approval to register the offshore company, he is not required to provide any reasons for the refusal and his decision is not subject to review or appeal.

Change registered name

• An offshore company may change its name, provided that it is acceptable
• In the event of a name change, the Registrar enters the new name in the register in place of the previous one, and issues a certificate of incorporation accordingly
• The change of name shall not affect any rights or obligations of the Company or render unlawful any legal proceedings brought by or against the Company, which may be continued or commenced by or against its new name.
• If the name is misleading or incomprehensible, the Registrar may direct the company to change it
• The company must comply with the direction within one month from the date of issuance of that direction or as the Registrar may permit
• A company that does not adhere to the directives of this regulation is considered to be in breach.

Types of license to establish an offshore company in Dubai

Types of license to establish an offshore company in Dubai.
In order to be able to establish a company, you must obtain one of the licenses that are compatible with your investment. The most prominent of these licenses are as follows:

1- Industrial license

It is a license for construction and small industrial activities.

2- Logistics license

This license is only issued in the logistics area in order to perform this type of service.

3- General trade license

This license is for the import, export, storage and distribution of items mentioned in this license, and you can also sell them throughout the Emirates.

4- Service license

It is specific to the services mentioned in this license. These services can be provided within the free zone or other places within the borders of the Emirates.

5- Teaching license

This type is for training and social services, and this license in particular is required when starting to establish an offshore company in Dubai.

Establishing offshore companies in Dubai

Offshore company formation in Dubai is a popular option for companies wishing to expand internationally. Here are some basic steps for establishing offshore companies in Dubai:

1. Market study and planning: Study the Dubai market and the surrounding area to understand the opportunities and potential challenges.
2. Choosing the type of company: Decide what type of company you want to establish, whether it is an individual company, a joint-stock company, or a partnership.
3. Business name selection and registration: Choose an appropriate name for the company and register it according to legal requirements.
4. Appointing a sponsor: In the case of some types of companies, you may need a local sponsor in Dubai.
5. Completing the legal procedures: Submit the required documents and complete the legal procedures necessary to establish the company.
6. Obtaining licenses and permits: You may need special licenses depending on the company’s activity, such as a business license and building permits.
7. Opening a bank account: Open a bank account for the company in one of the approved banks in Dubai.
8. Residence Visa: Make sure to arrange residence visas for foreign employees if the company employs non-local employees.

Differences between an offshore company and a local company in Dubai

This table shows the differences between an offshore company and a local company in Dubai:

These are some of the main differences between the two companies, but you should be aware that there may be other differences depending on the current laws and regulations in Dubai and the United Arab Emirates.

Types of offshore companies that can be established in Dubai

In Dubai, several types of foreign companies can be established. Here are some common types of offshore company incorporation in Dubai that can be established in Dubai:

1. Sole Proprietorship: This company is considered a sole proprietorship in which the owner is solely responsible for all actions and obligations related to the company.
2. Limited Liability Company – LLC: It is a common form of company in Dubai, where the shareholders of the company have limited liability for debts and obligations. There must be at least two shareholders and the ownership percentage must be determined for each shareholder.
3. General Partnership: This company is formed when two or more partners collaborate to manage a joint business. Liability and profits are divided between the partners according to the partnership agreement.
4. Public Joint Stock Company (PJSC): It is a commercial company whose shares are traded on the public financial market. There must be at least two shareholders and ownership and profits are divided among them.
5. Private Joint Stock Company (PrJSC): Similar to a public joint stock company, but with the difference that its shares are not publicly traded on the financial market.
6. Branch Company: It is considered a branch of an existing foreign company. The parent company can expand into the UAE market by establishing a branch in Dubai.

The tax and financial benefits of establishing an offshore company in Dubai

Establishing an offshore company in Dubai is an attractive option for many businessmen and companies due to the many tax and financial benefits it offers. One of the main benefits is the absence of personal income tax and corporate tax, including:

1. Tax exemption: Offshore companies in Dubai often benefit from tax exemption on profits made outside the UAE, which reduces the tax burden.
2. Easy access to global markets: Offshore companies in Dubai provide easier access to global markets due to Dubai’s strategic location and advanced infrastructure.
3. Confidentiality of information: The offshore company owner has a high level of confidentiality regarding financial and business information, as he can usually remain anonymous and the details of his business.
4. Facilitating financial operations: Offshore laws allow the efficient conduct of financial business, facilitating financing, investment and international money transfers.
5. No local requirements: While local companies in Dubai are bound by some local restrictions such as local recruitment and the need for a local sponsor, offshore companies can enjoy more flexibility in operating.
6. Political and economic stability: Dubai has a stable political and economic environment, making it a favorable place for establishing offshore companies.

Costs associated with establishing and operating offshore companies in Dubai

The costs of establishing an offshore company in Dubai may vary depending on the types of companies and their individual needs, and among these costs are:

• Incorporation fees: Includes registration fees and licenses required to establish the company in Dubai.
• Office space: There may be costs for the annual rent of an office, whether it is within a free zone or in a regular commercial building.
• Labor costs: Include staff and administration costs, such as salaries and fringe benefits.
• Administrative services: Includes the costs of administrative services such as communications, Internet, electricity, and water.
• Insurance: Company and employee insurance costs.
• Taxes and Fees: Costs may include local taxes and other government fees.
• Marketing and Advertising: Marketing and advertising costs to attract customers and business partners.
• Advisory Services: You may need the services of financial or legal advisors to assist with some aspects of the company.
• Training and Development: Costs of training and developing employees to improve their performance and efficiency.
• Overhead: Includes other administrative costs such as office supplies, travel, and meetings.

Steps to establish offshore companies in Dubai

Characteristics of offshore companies

Offshore companies are companies established in a country that provide financial and tax advantages to companies and individuals who are not residents of that country, and are characterized by several characteristics, including:

1. Privacy: Offshore companies provide complete confidentiality to shareholders and directors, revealing their information only when legally required.
2. Limited Disclosure: Offshore companies often require little financial disclosure and reporting of their activities.
3. Taxes: Offshore companies enjoy tax privileges, such as not being charged income taxes on profits made outside the country in which the company is located.
4. Flexibility in legislation: Offshore laws differ from those of major countries, providing flexibility in regulatory structure and administrative procedures.
5. Low costs: The costs of establishing and operating offshore companies are usually low compared to local companies in major countries.
6. No need for shareholder information: In many cases, offshore companies do not require disclosure of the identity of shareholders or directors.
7. Geographic Diversification: It provides investors with the opportunity to geographically diversify their business activity thanks to the presence in a global market.
8. Legal Protection: Some countries offer strong legal protection for offshore companies, which increases confidence in the business environment.

Advantages of establishing offshore companies in Dubai

Establishing offshore companies in Dubai has several advantages that make it a preferred destination for investors and businessmen, including:

• Confidentiality of information: Offshore companies in Dubai enjoy complete confidentiality of information related to shareholders and directors, as they do not generally require disclosure of their identity.
• Limited Disclosure: Offshore companies in Dubai do not require much financial disclosure and reporting on their activities, which makes it easier to manage and operate them.
• Taxes: Offshore companies in Dubai enjoy significant tax advantages, as they are not subject to income taxes on the profits they make outside the country.
• Flexibility in legislation: Dubai laws allow flexibility in structuring and organizing companies, allowing the company to be adapted to business and market needs.
• Legal Protection: Dubai provides a favorable legal environment for businesses, as it has an effective and reliable judicial system.
• Low Costs: Generally, the costs of establishing and operating offshore companies in Dubai are low compared to some other countries.
• Ease of management guidance: Offshore companies in Dubai can appoint foreign directors without having to provide them with residency in the country.
• Access to the Regional Market: Offshore companies in Dubai can take advantage of its excellent geographical location to access regional and international markets.

At the conclusion of this comprehensive article, we reiterate the importance of the presence of Al Afshar companies in Dubai as one of the most important global commercial stations. By cooperating with Itqan Company and benefiting from its experience and professionalism in the field of establishing companies, investors and businessmen can benefit from the promising opportunities offered by the Emirate of Dubai as a distinguished investment and commercial center.

Establishing Al-Afshar companies in Dubai is considered an important strategic step to expand the business scope and access new markets and multiple investment opportunities. Dubai, with its advanced infrastructure, incubating business environment, and flexible legislation, provides all the support necessary for the success of Afshar companies and achieving their goals and ambitions.

At Itqan Company, we are ready to provide you with all support and assistance in the process of establishing Al-Afshar companies in Dubai, from strategic advice to completing the necessary legal and administrative procedures. We work side by side with you to achieve success and sustainable growth in the global business world.

The most important frequently asked questions about establishing offshore companies in Dubai