Guide to Setting Up an Offshore Company in Dubai

December 8, 2019
Written by Arpan Ghosh

Dubai has always been an excellent choice for international investors, offering steady returns in a stable and secure environment. Of course, when dealing with large-scale investments such as real estate, many questions often arise, especially in terms of taxes and inheritance. Purchasing real estate through an offshore company can help to allay those concerns and it has become an increasingly popular option for overseas buyers.

 

What are the benefits of setting up an offshore company for the purposes of purchasing real estate?

 

Anonymity

Company information is kept confidential, so the details of the transaction and the extent of your property portfolio will not be a part of any public records.
 

Ownership

If you are setting up a company in Dubai, you will need to have a local partner with a majority share in the company. Though new rules have been announced regarding full ownership for expats, they have yet to be formally effected. At present, there are two ways to have complete ownership of a company - start up your business in a free zone or open an offshore company.
 

Limited Liability

In addition to giving you the option of 100% ownership, an offshore company is treated as a limited liability company (LLC), so your personal legal liability is greatly reduced. This adds a further level of security to your investment.
 

Tax Exemption

Offshore companies in Dubai are not subject to corporate tax or VAT, so the returns you generate from your investment are yours in full. This is one of the key incentives that attract international investors to the city.
 

Corporate Structure

Inheritance is a major concern among expats and that becomes even more of a concern when your assets are in the UAE and you are not. By purchasing property through an offshore company and making it a corporate asset, you will be exempt from local inheritance laws, giving you complete control of how the property is passed on in the future.
 

How can I set up an offshore company in Dubai?

 

There are currently two options available for setting up an offshore company - through the Jebel Ali Freezone Authority (JAFZA) or through the Ras Al Khaimah International Corporate Centre (RAK ICC).

 

JAFZA

Operating under JAFZA gives you all of the above benefits, plus further safeguards that have been put in place for added privacy and security.

 

The company must have a minimum of one shareholder, two directors and a secretary - a shareholder can also be a director and either a shareholder or director can also be a secretary. The company must have a registered office address in Dubai, whether that is an office owned by the company as an asset, an office maintained by the company, or the address of the registered agency that helped set up the business. Accounts must be kept meticulously and an auditor will need to be appointed to conduct an annual audit. Shareholders or appointed legal representatives must be present at the time of legal incorporation.

 

The name of the company must end with ‘Limited’ and there are certain activities for which setting up an offshore company is not possible - this restriction is applicable to Banking and Financial Institutions, Consulting Firms, Real Estate Brokerages, Media Companies, Production Houses, Casinos, Military Facilities and Educational Institutions.

 

RAK ICC

Incorporation under RAK ICC is even simpler and ultimately, cheaper. 

 

The company has a minimum requirement of one shareholder, one director and one secretary. Accounts should be kept but will not have to be filed and there is no audit. The company must have a registered office address in Dubai, whether that is an office owned by the company as an asset, an office maintained by the company, or the office of the registered business setup agency. Shareholders do not need to be present at the time of legal incorporation, but all legal documents must be signed at the office of the registered agency by the shareholder or their legal representative. 

 

The name of the company must end with ‘Limited’ or ‘Incorporated’ and there are certain activities for which setting up an offshore company is not possible - this restriction is applicable to Banking and Financial Institutions, Funds, Trusts, Chambers of Commerce, Building Societies, Co-operatives and Insurance Firms..

 

There is one restriction that applies to all offshore companies, regardless of the authority they are registered through - they cannot conduct business with other entities in the UAE. Any business conducted outside the UAE falls outside the country’s jurisdiction. Offshore companies can buy shares in companies within the UAE, however, and act as holding companies.

  

What is the process for setting up an offshore company?

 

The actual process for company setup is quite straightforward. The first order of business is to appoint a registered agency that will manage the process for you and to determine the total costs involved in registering the company, opening corporate bank accounts and in any specific government attestations that will be required. 

 

You will also need to determine the activities your company will be involved in and to finalise the total number of shareholders and the division of share capital, as well as the appointment of directors and company secretary.

 

Once all of the finer points of the business have been taken care of and all relevant documents have been signed - by the shareholders or their legal representatives in the presence of the registered agent - then the company application can be submitted.

 

If the registrar finds that everything is in order, the company will be formally registered within three working days.


What documents will be required?

 

An offshore company can be formed by an individual or an existing overseas corporate entity. In each case, the documents required would differ slightly.

 

For Individuals:

  1. Document showing that an official agent has been appointed for company setup (provided by the agent)

  2. Application form (provided by the agent)

  3. Personal profile of the applicant - essentially a brief resume and professional background

  4. Certified Passport copy with UAE entry page stamped

  5. Original certified reference letter from the applicant’s bank

  6. Proof of residence of the shareholder - this can be in the form of utility bills and/or bank statements and must be no older than 3 months

  7. Power of Attorney (notarized and attested) if the applicant is being represented by a POA

  8. A few different options for trade names

  9. Details of Directors/Shareholders with individual addresses and percentage held by each shareholder.

 

For Overseas Companies:

  1. Business Plan

  2. Application form (provided by the agent)

  3. Document showing that an official agent has been appointed for company setup (provided by the agent)

  4. Original certified reference letter from the company’s bank

  5. Copy of Certificate of Incorporation of the parent company, notarized and attested by the UAE Embassy in the country of origin.

  6. Copy of Memorandum & Article of Association of the parent company, notarized and attested by the UAE Embassy in the country of origin.

  7. Power of Attorney in favour of Manager, notarized and attested by the UAE Embassy in the country of origin.

  8. Board resolution to form a subsidiary in Dubai, notarized & attested by UAE Embassy in the country of origin.

  9. Certificate of good standing of the company, notarized & attested by UAE Embassy in the country of origin.

  10. Passport copies, original bank reference letters, proof of residence and profiles or resumes of the shareholders/directors of the parent company

  11. Original bank reference letter of the authorized representative of the parent company.

  12. Proof of residence of the authorized representative of the parent company - this can be in the form of utility bills and/or bank statements and must be no older than 3 months

 

This is a general guide to setting up an offshore company in Dubai. Document requirements or processes are subject to change depending on government regulations. We would always recommend taking legal advice before starting any processes to ensure that everything is above board. Should you have any questions related to setting up an offshore company for the purposes of real estate investment, please contact our advisory team. We would be delighted to assist.