Would you like to establish a company and are looking for a solution offering advantageous financial conditions while remaining within a legal framework? Setting up an offshore company in the United Arab Emirates is one possible solution.
Since 2009, the firm has assisted entrepreneurs with the process of setting up companies in the United Arab Emirates.
Before getting started, it is essential to understand how an offshore company works, its limitations, and the situations in which it may be considered.
What is an offshore company?
An offshore company may also be referred to as an International Business Company (IBC).
By setting up this type of company, you can have a registered office, a correspondence address, and a bank account. However, it does not allow you to conduct business activities in the country of registration.
Therefore, if the company is registered in the United Arab Emirates, you will not be able to open a physical office there, hire local employees, obtain residence and work visas for your employees, or work with locally based suppliers.
This structure is a Private Limited Company, and its activities are regulated.
What an offshore company allows - and does not allow
Registered office, address and bank account
The organization may have a registered office, a correspondence address, and a bank account.
No local activity
It does not allow you to directly carry out your professional activity in the country of registration.
No office, employees, or local visas
An offshore company does not allow you to open a physical office in Dubai, hire local staff, or obtain residence and work visas under this structure.
Regulated activities
The activities permitted for this offshore company are holding, consulting, and import-export.
Tax benefits
No taxes
Offshore is a solution that allows you to benefit from very favorable tax treatment. Under this model, no tax is payable.
No tax on profits and capital gains
There is no tax on profits or capital gains.
No withholding tax on dividends
There is also no withholding tax on distributed dividends.
Offshore, Free Zone, or Local Company: Don’t Confuse Them
These three models must be clearly distinguished. An offshore company does not allow you to have a local operational presence. A free-zone company, on the other hand, may allow you to conduct activities such as trading, consulting, or holding, have professional premises, obtain residence and work visas, hire staff, and work with local partners within the applicable framework.
A local company is a structure that allows direct activity in the UAE market, subject to different rules.
What is a holding company?
A holding company is a parent company that owns a group of businesses. There are two types of holding companies: a passive holding company, which is primarily used to hold shares in subsidiaries, and an active holding company, which can also provide services to its subsidiaries.
It is possible to establish a parent company in the United Arab Emirates to bring together subsidiaries located in different countries. Dividends received by the holding company are not subject to any tax.
However, please note that only companies established in a Free-zone can benefit from double taxation treaties.
What is tax optimization?
Tax optimization must be distinguished from tax evasion: this is not about circumventing the law, but about using legal means to avoid paying certain taxes.
In the United Arab Emirates, there is no corporate income tax or wealth tax. For an offshore company in Dubai, there are also no taxes on profits or capital gains, nor any withholding tax on distributed dividends.
It is essential to seek support from specialists to avoid using illegal strategies.