For an entrepreneur willing to live and work in Dubai it’s better to open a company but for the investors who don’t want a permanent residence here, it’s preferably to open offshore companies.
The appealing tax regime and many opportunities offered to the foreign investors in Dubai makes the entrepreneurs to choose opening offshore companies in Dubai.
The law that governs the actions of a offshore company in Dubai is the Federal Law no 8 from 1984, amended by the Federal Law No 13 from 1988 (the Commercial Companies Law). The offshore companies opened in the free zone are ruled by the Jabel Ali Free Zone Offshore Companies Regulations 2003.
The main advantages of opening an offshore company in Dubai are the following: there are no personal, corporate, capital tax or VAT (except for the foreign banking branches or oil producers), anonymity and privacy protection are guaranteed, there is no obligation to deposit the capital in a bank, the foreign ownership is allowed 100%, there is no minimum share capital requested in the Free Zone and just a small amount of money requested as a share capital at opening in the Ras Al Khaimah. Also it’s not necessary to submit the company’s account. These accounts are only presented to the shareholders.
There are two offshore authorities in Dubai located in Ras Al Khaimah and in Jebel Ali Free Zone. The regulations for opening offshore companies are slightly different but not significantly.
The name of an offshore company cannot contain the words: Insurance, Re-insurance or Banking in their composition. Any name of the offshore company must contain the termination ‘’Ltd.” or “Limited”.
An offshore company in Dubai can be formed by at least one shareholder and can have maximum 50 members. This type of company must be managed by at least two directors and a secretary. Their names are kept in the register of directors from the Dubai Registered Office, but they’re details are not available for the public. It’s not mandatory for the general meetings of the offshore company to take place in Dubai.
As a rule, any offshore company must have a local registered agent, approved by the Dubai Registered Office and the local authorities.
There is no minimal share capital requested at registration in the free zone, the company can choose its own authorized capital. For the companies opened in the Ras Al Khaimah, a minimum share capital of 1000 AED is requested.
The incorporation of this type of business in Dubai consists in registering documents and information at the Registrar.
The following information is necessary: the name and address of the offshore company, the type of business, the name and address of the founders, the amount of share capital, the articles of association and any other document the Registrar may ask.
After registration the company receives a certificate of registration and an identification number.
A bank account needs to be opened after receiving the certificate of registration. For this, the entrepreneur must present the following documents: bank account statements for the last two months, a proof of residence( for example a telephone bill with the details of the owner), the personal profile of the shareholders, the current business performed by the shareholders (name of the company, type of business, number of employees, address), the country of customers and suppliers, future predictions of the activities of the bank account, statement if cash from transaction will be in the accounts, initial amount deposited and the source of this amount.
Also, in the UAE, licenses are needed for performing commercial activities. There are three types of licenses: commercial, professional or industrial obtained from the Department of Economic Development.
DUBAI KEY FACTS
- The law that governs the actions of a offshore company in Dubai is the Federal Law no 8 from 1984, amended by the Federal Law No 13 from 1988 (the Commercial Companies Law). The offshore companies opened in the free zone are ruled by the Jabel Ali Free Zone Offshore Companies Regulations 2003.
- For an entrepreneur willing to live and work in Dubai it’s better to open a company, but for the investors who don’t want a permanent residence here, it’s preferably to open offshore companies.
- The investors willing to open a limited liability company in Dubai must know that 51% of the shareholders must be UAE citizens.
- A limited liability company in Dubai is based on a minimum share capital of 300,000 AED in cash or kind.
- The free zones of Dubai are different zones where taxes or restrictions on commercial activities are not applied.
- The most known free zones are: Jebel Ali Free Zone, Dubai Silicon Oasis, Dubai Airport Free Zone, Dubai Aid and Humanitarian City, Dubai Internet City and Dubai Media City.
- Dubai has signed or has in pending double tax treaties with more than 65 countries. As a particularity, Dubai hasn’t signed any exchange of information treaties.
- In Dubai, there are not many personal taxes, for example there is only a 5% tax on entertainment and hotel services and a 5% residential tax.
- Also, no VAT is payable for the goods, unlike other countries.
- The investors are also attracted by the advantageous tax system and the cheap workforce.