UAE offshore company formation

What is a UAE offshore company?

A UAE offshore company is a company incorporated by a UAE registry. A JAFZA offshore company receives a certificate of incorporation, not a license. An offshore company is used to own things and to do business outside the UAE.

JAFZA lists the uses of an offshore company as international trade, holding companies, owning real estate, registering copyrights and patents, and international consulting services. Ajman Free Zone lists holding companies, special purpose vehicles, real estate holding, parent company structures and international trading.

An offshore company has a registered office, usually at the office of its registered agent. A JAFZA or RAK ICC company cannot carry out business in the UAE without first obtaining the appropriate licenses. Ajman Free Zone says its product is not suitable for trading directly within the UAE market.

Which UAE authorities register offshore companies?

Three UAE registries offer offshore companies according to their own official documents: the Jebel Ali Free Zone Authority (JAFZA) in Dubai, RAK International Corporate Centre (RAK ICC) in Ras Al Khaimah, and Ajman Free Zone.

They do not publish the same amount of detail. JAFZA publishes its regulations and its fees. RAK ICC publishes its fee schedule, and its rules were read from its Business Companies Regulations 2018. Ajman Free Zone's offshore regulations are not published, and we found no offshore fee on the Ajman Free Zone pages we opened.

A JAFZA application goes through a registered agent approved by JAFZA. Under RAK ICC's Business Companies Regulations 2018 a company must have a registered agent at all times.

Good to knowThe fees in this table are the authority's own fees. They do not include the registered agent's fee. The Corporate Tax Law requires every taxable person to keep records for 7 years, whatever the registry's own rule says.

What is the difference between an offshore company and a free zone company?

At JAFZA, one difference is the document you receive. A JAFZA free zone company receives a license for its activity. A JAFZA offshore company receives a certificate of incorporation, which is not a license to carry out business in the UAE.

The table uses JAFZA as the example, because JAFZA registers both kinds of company and publishes the rules for each.

The choice is not permanent at JAFZA. An offshore company can apply to convert into a free zone company under Regulation 118 of the JAFZA Offshore Companies Regulations 2023.

Do UAE offshore companies pay corporate tax?

The UAE Corporate Tax Law applies to a UAE offshore company. It is not correct to describe an offshore company as tax free.

Under Article 11 of Federal Decree-Law No. 47 of 2022, a company incorporated under UAE legislation is a Resident Person. A Resident Person that is a company is subject to corporate tax on taxable income from inside and outside the UAE, and must register with the Federal Tax Authority.

Corporate tax is 0% on taxable income up to AED 375,000 and 9% on taxable income above AED 375,000. It applies from the first financial year that starts on or after 1 June 2023.

No Ministry of Finance or Federal Tax Authority document treats offshore companies as exempt. The 0% rate on Qualifying Income is available only to a Qualifying Free Zone Person, which must maintain adequate substance in a free zone. We found no official document that says whether an offshore company can qualify.

This is a reading of the general rule, because no official document names offshore companies specifically. Take tax advice on your own case before you decide.

Good to knowA UAE offshore company does not by itself end your tax obligations at home. US citizens and resident aliens are taxed on worldwide income, UK residence is decided by the Statutory Residence Test, and in the EU national law and tax treaties decide. Take advice from a qualified adviser in your home country before you set one up.

What does a UAE offshore company have to file and keep?

A UAE offshore company has to register for corporate tax, keep a register of its beneficial owners and give that information to its registrar. Economic substance reports are no longer required for recent years. The corporate tax point is a reading of the general rule, because no official document names offshore companies specifically.

The beneficial owner rules are in Cabinet Decision No. 109 of 2023, which applies to legal persons licensed or registered in the UAE, including the commercial free zones. Its list of exemptions does not include offshore companies.

• Corporate tax: register with the Federal Tax Authority and obtain a Tax Registration Number. The Ministry of Finance states that tax returns are due within 9 months of the end of the tax period.
• Tax records: keep records and documents for 7 years after the end of the tax period they relate to.
• Beneficial owner register: create it within 60 days and update it within 15 days of learning of a change.
• Filing with the registrar: submit the beneficial owner and shareholder register data within 60 days of registration.
• Who counts as a beneficial owner: a natural person who owns or controls 25% or more of the capital or voting rights, directly or indirectly, or who controls the company by other means.
• Contact person: give the registrar the name of a natural person who lives in the UAE and is authorised to disclose the required information.
• Economic substance reporting: cancelled for financial years ending after 31 December 2022 by Cabinet Decision No. 98 of 2024. Companies remain responsible for earlier years.

Good to knowAudit and record keeping rules differ by registry, so no single statement covers every UAE offshore company. Check the page for your registry.

Can you get a UAE residence visa through an offshore company?

An offshore company does not normally lead to a residence visa. Ajman Free Zone says its offshore product involves no visas and no office space.

JAFZA has one exception. Under Regulation 31.2 of the JAFZA Offshore Companies Regulations 2023, an offshore company that owns property in a designated freehold area may apply to the authority for a residency visa for its members, subject to the authority's eligibility requirements.

JAFZA does not publish those eligibility requirements. If a visa is the main reason you are setting up, a free zone or mainland company is the usual route.

Cayman Islands offshore company: the option outside the UAE

Links also offers a Cayman Islands offshore package. It is AED 16,500 and covers the certificate of incorporation, a registered office address for one year, a registered agent service for one year, and help with KYC and compliance checks.

The Cayman Islands General Registry requires a company to have a registered office, which accepts service of process and notices. Where a company's activities are to be carried out mainly outside the Cayman Islands, it can apply to be registered as an exempted company.

The Cayman Islands has an economic substance law, the Economic Substance Act, which came into force on 1 January 2019 according to the Department for International Tax Cooperation. Under it, an entity must tell the Tax Information Authority every year whether it carries on a relevant activity.

Good to knowThe package price covers the first year. Ask us for the renewal cost in writing before you commit.