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Offshore company formation in Dubai

The United Arab Emirates (UAE) ranks first globally for business efficiency and management practices according to the IMD World Competitiveness Yearbook 2019. The UAE's popularity continues to rise for several reasons, mainly because it can be seen as a modern alternative to traditional offshore jurisdictions. Offshore company formation in Dubai is an excellent choice for nearly any business. The UAE, as a modern alternative to traditional offshore destinations, has long offered favorable conditions for business operations. However, many entrepreneurs are simply unaware of the benefits that UAE companies provide for running and expanding a business. Let's explore these advantages in more detail.

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Offshore company formation in Dubai

Posted 4 May 2024

Advantages of Offshore Company Formation in Dubai

Registering an offshore company in the UAE offers the following benefits:

  1. Rapidly growing economy
    The UAE boasts high economic performance, positioning it as a leader in average annual income per capita among the Arabian Peninsula countries. Its strong economy allows this small nation to maintain high income levels for many years.
  2. Avoidance of CRS exchange
    When registering an offshore company in the UAE, it’s relatively easy to obtain tax residency status in the country.
  3. Favorable geographic location
    The UAE is a federation located on the Persian Gulf coast, offering access to major markets in Southeast Asia, Africa, and Europe.
  4. Favorable taxation
    The UAE is a beneficial jurisdiction in terms of taxation. VAT is only 5%, the standard corporate tax rate ranges from 0% to 9%, and many companies in free zones are exempt from this tax. The UAE does not have an income tax for individuals.
  5. Stable socio-political environment
    The UAE enjoys strong indicators in both political and social sectors.
  6. Supportive programs for small and medium businesses
    The government supports and stimulates entrepreneurship in the Emirates. Additionally, the UAE regularly publishes valuable information for residents and businesspeople on a dedicated government portal.
  7. Company and bank account in one place
    In the UAE, you can easily open both a company and a bank account in the same location, which is particularly important when working with, for example, Google.
  8. Presence of free zones (FZ) with favorable business conditions
    FZs are essentially the alternative to offshore companies. The UAE offers unique conditions for registering a company in a FZ, making it one of the most attractive business aspects of the country. These zones provide favorable tax conditions and business opportunities. Registering an offshore company in the UAE in one of the free zones greatly simplifies the process of doing business in this country.

Learn more about the advantages and registration procedure, as well as company taxation and reporting in the UAE.

Want to get further insights?

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Diane

Diane, partner of GFLO Consultancy

Free Zones — Alternatives to Traditional Offshore Locations

So, what is a free zone? And why are free zones in the UAE considered alternatives to traditional offshore locations?

A free zone in the UAE is a special area that offers highly advantageous conditions for starting and running a business:

  1. Ability to register a company with 100% foreign ownership.
    In FZs, you can register a company with 100% foreign ownership, meaning there are no residency requirements for directors and shareholders.
  2. No need to find a local agent or partner to start a company.
    This benefit naturally follows from the previous one. Since companies can be registered entirely by non-residents, you save time and money by not having to find local partners willing to participate in your business.
  3. Ability to conduct business within the FZ or outside the UAE.
    Free zones were established to attract capital to areas in need of investment and concentrate entrepreneurs’ main activities within those territories.
  4. Almost no taxation.
    If a company does not engage in banking or oil and gas extraction, restaurant or hotel businesses, its profits will be taxed on very low rates, if at all. VAT, which exists in the UAE with a rate of just 5%, is not applicable to most companies. Furthermore, many free zones are exempt from paying VAT.
  5. Opportunity to obtain residence visas for the company founder and their family members.
    A residence visa makes it easier to open a bank account in the UAE and significantly simplifies all bureaucratic procedures in the country.
  6. Free zones can benefit from double taxation treaties between the UAE and their country of residence.
    Free zones represent a mixed type of jurisdiction, sharing similarities with offshore locations while allowing companies registered in free zones to enjoy the same advantages as local companies. Both local companies and those registered in the UAE’s free zones are subject to the terms of double taxation treaties signed by the UAE with over 50 countries.
  7. The UAE is a reputable jurisdiction not listed on any offshore blacklists.
    Companies registered in free zones can expect to open accounts in reputable UAE banks, unlike traditional offshore companies.
    A list of the most popular free zones with descriptions of possible activities (licenses), minimum capital requirements, and company registration timelines is available in the article Company Formation in the UAE.
Note:

The UAE’s reputation is further bolstered by the fact that certain local companies in the UAE are required to meet economic substance requirements, which means they must maintain an office, employees, and real business activities within the Emirates. This requirement is quite common in most developed countries, and allows the UAE to enjoy a high level of trust from international organizations and banking institutions.

Conclusion

Today, offshore company formation in Dubai serves as a modern alternative to classic offshore destinations and enjoys great popularity and vast potential. Entrepreneurs and investors worldwide, who are already aware of the advantages of the UAE, are opening companies in the emirates’ free zones.

If you are looking for a favorable jurisdiction that offers highly attractive business conditions and has earned a global reputation, we would be happy to assist you with company registration in the UAE.

GFLO Consultancy experts are pleased to assist and help you with any inquiries, just get in touch or leave a request through the form right below.

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