A Guide to Understanding Onshore and Offshore Companies in the UAE
As the commercial hub of the Middle East, the United Arab Emirates provides immense opportunities for corporations, SMEs and start-ups to gain entry into the nation’s booming business ecosystem. International exposure, world-class infrastructure and business-friendly tax laws contribute to the UAE’s continued economic growth and sought-after business climate.
Foreign investors looking for a slice of the pie essentially have five different options to set up and run their business in the UAE. Business owners can operate as overseas traders, operate through a local distributor, work in a joint venture, look for mergers/acquisitions or incorporate a local entity. In this post we’ll be honing in on the latter, focusing specifically on the difference between offshore and onshore companies in the UAE. Let’s dive in, shall we?
Dubai onshore company
Onshore companies, also known as mainland companies, are entities that are established anywhere within the limitation of a commercialised geographic area. In the UAE, you can establish a Limited Liability Company (LLC) in either Dubai or the rest of the UAE. These entities come under the jurisdiction of the UAE Government. The main purpose of setting up an onshore company in Dubai or the UAE is to serve a customer base inside the jurisdiction or to tender for government contracts.
Previously, the federal Commercial Companies Law (CCL) stipulated that a UAE national must hold at least 51% of the total equity of any commercial business registered as a LLC, with non-nations able to hold up to 49%. Since 2021, the CCL has been amended, granting foreign investors full ownership of their companies and an incredible business opportunity.
It takes around 4 to 6 weeks for investors or enterprises to complete onshore company formation, including the legal formalities. With the help of a business services provider, like Europe Emirates Group, the incorporation process will be much smoother so you can start benefitting from your strategic location, double-taxation exemption, and easy availability of the investor visa sooner.
Offshore companies in the UAE
UAE offshore companies are a popular choice for investors looking to secure presence in the nation though not intending to engage in any business with the country. These companies are set up under an offshore regulatory system and act as holding companies that do not carry out any commercial activities.
While an offshore company can be owned by corporate entities or individuals, it is basically a non-resident company that cannot own office space in the UAE. These companies are framed under the no-tax jurisdiction law primarily to manage one’s wealth and reduce legal tax payments. Another reason for offshore company formation in Dubai is to ensure complete confidentiality over the company’s financial matters through tax exemptions and increase its wealth without interruption.
There are several ways to structure an offshore company, including an International Business Corporation, Offshore Limited Liability Company, Trust or Offshore Foundation. Each corporate structure comes with its legal framework.
Jebel Ali Free Zone (JAFZA) and Ras Al Khaimah Investment Authority (RAKIA) are the leading free zones that offer offshore company formation in the UAE. These tax-free jurisdictions levy no income or corporate tax. They also permit 100% foreign ownership and have Avoidance of Double Taxation Treaty agreements (DTTAs) with 115 countries, including the United Kingdom.
Incorporate your company in Dubai
If you’re planning on setting up an offshore or onshore company in the UAE, Europe Emirates Group can make the whole process run smoothly. Our team will share their expert knowledge so you choose the right entity for your business venture. Plus, we can assist you with other paperwork including bank accounts, residence visas (which you can get free, for life, via our promotion), relocation services and more. Get in touch today.