In financial language, the term “offshore” is used to define any business or investment made outside the country of residence or in other words an offshore company is a legal entity established in an Offshore Financial Centre (Offshore Jurisdiction).
Offshore Company, most commonly termed as International Business Company or a Non-Resident Company, is a legal structure which provides for a low/No-tax environment for an entity or an individual which in turn minimizes tax burdens and improves wealth management.
• Offshore company Must be incorporated under Offshore Company Laws and regulations of offshore jurisdictions
• Offshore company Must not trade within the offshore jurisdictions
Listed below is information summarizing the reasons for why offshore companies are formed:
Privacy & Confidentiality and Asset Protection
Tax optimization (depending on your jurisdiction)
Flexible Business Laws & Lawsuit Protection
International Financial Diversification
A new type of Offshore Company in RAK with the abbreviations RAK ICC (Ras Al Khamiah International Corporate Centre) is planned for the first half of 2016.
The Jebel Ali Offshore was established in 1985 by the Government of Dubai, and now consists over 100 square kilometres.
Ajman offshore was established in 1988 and was allocated an independent status under the Emiri Decree No. 3 of 1996 by the Ruler of Ajman.
Why setup an Offshore company?
There are number of reason why so many private individuals and businesses incorporate an offshore company however followings are the main reason to setup an offshore company.
Anonymity, confidentiality and the highest level of privacy protection
No accountant costs
Business can be conducted internationally (Invoice international clients)
Corporate Bank Account
Prestigious Registered that you can use our address for your offshore company
Offshore company can act as an intermediary in any transactions of your Company with foreign Companies
Benefits of Offshore company formation
100% tax free
100% tax/customs duty free
100% ownership, no local national involvement required
100% repatriation of profits and investments
Suitable for any kind of international business
No office space requirements
Liberal bank account opening and maintaining
Multi-currency bank accounts
Quick incorporation – 2-3 working day
Uses of an Offshore Company
As most other companies an offshore company may enter into contracts, open bank accounts, purchase and sell various products and services, own property. A typical offshore entity, also known as an International business company (or an offshore IBC) does not pay taxes in its home jurisdiction.
Following can be the uses of an offshore entity:
A trading company can be establish itself in an offshore area. The offshore company would take orders directly from the customer, but have the goods delivered directly to that customer from the manufacturer or place of purchase. The profits arising out of the difference between purchase price and sales price would then be accumulated in Offshore Company’s bank account.
You can also carry on your consultancy or counseling business by using an offshore company. You will find it easier to manage your company and will have reduced or even zero taxation depending on the jurisdiction in question.
Property Owning Companies
There are a number of good reasons why the use of offshore companies has become so popular when buying property in Dubai. The most obvious reason would be the avoidance of complicated inheritance procedures.
A company does not die. If your property is held in a low-cost offshore company, you (and your partner or partners) can own the shares of it as you see fit. So rather than have your individual names on the title of the property, you have a company name. In case of any uncertainty/unforeseen, all of your property and bank account will be frozen until a sharia court order is issued by the local courts.
As a UAE property investor, we do recommend to buy the property OR investing in any Company under the name of an off-shore company. so if in case your family will not be suffering. When the owner sells the property; a certain percentage of its value may charge by the authority. The transfer fee can be easily avoided by selling the Company itself.
People who want to invest their money in different projects and they don’t want to disclose to someone, can incorporate an offshore entity and then this offshore can invest as a corporate investor in different project. An offshore company can hold the shares of other companies in UAE or abroad.
Copyrights, Trademarks and Patents
Any kind of intellectual property right (a copyright or trade mark) may be registered in the name of an offshore company. The company may also buy or sell this type of rights.
Offshore companies can be used as a holding company where people can manage their all business under one holding structure.
Choosing the right Offshore jurisdiction
The structure of an offshore jurisdiction is important for many reasons. First, it is good for you when you are able to connect with the country easily, certainly through modern and reliable telecommunication lines. The country must have a up-to-date and reliable banking and financial system.
The factor which is very important but commonly overlooked – work ethics and traditions. Some regions are more relaxed in their attitude to work; this may become a critical issue when you need something to be done quickly and accurately. Some countries have historically developed a work culture of diligence, prudence and secrecy, others are less so.
Time zone should also be taken into account: dealing with the jurisdiction on the other side of the globe may frequently make you lose a day while communicating via e-mail or fax, and is certainly more convenient to make calls during your usual business hours.
There is a very significant difference between the ‘safe haven’ of The Emirates and other worldwide ‘tax shelters’ The Emirates and other GCC countries of The Middle East are ‘Zero tax’ jurisdictions by nature and not by design.
Why incorporate an Offshore company in UAE
Since the inception of offshore company formations in early 2003, the UAE has quickly emerged as the business hub of choice in the Middle East region and is proving itself to be well placed to being one of the most dynamic and fastest growing business and International Financial Centers Worldwide.
Given the UAE’s continued stance on ZERO tax’s and duty exemptions, there is little wonder why more and more individuals and International Companies are now choosing the Emirates as, not only their business headquarters, but also in many cases their primary choice of residence too.
In 2003, Jebel Ali Free Zone Authority (JAFZA) Dubai’s foreign ownership Free Trade Zone, became the first location in the UAE to provide offshore company formations. In February 2007, Ras Al Khaimah Investment Authority (RAKIA) and Ras Al Khaimah Free Trade Zone (RAKFTZ) located in the most Northerly region of the Emirates expanded their already thriving Free Zone to include offshore business formations, often known as International Business Companies (IBC’s.) Due to the excellent operational service methods adapted by RAK Offshores, the offshore incorporation division of RAKIA and RAKFTZ, coupled with the clear documentation process and lower incorporation fees, RAK Offshores have stepped into the driving seat of offshore formations within the UAE.
Advantages of Dubai Offshore Company Formation
Setting up an Offshore Company in UAE will benefit, and is particularly useful if you are considering or want to achieve any of the following:
A Dubai Offshore Company portrays a good image to your Clients and suppliers.
There is no public register of shareholders and directors.
A Dubai Offshore Company is quick to incorporate.
Tax-Free economy with no capital gains, company or income tax.
Simple reporting and regulatory requirements.
Suitable for any kind of international business
High degree of privacy for corporate information
Companies may own investments (assets, real estate, cash, shares)
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