The United Arab Emirates continues to be one of the most business-friendly countries in the world. Due to this reason, many entrepreneurs and organizations are still choosing to establish their ventures here.
Establishing an offshore company here is another popular option among foreign entrepreneurs. With this business set-up, you can benefit from fewer or lower tax liabilities, low incorporation fees, and better asset protection.
With an offshore company, you can also start looking for and securing opportunities that you can use to your advantage when you decide to open a business in the UAE.
Once you have an established offshore corporation, you can open and hold bank accounts, enter into legal agreements, and hold digital and physical assets.
An Overview of Setting Up an Offshore Company in the UAE
The key to reaping the benefits of having an offshore business is going through the set-up successfully.
Having an idea of the entire process and knowing some useful tips can greatly help as you go through each step.
Trusted consultants from a business solutions provider share below an overview of the steps involved in offshore company formation in UAE, plus some tips that can help you breeze through the process:
1.Work with a qualified offshore company registration agent.
Whether you are familiar with the ins and outs of the UAE’s business scene or not, you will benefit from working with a consultant that will assist you from the start to the end of the whole offshore company formation process.
Trained consultants can give you all the information you need to complete all the documents and requirements required to establish your offshore business.
They can also help you make the hard decisions, such as selecting which jurisdiction to set up your business in and which type of company structure to go with.
Also, business solution providers can help you with other steps, such as opening a bank account, and provide tax consultancy and filing services if you need them along the way.
When you choose a reputable and seasoned consultant to work with, you will have quick access to any type of assistance you may require.
2. Choose the right jurisdiction.
The UAE has different jurisdictions that allow offshore company formation. They differ in terms of the benefits and freedom they offer to foreign businesses.
Due to this reason, you need to select the best jurisdiction that will meet your specific needs as well as your company’s.
Start by studying the taxation programs and incentive plans the jurisdiction offers since they are the most significant benefits you have to consider.
Think about your preference in terms of the degree of confidentiality and asset protection as well and find out which jurisdiction can provide you these.
Selecting the right jurisdiction is a crucial step in the whole offshore company formation process. Once you have this figured out, you will find it easier to complete the other steps.
3. Select your company structure.
The company structure you choose will also affect the flexibility and freedom of your business operations.
There are three offshore company structures you can select from for your offshore business:
International Business Company or Business Company
This particular structure allows you to engage in international business activities, including trading and investment. It also comes with low tax rates, or is free from local corporate taxes if you do not conduct business within the jurisdiction of the incorporation.
What’s more, it comes with banking and corporation privacy and nominal reporting requirements.
Limited Liability Company or LLC
When you want to register an LLC, your business will not be subject to local corporate tax on assets or income outside of the jurisdiction of the incorporation. You and the other company members, if there are any, are also not personally liable for debts or liabilities of the venture.
LLCs have to meet minimal reporting requirements as well.
Private Limited Company or Pte. Ltd
Pte. Ltd companies offer limited liability to shareholders. Owners can enter into contracts and acquire assets. They are also subject to low tax rates or can even be exempted from taxes on income earned outside.
The downside of opting for this business structure is that there are more reporting requirements than with international business companies.
When selecting your structure, consider the type of business you want to put up and the benefits that you can use.
4. Decide on your company name.
As the leader, selecting your company name is another important decision you have to make since it can affect various elements of your business, including your branding and marketing efforts.
Think about three names that best represent or encompass what you have in mind for your business. Go online to find out if they have already been taken. If they are, make sure you come up with replacements immediately.
You have to submit at least three names for the authorities to choose from. The incorporation body will choose one and approve only one name out of the three.
Also, registration rules mandate the company name to end with “Limited” if you have an LLC structure or “Limited” or “Ltd” if you choose to establish a Pte. Ltd business.
Lastly, keep in mind that your company name must not include certain words, such as:
- Insurance
- Bank
- Building society
- Cooperative
- Fund
- Municipal
- Royal
Your offshore company formation consultant can provide you a list of the words you cannot use.
5. Submit all required documents and draft the MOA and AOA
Once you have completed all the application forms and other requirements, such as the copy of your passport, proof of address, and proof of bank account, you have to submit them to the concerned authorities. They will then review all the documents.
If they are satisfied with your application, they will issue the relevant approval.
Once the approval is obtained, you need to have a Memorandum of Association or MOA and the Articles of Association or AOA drafted in English.
Once the authorities approve the documents, you can officially start your company.
6. Open an offshore bank account
The last step involved in setting up an offshore company in the UAE is opening an offshore bank account.
With this bank account, you will have an easier time carrying out business transactions.
Authorities from your chosen jurisdiction can help you open an offshore company and an offshore bank account in different locations. Your consultant can also provide assistance in this matter.
Setting up an offshore company in the UAE can take up plenty of your time. Get help with the entire process to establish your business here and reap the benefits of having one in this country as soon as possible.
AUTHOR BIO:
Naresh Manchanda is a Partner at MBG Corporate Services, an international organization supporting clients across Asia, Europe and the Middle East and providing sustainable solutions and strategies that drive business transformation. Established in 2002 and headquartered in Singapore, MBG is a 450-strong member team that operates out of Europe, the Middle East and Asia, providing Legal, Risk, M&A, Tax, Strategy, Technology and Audit Services.
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