An offshore and onshore company in the UAE may potentially offer the same products or services. The key difference is where they’re situated. An offshore firm undertakes offshoring activities, whereas an onshore firm is situated in the same country that it conducts its business in.

Each type of enterprise offers its own set of benefits. The set-up process for offshore and onshore companies is also different. Here’s a guide, providing more information about how to incorporate your business, and the advantages of choosing offshore or onshore set-up in the UAE.

Offshore companies in UAE

Contrary to popular belief, establishing an offshore business isn’t restricted to wealthy entrepreneurs. Start-ups can also set themselves up as an offshore firm, which is advantageous if they want to enter the international market right from the start (and pay lower taxes).

The UAE is home to several offshore companies, notably in Ras Al Khaimah (RAK ICC) and Jebel Ali (JAFZA).

The set-up process

To set up the company, you’ll need to:

  1. Compile the required documents. The exact documents required will depend on where you’re incorporating your company. Some documents are mandatory though, which include:
    • Shareholder ID
    • Shareholder passport and Visa
    • A filed application of the company incorporation
    • Proof of your financial status
    • An MOA (Memorandum of Association)
    • An AOA (Articles of Association)
  2. Create a business plan. As with any company set-up, you’ll need to produce a comprehensive business plan. This should feature details like:
    • Your budget
    • Projected finances
    • Liquidity
    • Development plans
  3. Find an CSP (Corporate Service Provider). A CSP makes the set-up process a lot easier. They coordinate the whole set-up, and may offer advice regarding the legalities of incorporation. Note that CSPs charge fees, but these are often regarded as a worthwhile expense for the expertise that they offer. The CSP will also provide the legal requirement of a Registered office address for the company.
  4. Select a business structure. Your business will need to be structured as:
    • A sole proprietorship
    • An LLP (Limited Liability Partnership)
    • An LLC (Limited Liability Company)
    • A Public Shareholding Company
    • A Private Shareholding Company
    • A Joint Venture

What are the benefits of setting up an offshore company in UAE?

There are several advantages to establishing an offshore company in UAE. These include:

  • No corporate tax to pay
  • 100% foreign ownership
  • A speedier incorporation process
  • Lawsuit protection – this protects your possessions if you’re involved in legal proceedings
  • Protected assets – the legal system prevents creditors from seizing assets tied up in the offshore company
  • Privacy – as an offshore enterprise, you can enjoy complete privacy
  • Option to issue multiple classes of shares
  • Just one shareholder and one director required (at a minimum)

UAE offshore companies provide great flexibility. For example, in Jebel Ali Free Zone Authority (JAFZA), offshore businesses are permitted to own real estate in Dubai. It’s worthwhile exploring the free zones in greater depth, to ascertain if they’d be suitable for your enterprise.

Onshore companies in UAE

Onshore companies are able to operate within UAE’s local market; something that’s increasingly appealing to foreign investors. There’s also the option to register the onshore business in one of the free zones, which offers a variety of tax benefits, and permits 100% foreign ownership.

An onshore firm carries out its business in UAE, but can also choose to operate beyond this area. A free zone company is usually tied to the free zone that it’s in, but can trade with any other free zone in the UAE, and with companies globally. The option that’s best for your business depends on a number of different factors.

The set-up process

If you want to set up an onshore company in UAE, you’ll need to do the following:

  1. Register your company. You’ll need to prepare certain documents (many are the same as for an offshore company), then file them. This needs to be carried out through the Dubai Trade Register. In order to complete the registration process successfully, you’ll need to obtain a legal address for your business, and set up a bank account.
  2. Register for tax / VAT. You’ll also need to register for taxation purposes, and obtain a VAT number. Your company will require a specific licence (depending on the nature of your business practices). Be aware that some industries will need special permits or licences.
  3. Establish a business plan. As with an offshore company, you’ll need to put together a business plan, detailing all the essential information about your company.
  4. Seek assistance. Most business-owners seek professional help when establishing their onshore enterprise. Charterhouse Lombard handle the registration process (among other things), to ensure that all the paperwork is in order, and the necessary documents are obtained. We’ll also check that your business is compliant with local laws etc.

Most onshore, non free zone companies are formed as mainland LLCs. Traditionally, this means that the foreign investor holds 49% of the business’s shares, while UAE nationals hold the remaining 51%. 100% foreign ownership was recently approved by the UAE Cabinet in a bid to attract more investment from abroad.  

What are the advantages to setting up an onshore company in UAE?

Setting up an onshore business in UAE offers some terrific benefits. These include:

  • Benefitting from a tax-free economy
  • No capital gains and corporate tax (in Dubai)
  • A straightforward regulatory system
  • Swift registration (usually less than 14 days)
  • Unlimited visa access for all the shareholders
  • Access to a wealth of talent within the local area
  • More financial freedom with a local bank account
  • No personal liability – assets are protected in the event of legal disputes, financial instability etc.
  • Flexible ownership (LLCs) – business-owners can partner with foreign shareholders

Discovering more about offshore / onshore businesses

Charterhouse Lombard specialise in helping onshore and offshore companies in UAE. We’ll make sure that you’re registered quickly, and that all corporate obligations are adhered to. We also offer a range of ongoing management services to help your business to flourish. To learn more, get in touch with us today.