Due to the new directive by the European Union, which requests all financial institutions located in the European Union member states to declare tax and bank information on their customers to the related tax authorities, Dubai is a better option to incorporate your offshore company in.
Despite that European Union’s new directive only affects residents in European Union member states, several banks located in tax havens including Jersey, Guernsey, the Isle of Man, the British Virgin Islands, the Cayman Islands, Liechtenstein, Switzerland, San Marino, and Monaco has also decided to disclose their customer’s information. As Dubai is well-known for its secure and tax-free jurisdiction for company incorporation and international banking, it is becoming more popular among the international business and high net worth international investors community.
The advantages of forming an offshore company in Dubai are:
- No taxes and no tax departments
- You only have to pay taxes if you are opening an oil producing company or a foreign bank branch
- There is no need file any accounts
- Dubai has not signed any agreements to exchange information on taxation with other countries
- Records for Directors are shareholders are held in private because there is no public register
- Very flexible and confidential banking system that is designed to fulfil the requirements of high net worth international investors
- The confidential information of investors are protected through strong regulations
Despite the great advantages of forming an offshore company in Dubai, there are also some disadvantages. Some of the disadvantages are:
- An offshore company that is incorporated in Dubai is not allowed to trade within the United Arab Emirates (UAE)
- An offshore Dubai company cannot rent a place to operate its business so the company needs to purchase a property to do so
Type of Company
As an International Business Company (IBC), the company is not allowed to participate in any trades within the United Arab Emirates as mentioned above. International Business Companies (IBCs) are mainly incorporated for conducting business activities like offshore banking, doing international trades, to provide professional services, and as an asset protection.
Name and Company Activities
An IBC is not allowed to name its company name with words such as BANKING, INSURANCE, and REINSURANCE. Similarly, the company is not allowed to operate such business activities. Additionally, the name of the company must have LTD at the back of it.
An IBC has to solicit the services of a local registered agent, which has to be approved by the local authorities and must have a locally registered office.
As mentioned above in the advantages, there is no need to pay any type of taxes including corporate tax, personal tax, capital gains tax, or value added tax in Dubai unless you are operating an oil producing company or a branch of a foreign bank.
While Annual Report is not required, the company’s account must still be audited and distributed to the shareholders. There is no need to file them and these records can be retained whenever the Directors choose to do so.
List of Double Taxation Avoidance Agreements
UAE has agreements on double taxation avoidance with the following countries:
- Egypt, Algeria, Yemen, Tunisia, Morocco, Sudan, Syria, Lebanon, Mozambique, Pakistan, India, Sri Lanka, Philippine, Korea, Singapore, Indonesia, Thailand, Malaysia, China, New Zealand, Ukraine, Belarus, The Netherlands, Bulgaria, Turkmenistan, Armenia, Tajikistan, Mongolia, Azerbaijan, Austria, Poland, Germany, Finland, Italy, Czech, France, Belgium, Romania, Turkey, Luxemburg, Spain, Malta, Bosnia and Herzegovina, Seychelles, Mauritius, Canada, and Uzbekistan
Shareholders and Directors
A minimum of one Director and shareholder is required for the incorporation of the offshore company. There is no need to register them publicly but the registered local agent must keep a register of the Directors at the local registered agent office.
Similar to above, a minimum of one Director is required but Corporate Directors are also allowed.
The minimum capital must be determined by the shareholders but a minimum capital amount of 1000 United Arab Emirates Dirham (AED) to start things off with, is recommended. The related documents can also be notarized by an N, Notary Public Solicitor or the Ministry of Foreign Affairs in applicant’s home country can legalize and verify the documents. After that, the documents must be stamped by UAE or Arab Embassy.
The required documents for forming an offshore company in Dubai are:
- Passport copy that is notarized by Notary Public Solicitor
- 2 original utility bills and telephones that are not older than 3 months to show proof of residence
- The original bank reference letter in English
- The original bank reference letter
- 2 to 3 suggested names for the name of the company
- Payment to EURO COMMERCE LLC bank account
The bank reference letter in English must be written by the bank and sent to the following address:
Ras Al Khaimah Investment Authority
PO BOX 31291
Ras AL Khaimah
Bank Account Required Documents
In order to open a bank account in Dubai, you have to provide the following documents:
- A passport copy that is verified by the Barclays Bank
- Latest last 6 months bank statements and you might also have to download these documents in front of the Barclays Bank employee so that they can confirm that the documents are genuine copies of the original and they will then sign and certify each of the bank statements
- Bank forms that are certified and stamped by Barclays Bank employee or agent
- A minimum of 25000 United Arab Emirates Dirham is required in the bank account
- Applicant can also apply for a debit card after the approval
The additional fees for forming an offshore company in Dubai are:
- Incorporation: 2500 British Pounds
- Annual Renewal: 1500 British Pounds
- Nominee Shareholder: 1500 British Pounds on annual basis
- Nominee Director: 750 British Pounds on annual basis
- Opening of Bank Account: 700 British Pounds
- Power Of Attorney: 400 British Pounds
- Certificate Of Incumbency: 400 British Pounds
It is also worth mentioning that apostil is not possible in Dubai and the certification is mainly done by the consulate in the country that you would like to produce your document to.