Why you should consider incorporating an onshore or offshore company in the UAE

The United Arab Emirates has positioned itself as the business hub of the Middle East due to its strategic location between the East and West – it is a well-connected, 5-6 hour flight from the major European and Asian capitals – and its more than 40 free-zones governed by liberal economic policies.

Along with that, it has a highly developed infrastructure, with modern logistics and manufacturing facilities, a business-friendly environment, developed and globally-integrated financial sector, and a stable political system.

The UAE has the ninth largest port globally in volume of goods, Jebel Ali, and is the gateway to the Arabian Gulf’s market, which is one of the fastest-growing worldwide.

Settling in one of the free trade zones is certainly an attractive option for businesses engaged in international operations, whatever your economic activity may be. And the case for doing so might be even more compelling when you consider that it is relatively easy to obtain a residence visa through incorporation.

There are also three offshore structures available, as we will see below, with similar benefits to the traditional Caribbean offshore companies, adding its reputation and good press as a solid jurisdiction.

About The UAE

The United Arab Emirates is a former British protectorate and is now a federation of the Middle East, located on the east of the Arabian Peninsula. It borders Oman to the southeast, with the Persian Gulf to the north and Saudi Arabia to the west and south. It is composed of a hybrid monarchy consisting of 7 emirates; Abu Dhabi, Ajman, Dubai, Fujairah, Ras al Khaimah, and Umm al Qaywayn.

It has a population of around 9 million. Its capital is Abu Dhabi, but its most populated and well-known city is Dubai. Arabic and English are the official languages, and its official currency is the United Arab Emirates Dirham (AED), pegged to the US dollar at an exchange rate of 3.67:1.

The Supreme Council, made up of each emirate’s Sheikh, is the highest political decision-making body in the country. That being said, each Emirate retains considerable political, economic and judicial autonomy, with different rules and regulations.

The federation is one of the richest countries in the world, supported by a liberal and open economy with the eighth highest per capita income worldwide, and a considerable annual trade surplus.

Having the seventh largest oil reserves in the world, its economy is clearly dependent on these commodity fluctuations. However in recent years, efforts have been made to diversify its economy, to make it less oil-dependent and to develop sectors such as retail, finance and tourism.

A clear example of this strategy is the establishment of free zones to attract foreign capital to invigorate the private business sector.

This has especially been the case in Dubai, where oil and gas revenues barely represent 3% of its economy. Over the last three decades, Dubai has managed to establish itself as a regional retail hub and a major player in the export market of industrial and manufactured goods, and now possesses the 9th largest port worldwide in terms of volume of goods.

Added to that, it is also the largest financial hub in the region and has been positioned as a top tourist and entertainment destination; it is the site of the highest number of luxurious hotels worldwide, which in turn is the engine of the real estate, infrastructure, and retail sectors.

All that is wrapped up in one of the safest countries, with one of the highest standards of living worldwide.

Onshore companies in Free Zones

Upsides

Incorporating a company into one of the UAE’s more than 40 free zones is a unique opportunity. It allows you to operate with a tax-free company from the territory, which international control and tax authorities do not consider as an offshore haven.

Unlike the rest of UAE, where foreign-ownership is restricted to 49%, in the free zones, this rule does not apply. Foreigners may fully own an entity, which is entitled to trade internationally and within the free zone.

Just how free are these free zones? Pretty free. They offer totally direct, tax-free exemption from corporate tax for most economic activities, the absence of personal income tax and practically no additional costs related to the payment of wages.

There is also free repatriation of capital and profits, free transfer of funds and a full exemption from import and export duties, provided that goods are not sold on the local market.

Free zone companies also benefit from confidentiality. In most free-zones, there is no public register where the names of shareholders and directors are disclosed.

All this combined with a highly developed logistics infrastructure, affordable energy costs and a strategic geographical location for trade in both Europe and Asia.

Incorporated companies also have the ability to access and benefit more than 50 tax treaties.

Most free zones are geared to a specific economic sector. For example, Dubai Healthcare City is a Medical Hub, Dubai Technopark for IT firms, Dubai Financial Center for banks and insurance businesses, or Jebel Ali where most companies registered are involved in cargo ship management. This makes it an ideal business environment for establishing partnerships and optimizing the business development.

The company is considered resident and therefore will need a specific license to operate, according to its economic activity. The most common license types are commercial, e-commerce, service and industrial. The requirements to obtain one vary, but for holding companies, commercial or professional services such as consulting, tend to be quite lax and the process is considerably simple.

Enterprises incorporated into free zones can purchase real estate in designated areas and in government-approved development projects.

After incorporation, it’s relatively easy to obtain a residence visa, both for shareholders, managers, and their families as well as for their employees, which will be explained further later.

Downsides

Unlike traditional offshore companies, the legal requirements for establishing and maintaining such a company are more demanding and the costs of incorporation and maintenance are considerably higher.

Operating directly outside the free zone the company is incorporated in is forbidden; to do so you must hire a local intermediary.

The activities of the company are restricted to the type of license obtained. The company cannot carry out any activity that is not expressly permitted. Doing so may lead to penalties and eventually dissolution. Some activities such as construction, engineering consultancy, recruitment, legal services, security services and real estate agency services, may also be restricted in some free zones. 

Although there is no restriction on nonresidents owning a company, you should appoint a local representative agent to deal with the authorities.

The required share capital is usually high, which varies depending on the area, business form, economic activity or number of shareholders. It can range from AED 50,000 (USD 13,600∼) up to AED 1m (USD 272,500∼) for large production companies. But capital reserves are not normally required, so after formation, it can be invested in the business.

Renting an office is usually required, and must be renewed annually. However, this depends on the area, for example some, such as JAFZA require a minimum office space of 26.88 sq. m., while in others such as Fujairah Creative City, a rented space is not required for certain activities.

In most cases, renting offices or facilities outside the free zone is not allowed.

Some free zones, especially those specialized in a specific economic sector, require the presentation of a business plan and its approval by the free zone’s board of directors.

Regarding accounting, an annual audit requirement is common. Although once again, it depends on the zone. For example, in JAFZA it is mandatory, while in Fujairah Creative City it is not.

It is imperative to ensure, through local advice, that the kind of business you are going to carry out complies with the regulations and laws of the country.

Doing business in the UAE has its peculiarities and you must make sure that your economic activity does not violate any Islamic laws or values. Flag Theory has access to qualified consultants and advisors in UAE who can help you in this and other related regards. Contact us for further information.

Residence Visa

Registering or participating in a UAE company entitles you to apply for a resident visa. The process is relatively simple and part of it can be done online.

Usually, visas are valid for up to 3 years, renewable without limit, as long as you own a company and you visit the country at least once every 180 days. Absence for a longer period may lead to its cancellation.

The visa entitles its holder to reside in any of the 7 states of UAE.

It is not necessary that the company carries out a real commercial activity in the territory, but you must own shares with a value of at least AED 50,000 (USD 13,623∼). It also requires the payment of several fees with a total cost of around AED 3,200 (USD 872∼).

The company may not only sponsor shareholders, but also managers and employees. Once you have obtained the visa, you can sponsor your relatives.

The number of visas for your foreign employees is restricted to the size of the leased office or facility.

After obtaining residency, your dependents may apply for a valid 3-year visa, renewable. You must demonstrate family ties and receive at least AED 4,000 (USD 1,090∼) per month. A man may not apply a visa for his children he is not together with his wife, unless the latter has died.

The residence visa is also available for those who invest at least AED 1m (USD 272,480∼) in real estate of a designated area that’s approved by the Government. In this case, the visa has a validity of 2 years and does not entitle one to apply for a work permit.

Citizens of GCC countries do not require a visa to settle in the UAE.

The registration of the company, the visa application and the respective formalities usually take about 1 month to complete.

There is no permanent residence visa, which means that every three years you must renew the visa.

Getting citizenship, in principle, requires 30 years of residence, or 7 if you are from Qatar, Oman or Bahrain. You will be required to have knowledge of the Arabic language and renounce your previous nationality, among other requirements.

Living or doing business in the UAE can be considerably different from your home country. Keep in mind that Islamic values underpin everything, from their legal systems to working life.

So, the rules for doing business and living in your home country may not apply in the UAE, so you should therefore be prudent and spend some time learning to understand and get used to its culture, traditions and particularities.

Jebel Ali Free Zone (JAFZ)

The JAFZ is in the Emirate of Dubai and is the main trading hub of the Middle East, located around the world’s largest artificial port and the ninth largest in volume of goods.

Although conceived for the distribution of goods throughout the Arabian Gulf, it currently supports the formation of companies from a wide range of activities ranging from commercial, manufacturing, e-commerce or professional services.

Usually, across all UAE free zones, there are two types of companies limited by shares available. The so-called Free Zone Company (FZCo), which is formed by more than one shareholder, and a Free Zone Establishment, formed by a sole shareholder.

FZCo in JAFZ, can be formed by individuals or corporations, up to 50 shareholders.  The minimum paid-in capital required is AED 500,000 (USD 136,239∼) and shares may be denominated in AED or USD.

To form an FZE with a sole shareholder, a deposit of AED 1,000,000 (USD 272,480∼) in share capital is required.

Both entities require a director, a secretary and a manager (can be the shareholder, director or secretary), which can be an individual or corporation and non-resident. The details of the shareholders and directors are not disclosed publicly. A general annual meeting is required.

In JAFZ, a Public Company Limited (PLC) is also available. Formed by at least 2 shareholders, a PLC may invite the public to subscribe its shares and must list its shares in a stock exchange.

A PLC requires two directors, of which one must be a natural person, resident or non-resident. It also requires a secretary, and a manager, who can be the shareholder, director or secretary.

Offshore companies are also available, as shall be seen later.

The other option is to set up a branch, which does not require a minimum capital and will operate under the same name and run the same business of the parent company.

Limited companies should appoint an auditor, and file the audited annual accounts to the relevant authorities. Redomiciling a foreign company to JAFZ is allowed. 

The registration fees of an FZE or FZCo are AED 10,000 (USD 2,725∼) and AED 15,000 (USD 4,087∼), respectively. For a subsidiary the price would be AED 5,500 (USD 1,498∼).

The annual license fees are 5,500 (USD 1,498∼) for industrial or service sectors, from AED 5,500 (USD 1,498∼) to 12,500 (USD 3,406∼) for trading (depending on the number of product lines) and up to AED 30,000 (USD 8,174∼) for general trading (without restrictions).

Shareholders will have to travel to JAFZ to formalize the company’s registration, and the whole process may take about 3 weeks.

The JAFZ FZCos are obliged to rent an establishment or office, with an estimated minimum annual cost of about AED 35,000 (USD 9,537∼).

Ajman Free Zone (AFZ)

Located at the entrance to the Arabian Gulf, in the Emirate of Ajman, the AFZ is strategically located only 12 km from Dubai with easy access to two international airports and four ports. It also benefits from an extensive outdoor connection via road networks with Oman, Bahrain, Qatar, Iran, Kuwait and Europe. In addition, it’s also notable for its easy access to a large workforce with more affordable salaries than in other areas.

It mainly includes companies dedicated to commerce, especially e-commerce, distributors, storage services, but also providers of professional services such as management, marketing and IT consulting. Industrial companies are reserved for GCI nationals, who must own at least 51% of the company’s property.

FZEs (sole shareholder) and FZCos (2 to 5 shareholders) may be formed by individuals or corporations. The minimum paid-in capital required is AED 185,000 (USD 50,408∼). Shares may be denominated in AED or USD. A resident director is required, but a secretary is not. The details of the shareholders and directors are not disclosed publicly. A general annual meeting is required.

Audits are not normally required and there is no registration fee.

Annual license fees are considerably cheaper than those of JAFZ. The trading license fee varies between AED 3,000 (USD 817∼) and 5,000 (USD 1,362∼), depending on the number of product lines. A services license is AED 5,000 (USD 1,362∼), and both industrial and trading licenses without restriction are AED 7,000 (USD 1,907∼).

It is not required to rent a physical office and virtual offices are allowed. Redomiciliation of a foreign company to AFZ is allowed. Registering an AFZ company can be done remotely, and may take from 6 to 8 weeks. It is also possible to register an offshore company in 2-3 days, as we’ll see below.

Hamriyah Free Zone (HFZ)

Located in the Emirate of Sharjah, the HFZ is oriented to industrial activity. It has access to one of the largest cargo centers in the UAE, as well as maritime ports on the East and West coasts with uninterrupted access to the Indian Ocean.

Its geographical location, advanced infrastructure and easy accessibility through land, air and sea have made HFZ one of the most industrially developed free zones. Almost any activity is allowed, as long as it complies with the laws and regulations of the State.

FZEs (sole shareholder) and FZCos (2 to 5 shareholders) may be formed by individual or corporations. The minimum capital requirement of AED 150,000 (USD 40,872∼), must be paid up front. Shares may be denominated in AED or USD. Two directors and two secretaries are required, and one of the directors must be resident. The details of the shareholders and directors are not disclosed publicly. A general annual meeting is required.

Both FZEs and FZCos must appoint an auditor, and file audited accounts annually. They are also required to rent a facility or office within the free zone. Relocating an existing foreign company is allowed.

Companies incorporated in HFZ are subject to a registration fee of AED 9,000 (USD 2,452∼).

Industrial, trading and services licenses are AED 2,750 (USD 749∼) annually. Companies that trade more than 5 products are subject to a trading license fee of AED 12,000 (USD 3,270∼). The entire registration process may take from 6 to 8 weeks.

Ras Al Khaimah Free Zone (RAK FZ)

The RAK FZ is one of the most attractive areas to establish a business in the UAE and one of the fastest growing business hubs. The Emirate of Ras al Khaimah is in the northern part of the country, well connected by express roads,  and approximately 1 hour’s drive from Dubai. One of the biggest advantages of RAK is that business and living costs are some of the most affordable of the country.

The area is comprised of four economic clusters: a business park for offices, an industrial park for heavy industries and warehousing, a technological park for trade and light manufacturing, and the academic area for educational organizations.

In RAK FZ  both FZEs (sole shareholder) and FZCos (2 to 5 shareholders) can be incorporated, and corporate shareholders are allowed. The minimum paid-in capital required is AED 150,000 (USD 40,872∼) for FZEs and AED 250,000 (USD 68,120∼) for FZCos. Shares may be denominated in AED or USD. Two directors and a secretary are required, one of whom must be a natural person. The details of the shareholders and directors are not disclosed publicly. A general annual meeting is also required.

Both FZCos and FZEs must appoint an auditor and file audited accounts annually. Renting a workspace is also required, either an office or facility; its minimum estimated annual cost is about AED 28,500 (USD 7,765∼).

The registration fee is AED 7,000 (USD 1,907∼), while licenses are AED 5,000 (USD 1,362∼) for industrial, AED 3,650 (USD 995∼) for trading (up to 7 product lines), AED 7,500 (USD 2,403∼) for consulting or services, and AED 15,000 (USD 4,087∼) for trading without restrictions.

Shareholders must travel to RAK to formalize the company’s registration, which may take about two weeks.

Fujairah Creative City (FCZ)

Fujairah is located on the east coast of the country, on the Gulf of Oman, two hours from Dubai and three and a half hours from Abu Dhabi. It is well connected by express roads, its international airport and by the port of Fujairah, with access to the main global sea routes.

The free zone is aimed at consulting, internet businesses, holding companies, marketing, media, events, consulting, education, communication, music and entertainment, design and information technology. Licenses are not granted for industrial activities.

The license and incorporation costs are the most affordable of all the free zones of the UAE. In addition, legal establishment and accounting requirements are much more flexible. There is no minimum capital required, making it one of the most attractive options for startups and freelancers.

Both FZEs (sole shareholder) and FZCos (2 to 5 shareholders) are available. They may be formed by corporate or individual shareholders. As previously mentioned, there is no paid-in capital requirement, and shares may be denominated in AED or USD. A Director and a secretary are required, who must be natural persons. The details of the shareholders and directors are not disclosed publicly.

There is no audit requirement for companies incorporated in FCZ, nor is there a requirement for the filing of annual accounts. 

Companies incorporated in this free zone are not required to lease a physical establishment or office.

The registration fee is AED 4,000 (USD 1,089∼), while annual license fees are AED 12,500 (USD 3,406∼) for services and trading, and AED 10,000 (USD 2,725∼) for freelancers.

The registration process can be done remotely and takes about a week, which is the fastest among all free zones.

Other Free Zones

Abu Dhabi

• Abu Dhabi Global Market, an international financial centre located on Al Maryah Island. Non-financial companies such as law firms, accounting firms, holding companies or management offices, among others, may be established under Registration Authority authorization.
• Masdar city, a cleantech cluster near Abu Dhabi International Airport and 17km from downtown. Aimed at the development of energy solutions and clean technologies.
• Abu Dhabi Airport FZ, development of the aviation infrastructure.
• Twofour54, development of Arabic Media and entertainment content.
• Khalifa Industrial Zone, industrial cluster, with high class infrastructure, transportation and logistics in a low operating cost environment.
• Industrial City Abu Dhabi, an industrial cluster comprising heavy and light industries that range from steel and metals to construction material, logistics, food, and oil and gas.

Dubai

• Dubai International Financial Centre, the major financial hub for the Middle East, Africa and South Asia markets.
• Dubai Academic City, a free zone for schools, colleges, and universities.
• Dubai Airport Free Zone; fast and effective cargo clearance services with the presence of international freight forwarders and logistics.
• Dubai Healthcare city, divided into healthcare, with more than 120 medical facilities, medical research and education, and wellness areas.
• Dubai Internet City, an information technology park with the presence of firms such as Microsoft, Facebook, Google, Linkedin, Samsung, IBM, Huawei, Intel and Dell, among others.
• Dubai Media City, a regional hub for media organizations including news agencies, publishing, online media, advertising, production, and broadcast facilities.
• Dubai Multi Commodities Centre, the regional hub for global commodities trade, with access to market infrastructure and physical facilities such as gold and diamond vaults, trading platforms and a range of commodity-backed financial investment tools.
• Dubai Outsource zone, with high-developed infrastructure and an ideal environment for outsourcing companies to set up global or regional hubs servicing the worldwide market.
• Dubai Industrial Park, an industrial cluster aimed at food and beverage, transport equipment and parts, machinery and equipment, mineral products, base metals and chemicals.
• Dubai Design District, aimed at startups, entrepreneurs and established international design, luxury and fashion brands.
• Energy and Environment Park, for clean energy and environmental technology industries.
• Dubai Silicon Oasis, a technology park wholly owned by the Government of Dubai.
• Dubai World Central (Dubai Logistics City), mainly aimed at transportation and logistics businesses.
• Dubai Flower Centre, located at the Dubai International Airport, aims at developing and promoting the floriculture industry.
• Dubai Maritime City, the world’s most comprehensive maritime complex aimed at networking and integration of leasing maritime companies.
• International Media Production Zone, for graphic art, publishing and packaging industries.
• International Humanitarian City, aimed at humanitarian organizations to facilitate aid and development efforts across the globe.
• Dubai Studio City, for broadcast, film, television and music production industries.
• Dubai Biotechnology & Research Park, a global life science industry cluster.

Umm Al Quwain

• Ahmed Bin Rashed Port & Free Zone, targeted to light industrial development.

Sharjah

• Sharjah Airport International Free Zone, covering several industries such as IT services, media, consumer durables and light to medium manufacturing, among others.

Ras al Khaimah

• RAK Maritime City, aimed at the maritime industry for retail, warehousing, general cargo handling, industrial production and manufacturing, tank storage and shipbuilding or repairs.
• RAK Media Free Zone, for businesses conducting publishing licenses, TV and radio broadcasting licenses, production and post-production, media and marketing services licenses, music production and recording activities.

Fujairah

• Fujairah Free Zone, adjacent to the port of Fujairah, covers a wide range of economic activities, industry, services and trading.

Offshore Companies in the UAE

Why incorporate an offshore company in UAE?

There are 3 free zones where you can set up an offshore company in the UAE: RAKICC, JAFZA and AFZ.

Offshore companies are entitled to do business internationally and may not carry out trade or business within UAE, or any free zone.

This includes renting offices or facilities within the territory. However, companies are allowed to have certain types of relationships with residents providing certain professional services such as legal or consulting, and they have access to the banking system and can open corporate bank accounts.

They are generally allowed to carry out activities such as international trade, overseas consulting and advice, international professional services, act as holding company, hold intangible assets, investment, as a joint investment company, intermediary brokers, overseas property ownership, shipping and ship management.

Any activity related to banking, insurance, assurance, reinsurance, fund management, collective investment schemes, trust management or trusteeship, is strictly prohibited.

An offshore company in the UAE is a powerful instrument for asset protection, wealth management, tax planning and optimization, as well as being easy to incorporate, manage and with low accounting requirements.

It goes without saying that these companies are fully exempt from all taxes, and only subject to a license fee, which must be renewed annually.

As they are considered non-residents for tax purposes, they cannot benefit from UAE tax treaties. However, they are usually authorized to own shares of FZ or local companies, or even establish a branch onshore.

In addition, offshore companies incorporated into JAFZ (Dubai) may by exception acquire real estate in designated areas and in government-approved development projects.

JAFZ Non-Resident Company

JAFZ Special Status Non-Resident Companies are companies limited by shares. They have restrictions in doing business within the UAE, except for the negotiation and purchase of real estate in designated areas of Dubai. They can also participate in companies incorporated in the UAE, inside or outside the FZ.

A company can be formed by 1 to 50 shareholders, who can be individuals or corporations. It will require two directors, which must be natural persons and may be nonresidents. A secretary is also required. Details of shareholders and directors are not available to the public. Nominee shareholders and directors are permitted, and annual meetings can be held anywhere.

The company must have a registered address, which will be provided by your registered agent approved by JAFZ. At the time of registration, the shareholders must personally appear to sign the documents. The documents of incorporation can be in English. The re-domiciliation of a foreign company is allowed.

There is no minimum capital requirement. Issued shares may be in any currency and are usually on a non-paid up basis. Bearer shares are not allowed.

JAFZ offshore companies must maintain accounting records, appoint an auditor and present the audited financial statements annually.

Registration fees are AED 10,000 (USD 2,725∼), which must be renewed annually for AED 2,500 (USD 681∼). Registration may take about 1 week.

Upsides:

• Company incorporated in a high reputation jurisdiction, Dubai.
• Allowed to buy real estate in Dubai.

Downsides

• Higher costs of incorporation.
• Annual audit required.
• Two directors required, corporate directors not allowed.
• Physical presence to register the company.

RAK IC

RAK IC is the most popular offshore company in the UAE.

Previously, there were two offshore registrars available in Ras al Khaimah, RAKFTZ and RAKIA, which offered two different offshore structures, RAK IBC and RAK Offshore. In 2016 the two registrars were merged into RAKICC (Ras al Khaimah International Corporate Center).

RAK ICs can be limited companies by shares or by guarantees. They are entitled to do business outside the country and the free zones. As we’ll see later, RAK ICs may open a bank account in the UAE.

The company may be formed by 1 to 50 shareholders or members, who can be individuals or corporations. A single director is required, which may be a corporate or natural person, resident or non-resident, and may be the shareholder / founder. A secretary is also required, and is not required to be a resident. There is no public record that discloses the names of the members, shareholders, directors or beneficiaries. Nominee shareholders and directors are permitted. Annual meetings can be held anywhere.

RAK ICs must have a registered agent approved by RAKIA (RAK Investment Authority), which will provide the required registered address, which may be in Ras al Khaimah or even in Dubai. Shareholders may delegate power of attorney to a representative and therefore will not be required to be personally present at the time of registration. The documents of incorporation can be in English. The transfer of domicile of a foreign company to RAK is allowed.

There is no minimum paid up capital. Shares may be denominated in any currency and may be with or without par value, treasury shares, bonus shares, partly paid or nil paid shares and fractional shares. Bearer shares are not allowed.

RAK international companies must maintain accounting records, but they are not required to file annual reports, nor must they file annual audits of their financial statements.

The annual license fee is AED 2,000 (USD 545∼). The registration process may take 2-3 days.

Upsides

• Most affordable option
• Quick company set up
• Remote company set up
• No audit or filing requirements
• 1 director required, which may be a corporation
• Availability of several types of entities
• Dubai registered address available

Downsides

• Purchase of real estate in UAE or FZ territory not allowed

Ajman Offshore Company

Offshore Companies incorporated in Ajman FZ are companies limited by shares. They may have restrictions on doing business within the UAE.

The company can be formed by 1 to 50 shareholders, who can be individuals or corporations. The appointment of a director is required, who may be a natural or legal person and resident or non-resident. A secretary is required, who must be a resident. The names of the shareholders and directors are not disclosed publicly. Nominee shareholders and directors are admitted. Annual meetings can be held anywhere.

The registered agent is mandatory, which will provide the registered address of the company, which may be in Dubai. Shareholders can form the company remotely, through a legal representative. The documents of incorporation can be in English. Enterprises incorporated abroad may re-domicile in Ajman.

The default amount of share capital is AED 10,000 (USD 2,725∼), which may not be disbursed, and may be in any currency. Shares may be ordinary shares, preferred shares, or deferred shares with or without voting rights. Bearer shares are not allowed.

Ajman’s offshore companies must maintain accounting records and prepare annual financial statements, but there is no filling or audit requirement.

The offshore company registration fee is AED 4,300 (USD 1,171∼), and the annual renewal fee is AED 6,000 (USD 1,634∼).

Upsides

• Fast Company set up
• Remote company set up
• No audit and filing requirements
• 1 director required, who can be corporate
• Dubai registered address available

Downsides

• Higher renewal costs
• Local secretary required
• Purchase of real estate within the UAE not allowed.

Opening a bank account in the UAE

The banking sector in the UAE is considerably solid and capitalized. It is one of the largest of the MENA region, accounting for about 182% of GDP at current prices and 238% of non-oil domestic output of the country.

The UAE contains the main financial hub of the region, the Dubai International Financial Center, and another sizable and expanding financial center, the Abu Dhabi Global Market.

The sector is made up of 23 local banks and 28 foreign banks. Emirates NDB, the National Bank of Abu Dhabi, First Gulf Bank and the Abu Dhabi Commercial Bank are the most prominent entities and jointly bring together more than 50% of the assets.

The National Bank of Abu Dhabi, Abu Dhabi Commercial Bank, Union Bank, and First Gulf Bank, are the most solvent and safest banks. In January 2019, Abu Dhabi Commercial Bank and Union Bank announced plans to merge and acquire Hilal Bank, the result of which would be the creation of the third largest bank in the UAE and the fifth largest in the Gulf Cooperation Council (GCC) in terms of assets. 

Generally, it is not possible to open a bank account in the UAE remotely, so you will have to step on the ground and go personally.

For residence visa holders, it is quite simple to open a personal account and there are usually current, savings or combined accounts available.

For non-residents, the picture changes a bit, but, although it may be somewhat more complicated, there are a number of banks that are willing to open savings accounts and provide debit cards.

The minimum balance required for non-resident accounts varies depending on the bank, but range from AED 10,000 (USD 2,725∼) to AED 300,000 (USD 87,430∼) or even more.

Savings accounts and deposits are available in major world currencies such as USD, EUR, GBP, JPY, CHF, AUD, SGD, HKD, as well as currencies from Gulf countries, among others. You can also open multi-currency accounts.

Apart from a passport with its corresponding entry stamp, the usual required documents are a utility bill with your name and home address, a bank reference letter and / or bank statement and / or an introduction letter from an existing customer. Some banks may ask for a CV with professional references. Residents must also provide a copy of the visa in their passport and resident ID card.

With regard to corporate accounts, both FZ and offshore companies can open corporate accounts easily and quickly if the required documentation is properly submitted. However, some banks only open corporate accounts if the shareholder holds a resident visa.

The required deposit, as well as the minimum ongoing balance, depends on the bank but may range from AED 20,000 (USD 5,000∼) to AED 500,000 (USD 136,232∼). The amounts required for offshore companies are usually higher.

Most banks only issue a debit card linked to the shareholder’s personal account, although some offer it for corporate accounts of FZ companies. Corporate credit cards are only available at some banks and against a fixed deposit.

Conclusions

The UAE free zones definitely provide a myriad of incentives and opportunities for doing business in one of the fastest-growing economic regions worldwide. It’s a place where you can move your business operations and establish a completely tax-free company, while benefiting from the broad list of tax treaties that the country has concluded.

This unique feature, a fully tax-free company with access to tax treaties, is a powerful instrument for structuring your business internationally.

Setting up a FZ company also leads you to a resident visa. Abu Dhabi and Dubai are cosmopolitan, livable cities, with a high quality of life.

Regarding offshore companies, RAK IC is the most flexible and affordable entity. Unless you want to use the company as a vehicle to purchase Dubai real properties, RAK IC will be the preferable option.

This is one of the advantages of offshore companies in the UAE. It offers similar benefits to those of the Caribbean, but without the jurisdiction being continuously placed in the spotlight of the press as a ‘tax haven’, while foreign international banks are usually very willing to work with its entities.

At Flag Theory, we can assist you in setting up your company in the UAE. Contact us for a consultation to find the most suitable UAE company and free zone options according to your business activity, circumstances, needs, and priorities, and let us assist you in  your decision-making process. If you are ready to incorporate, either onshore or offshore, we can carry out the procedure for you, and make it as straightforward and hassle-free as possible.