Offshore Company in UAE

1. Why The United Arab Emirates

The U.A.E are politically stable, economically strong and socially open minded. An excellent business infrastructure, a zero tax environment and a liberal labor law complete the U.A.E.'s profile for an ideal business location. The U.A.E with its member Emirates Dubai and Abu Dhabi are centrally located in the middle of the Gulf region . Dubai International Airport ranks top in the provision of worldwide direct flight connections. Travel distances (hours of flight) from and to major places of business are within comfortable reach.

-  Europe 6 hours

-  Hong kong 8 hours

-  Bombay 2 hours

2. Legal Framework

When contrasted with other Arab states, such as Saudi Arabia for instance, the UAE has comparatively very liberal laws. The country has a civil law jurisdiction. However, Shari's or Islamic Law is applied to aspects of family law, inheritance and certain criminal acts. A federal court system applies yo all emirates except Dubai and Ras Al Khaimah, which are not fully integrated into the federal judicial system. All emirates have secular courts to rule about criminal, civil, and commercial matters, and religious disputes.

In the UAE the establishment of the civil and criminal courts resulted in diminishing the role of the Sharia Courts. Nevertheless, the competence of the Sharia Courts in some emirates, particularly Abu Dhabi, was substantially expanded later on to include, in addition to matters of personal status, all types of civil and commercial disputes as well as serious criminal offences. Therefore, in addition to the Civil Courts. each of the seven emirates maintains a parallel system of Sharia Courts which are organised and supervised locally.

3. Banking

There are around 50 banks in the U.A.E. international as well as local banks, as HSBC, Citibank, Standard Chartered, Barclay's, Deutsche Bank, EmiratesNBD, National Bank of Abu Dhabi, offering large range of state of the art banking services. The U.A.E. have no restrictions on import and export funds to and from the country.

4. Financial Regulatory Authority

The Central Bank Law establishes five principal categories of institutions in the UAE - commercial banks, investment banks, financial establishments, financial intermediaries, and monetary intermediaries - all of which must be licensed by both the central bank and the local licencing authorities. In addition to these five categories, current practice in the individual Emirates permits the licencing of financial or investment consultants. These consultants are not required to obtain a central Bank Licence.

5. Taxation

5. a. Corporate Tax

There is no corporate taxation with in the UAE except for foreign bank branches, oil and petrochemical companies.

5. b. Personal Tax Rates

There is no personal tax with in the UAE.

5. c. Social Security

There is no social security system with in the UAE. The only mandatory insurance is a medical insurance for the employees of the company.

Research incentives - In case any UAE National is employed in the private sector, then the employer must pay monthly contribution to a pension fund at the rate of 17.5% of the contribution salary (12.5% by the employer and 5% by thew employee).

5. d. Customs & Excise Duties

Under the terms of the Gulf Co-operation Council (GCC) regulations (comprising the member states of UAE, Saudi Arabia, Qatar, Oman, Kuwait and Bahrain), a unified customs tariff of 5% of the c.i.f. value applies to the taxable imports. All existing taxes and duties on imports with in the GCC member states have been abolished. Tobacco and tobacco products are subject to a 100% customs duty, and for alcohol the rate is 50%. There is no Central Excise Duty.

5. e. V.A.T.

There is no VAT in the U.A.E.

5. f. Tax  Incentives

Free Zones - There are more then 25 Free zone with in the U.A.E offering various benefits such as: 

- 100% foreign ownership

- 100% capital and profit repatriation

- no import or export (outside the GCC)

- guarantee of no personal or corporate income tax for 15/50 years (renewable)

- no foreign exchange controls 

- no trade barriers or quotas

- liberal labour laws

Offshore Company - For offshore companies there is no taxation at all. They are not allowed to carry out business activities within the U.A.E.

6. Main Types Of Corporate Forms

Limited Liability Companies (LLC) is the most common form for a local company. Free zone companies are usually Free zone Company (FZCO - two or more shareholders). Since several years some of the emirates allowing the incorporation of Offshore Companies (LTD). The LLC is a legal person, its partners (at least 51% UAE Nationals) are not personally liable for the company or the other partners. The share capital has to amount to a minimum of AED 150,000 depending on the Emirates, each share has to amount to AED 1,000.

       The FZE or FZCO are legal persons with in one of the U.A.E.'s Free zone, shareholders are not liable for the company, the share capital has to amount to minimum of AED 150,000 according to the regulations of the Free zone.

       The LTD is a legal person with in one of the U.A.E.'s Free zones allowing the registration of Offshore Companies, Shareholders are not liable for the company, the share capital has to amount to minimum of AED 10,000 according to the regulations of the Free zone. Shares can have nominal values. Bearer shares are not allowed.

7. Company Incorporation

The LLC legally comes into being with the entry into the corporate register. Next to an application form containing all company-relevant information, signed by all shareholders and attested to by notary, several documents are necessary such as the articles of association. After the notarial attestation are signed, the entry of the LLC in the corporate register takes one to two weeks.

      The FZE or FZCO legally comes into being with the entry into the corporate register. Next to an application form containing all company-relevant information, signed by all shareholders (there is no need for a notarization; for an FZCO the articles of association are necessary). The entry of the FZE or FZCO in the corporate register takes several days.
    The LTD legally comes into being registered with the regulator. The entry of the LTD in the corporate register takes 1 day.

8. Reporting & Auditing

Local Companies have to have the annual financial statement audited and reported to the Government. Most Free zones require an audited financial statement submitted to the Free zone Authority.