What is an Offshore Company Formation in the UAE?

8 min read

September 8, 2025September 8, 2025

What is an Offshore Company Formation in the UAE?

Introduction

An Offshore Company is a business you register in a foreign country where you don’t actually operate locally in the UAE market. People set up these companies for specific reasons, like protecting assets, managing wealth, or handling international trade. The UAE is a preferred destination for foreign investors looking for a secure, private, and tax-efficient environment to establish an offshore company.

The UAE has rapidly become a global business hub, attracting entrepreneurs and corporations worldwide with its strategic location, strong economy, and straightforward business regulations.

In fact, the UAE saw a 25% increase in company registrations last year, reflecting the country’s growing appeal as a business center. This surge in registrations is closely linked to the UAE’s ability to attract significant Foreign Direct Investment (FDI). The UAE secured AED 167.6B in FDI, positioning itself as the leading FDI destination in both West Asia and the MENA region and accounting for 37% of total FDI inflows.

It’s no surprise that the UAE offers a business-friendly environment that’s hard to beat.

Whether you’re looking to protect your assets, expand your international business, or benefit from the UAE’s tax advantages, this blog will help you make an informed decision and take the right steps towards setting up your offshore company.

Common UAE Offshore Jurisdictions You Can Choose

Several places in the UAE (especially Dubai) offer offshore company setup, and each has its own rules and benefits. The three most common are Ras Al Khaimah (RAK), Jebel Ali Free Zone (JAFZA), and Ajman.

Ras Al Khaimah (RAK) International Corporate Centre (RAK ICC)

RAK ICC is one of the most popular and affordable choices for offshore company formation. It is known for its business-friendly rules, fast setup, and high level of privacy. As of 2025, RAK ICC has registered over 40,000 active companies, making it a leading hub for international business.

The jurisdiction is particularly favored for setting up holding companies, facilitating international trade, and managing assets. Notably, RAK ICC replaced the previous RAKIA and RAK Offshore frameworks, consolidating these structures under one unified authority to streamline the registration process.

Jebel Ali Free Zone (JAFZA) Offshore

JAFZA is a well-known and respected area in Dubai. It offers a premium offshore solution, especially for those with specific business needs. One of the main benefits of setting up a JAFZA offshore company is that it can own property in designated areas of Dubai, as long as it gets approval from the Dubai Land Department. This makes JAFZA a popular choice for property investors and businesses looking to own assets in Dubai.

Ajman Offshore

Ajman, located in the Emirate of Ajman, offers a fast and affordable offshore company setup. Ajman Offshore companies provide complete privacy, asset protection, and 100% foreign ownership. They are a good choice for international trade and as holding companies, especially for people looking for a quick and cheap way to enter the market.

Key Features and Benefits of UAE Offshore Companies

Setting up an offshore company in the UAE offers various advantages, such as:

Confidentiality: No public access to shareholder and director details.
Tax Advantages: Enjoy a zero-tax environment with tax treaties in place.
Asset Protection: A Separate legal entity that protects personal assets.
100% Foreign Ownership: Full control without needing a local partner.
Quick Setup: Fast incorporation, often within 2-4 days.

For a detailed explanation of these benefits, visit our blog on the benefits of offshore companies in Dubai.

Limitations of UAE Offshore Companies

While UAE offshore companies offer numerous benefits, it’s important to be aware of their limitations:

No Local Business Operations: Offshore companies are not permitted to operate within the UAE market. They can only engage in international business activities.
No Residency Visa: Offshore companies do not grant the right to apply for a UAE residency visa for the company owner or employees.
Limited Ability to Own Property: Only companies set up in specific jurisdictions, like JAFZA, can legally own real estate in designated parts of Dubai. Other offshore entities cannot hold property in the UAE.
Cannot Conduct Business with UAE Residents: Offshore companies are restricted from conducting business directly with UAE residents or trading within the UAE, unless they operate through a local distributor or partner.
Limited Scope for Expansion: Offshore companies are typically restricted to specific business activities, primarily focused on international trade and holding assets. They cannot engage in broader business activities within the UAE.

How Can You Set Up an Offshore Company in the UAE?

Forming an offshore company is a simple process, especially when you work with a professional service provider like Safe Ledger. Here’s a general overview of the steps:

Selecting the Jurisdiction

Your first step is to choose the right place, aka a recognized offshore jurisdiction, based on your business goals. For example, if you want to hold property in Dubai, a Jebel Ali offshore company is your only option. If you are looking for a fast, low-cost solution for international trade, RAK ICC or Ajman Offshore might be the best fit.

Documentation and Compliance

You will need to prepare a few documents for the application. For individual shareholders, this usually includes:

Passport copies of all shareholders and directors.
Proof of residence (like a utility bill).
A professional resume (CV).
An original bank reference letter.
A list of suggested company names.
A description of the business activity.

Keep in mind that the exact documents required can vary depending on the offshore jurisdiction. For example, Ajman Offshore may not ask for a bank reference letter, while JAFZA often requires one. A professional agent will help you ensure that all your paperwork is correct and meets the specific requirements of your chosen jurisdiction.

Registration and Licensing

Once your documents are ready, your agent will apply to the right authority. They will check the documents, do a background check, and, once approved, give you a Certificate of Incorporation.

Unlike the setup of mainland or free zone companies, offshore companies do not get a trade license as they can’t do business in the UAE.

Opening Bank Accounts and Maintaining Compliance

After you get your incorporation certificate, you can open a corporate bank account in the UAE. This is a key step, as it gives you access to the country’s strong banking system. Many banks have strict rules, and your professional agent can guide you through the process.

You don’t need to file audited financial statements for most offshore companies, unlike mainland or free zone companies. However, you still need to keep your company’s internal accounting records up to date. It’s important to follow the annual renewal rules to maintain your company’s good standing.

Distinction Between Offshore, Mainland, and Free Zone Companies

Understanding the differences between the three main types of companies in the UAE is important.

Feature	Mainland Company	Free Zone Company	Offshore Company
Business Scope	Can operate anywhere in the UAE, including the local market, and internationally.	Can operate within its specific free zone and internationally. To trade with the mainland, you must use a local distributor.	Strictly for international business. It cannot operate or trade within the UAE.
Corporate Tax	Subject to a 9% corporate tax filing on profits exceeding AED 375,000, which started in June 2023.	Generally exempt from corporate tax on “qualifying income” if they meet certain criteria and maintain a physical presence.	Generally exempt from corporate tax as they are non-resident companies with no in-country operations.
Ownership	In most sectors, you can have 100% foreign ownership, a change from past regulations that required a local partner.	Allows 100% foreign ownership and full repatriation of profits.	Allows 100% foreign ownership.
Physical Presence	Requires a physical office.	Requires a physical office or a flexi-desk.	Does not require a physical office.
Residency Visa	You are eligible to apply for a residency visa for yourself and your employees.	You are eligible to apply for a residency visa for yourself and your employees.	You are not eligible to apply for a residency visa.
Legal Status	A business license is issued by the Department of Economic Development (DED).	A business license is issued by the specific Free Zone Authority.	Receives a Certificate of Incorporation, not a trade license, because it cannot conduct business within the UAE.

Common Uses and Industries for UAE Offshore Companies

Offshore companies are very useful and serve many strategic purposes for global businesses and investors.

Holding Companies and Intellectual Property

A common purpose for an offshore company is as a holding company. You can utilize it to hold shares in other companies, both local and international. This structure provides protection and can be very effective for managing a portfolio of businesses. Offshore companies are also great for managing Intellectual Property (IP) assets, like patents and trademarks. By holding IP in a place with no tax, you can improve your global tax structure.

International Trade and Asset Management

For those involved in international trade, an offshore company can simplify cross-border transactions. You can use it to bill clients, pay suppliers, and manage contracts on a global scale. This can streamline operations and provide a single structure for all your international business dealings. It is a very effective tool for managing and protecting global assets, from real estate to investment portfolios.

Investment and Wealth Management

Wealthy individuals often use offshore companies as a tool for managing their money and for estate planning. The privacy and asset protection features make them ideal for holding private investments. This structure helps ensure a smooth transfer of assets to heirs while protecting the wealth from outside risks.

Conclusion

An offshore company in the UAE offers a powerful and flexible solution for international business, asset protection, and wealth management. With its tax benefits, strong legal system, and commitment to privacy, the UAE has become a top global financial center. While you must choose the right jurisdiction and understand the legal requirements, the process is simple and very efficient.

Whether your goal is to manage international trade or secure your assets for the future, an offshore company in the UAE provides a legitimate and strategic way to reach your goals. By working with a reliable and experienced professional, you can navigate the process with confidence and unlock the full potential of this unique business structure.

Frequently Asked Questions

Q-1: Can I get a residency visa with an offshore company in the UAE?

No, an offshore company does not grant eligibility for a residency visa in the UAE. Offshore companies are non-resident entities, meaning you don’t need to be physically present in the UAE to own one. If you want to obtain a residency visa, you will need to set up a free zone or mainland company.

Q-2: What is the minimum capital needed to start an offshore company?

Most offshore jurisdictions in the UAE, such as RAK ICC and Ajman Offshore, do not have a minimum capital requirement. This makes the setup process affordable and accessible for entrepreneurs. However, some jurisdictions may recommend a nominal amount for administrative purposes.

Q-3: Is an offshore company subject to the new UAE Corporate Tax?

Yes, offshore companies in UAE free zones like RAK ICC or JAFZA are subject to UAE Corporate Tax. They may qualify for a 0% tax rate if they meet these conditions:

Earn qualifying income
Maintain economic substance
Avoid mainland business activities

If these conditions aren’t met, they will be taxed at 9% on profits over AED 375,000. The exemption is not automatic.

Q-4: Can an offshore company open a bank account in the UAE?

Yes, an offshore company can open a corporate bank account in the UAE, though the process can be strict. Banks require thorough documentation and compliance with local regulations. Professional services can assist in navigating the bank’s requirements.

Q-5: How long does it take to set up an offshore company?

The process typically takes 2 to 4 working days to obtain your Certificate of Incorporation, assuming all documents are correct. Offshore companies benefit from a quick and efficient setup process compared to other types of companies in the UAE.

Q-6: Can a UAE offshore company own property?

Yes, but with one specific rule. Only a JAFZA Offshore company can legally own real estate in certain parts of Dubai. Other offshore jurisdictions, like RAK ICC, cannot own property in the UAE.

Q-7: Do I need to be in the UAE to set up an offshore company?

No, you don’t need to be physically present. The setup process can be handled remotely by a licensed agent, who will manage all the paperwork and submissions on your behalf.

Q-8: What's the main difference between an offshore and a free zone company?

An offshore company is for international business only and cannot operate within the UAE. It doesn’t offer residency visas. In contrast, a free zone company can operate within its free zone and internationally, and it allows the owner to apply for a residency visa.

Q-9: Is a UAE offshore company legal and reputable?

Yes, UAE offshore companies operate within a legal framework that complies with international standards. The UAE is committed to maintaining transparency and following global regulations, making offshore companies here both legal and reputable.

Q-10: Do I have to audit my offshore company's accounts every year?

The requirement for an annual audit varies. For example, JAFZA Offshore requires an annual audit, while RAK ICC does not. However, all offshore companies must maintain accurate financial records and comply with local regulations.