Offshore Company Setup in the UAE: Cost and Tax Rules Explained

What Is an Offshore Company in the UAE?

An offshore company in the UAE is a legal entity incorporated under one of three dedicated offshore regimes (RAK ICC, JAFZA Offshore, or Ajman Offshore) to hold assets, conduct international trade, or act as a holding vehicle, without a physical office or the ability to conduct business directly within the UAE domestic market. Offshore companies are incorporated under the RAK International Corporate Centre (Business Companies) Regulations 2018, the JAFZA Offshore Companies Regulations 2018, and the Ajman Free Zone Offshore Companies Regulations 2014, respectively. Each regime is administered separately and carries its own fee structure, permitted activities, and banking relationships.

Why Businesses and Investors Choose UAE Offshore Structures

• 100% foreign ownership without a local sponsor or service agent
• Confidentiality of shareholder and director information, which is not published on a public register
• A holding structure for international assets, investments, or intellectual property, separate from operating businesses
• Access to multi-currency banking for international transactions
• No requirement for physical office space or UAE-based staff

Corporate Tax Treatment: A Common Misconception Corrected

A frequent assumption is that an offshore company automatically sits outside the UAE Corporate Tax regime because it does not trade within the UAE. This is not accurate. Under Federal Decree-Law No. 47 of 2022, any entity incorporated in the UAE, including a RAK ICC, JAFZA Offshore, or Ajman Offshore company, is classified as a Resident Person for Corporate Tax purposes, regardless of where it is managed or where its income arises. Being a Resident Person does not necessarily mean Corporate Tax is payable. Most offshore holding companies have no UAE-sourced business income and can structure their affairs so that little or no tax is due, and Small Business Relief may apply below the AED 3 million revenue threshold. But the company is still generally required to register with the FTA and assess its filing position each tax period. Treating an offshore company as automatically exempt from any Corporate Tax registration or filing obligation is a planning error that can surface as a compliance gap later.

Choosing Between RAK ICC, JAFZA Offshore, and Ajman Offshore

How to Register an Offshore Company in the UAE

1. Select the offshore jurisdiction and confirm the intended business activities are permitted under that regime
2. Reserve a unique trade name that meets the registrar’s naming conventions
3. Prepare and submit incorporation documents through a registered agent, since offshore companies cannot apply directly without one
4. Obtain the offshore incorporation certificate and supporting constitutional documents
5. Open a corporate bank account, which typically requires additional due diligence given the offshore structure

Formation typically takes five to ten working days once documentation is complete, though bank account opening can take considerably longer depending on the bank’s compliance review.

Offshore vs Free Zone vs Mainland: Comparing the Structures

Also check: Offshore Bank Account Opening in UAE

Cost of Setting Up an Offshore Company

• Formation fees: approximately AED 10,000 to AED 18,000, covering registration, government fees, and registered agent services
• Bank account opening support: approximately AED 3,000 to AED 7,000, varying by bank
• Annual renewal fees: approximately AED 8,000 to AED 15,000, depending on jurisdiction

Offshore companies do not carry visa or employee sponsorship costs, since they are not licensed to employ UAE-based staff directly, but they do carry ongoing registered agent and renewal fees that must be budgeted for every year the structure remains active.

Related: Onshore & Local Bank Account Opening Services

Economic Substance and Tax Residency Considerations

Because an offshore company has no obligation to maintain a physical office or local staff, it generally cannot demonstrate the kind of economic substance in the UAE that would support a UAE Tax Residency Certificate for double taxation treaty purposes. Investors who plan to rely on UAE tax treaty benefits for an operating business should generally use a free zone or mainland entity with genuine UAE substance instead, and reserve the offshore structure for pure holding functions where treaty access is not the objective. Mixing these two goals under a single offshore entity is a common structuring mistake that surfaces only when the entity later needs to prove residency to a foreign tax authority or bank.

Common Mistakes When Setting Up an Offshore Company

• Assuming the structure allows direct UAE trading or invoicing to UAE customers, which offshore regimes do not permit
• Overlooking Corporate Tax registration on the assumption that “offshore” means “tax-exempt with no filing obligation”
• Choosing a jurisdiction based on cost alone without checking whether the target bank accepts that specific offshore regime for account opening
• Failing to maintain the registered agent relationship, which can result in the company falling out of good standing

Frequently Asked Questions

How Farahat & Co. Can Help

Farahat & Co. advises on offshore jurisdiction selection, manages incorporation and registered agent requirements, and supports corporate bank account opening and Corporate Tax registration for offshore structures.

Contact Farahat & Co. today to discuss your offshore company setup requirements.