What are the differences between an offshore company and a company registered in the UAE FEZ?
The fundamental difference is that offshore companies do not have the right to operate in the UAE, and directors and shareholders of the company cannot obtain a residence visa. Companies registered in one of the free economic zones can carry out almost any activity within the FEZ, but upon registration they must obtain a special license for a specific type of activity. Directors and shareholders of a company, their family members and employees of a company established in the SEZ are eligible to obtain a UAE resident visa, and the company can open a physical office in the UAE.
For companies located in free economic zones of the UAE, there are three main forms of ownership: Foreign Branch (branch of a foreign company); Free Zone Establishment (FZE) or Free Zone Company (FZCO) limited liability company. A Free Zone Establishment (FZE) company is ideal for sole proprietorship because this form of company allows for only one founder. Free Zone Companies may have several founders, individuals or legal entities, including non-residents of the UAE. The amount of the minimum authorized capital and the need to pay it depends on the form of the company and the type of activity (that is, the type of license).
A mandatory condition for doing business in the UAE is that the company has a license for a certain type of activity. A free economic zone license in the UAE gives the right to conduct activities only within one free economic zone and on the international market. To enter the UAE domestic market, you will need to use the services of a sales representative or register a branch.
Despite the fact that there are more than 30 free trade zones in the UAE, a business owner should carefully consider all options for registering a company in the UAE. After all, each of the free zones is suitable only for a certain type of activity.
For example, the free economic zones of the Emirate of Dubai are the most prestigious, expensive and conservative zones. Registration of a company in such SEZ obliges you to rent a real office. Dubai Airport Free Zone (FEZ at Dubai Airport) is suitable for companies involved in logistics, aircargo and trade in high-value products that require quick customs clearance and support.
For companies providing IT services, engineering or services in the field of mass media, design, medicine and education, it will be interesting to register a company in the TECOM Investments or Dubai Silicon Oasis free zone.
For trading companies, the most profitable solution would be registration in the Dubai Multi Commodities Center free zone with the ability to obtain all types of trade licenses, including for precious metals and stones.
FEZ Dubai International Financial Center is a prestigious financial center in the emirate of Dubai, where your company can obtain a license for banking, financial, and insurance activities, as well as asset management.
If it is important for your business to combine the prestige of being located in the capital of the UAE with the possibility of using commercial real estate of any type, then you should pay attention to the emirate of Abu Dhabi. FEZ Masdar City Free Zone is focused on services in various sectors of the economy, and the legislation allows you to quickly register a company and obtain a resident visa. The SEZ at Abu Dhabi Airport - Abu Dhabi Airport Business City is ideal for aircargo logistics and customs services.
If you do not need to rent a separate office in the UAE, pay attention to the free zones located in the northern Emirates. One of the most inexpensive SEZs, RAK Free Trade Zone (Emirate of Ras Al Khaimah), is suitable for business in the field of trade and services. The SEZ in the emirate of Ajman - Ajman Free Zone - is extremely beneficial not only for trading companies, but also for companies operating in the field of production and logistics. Along with low tariffs, this SEZ has a successful logistics network, strategically located at the entrance to the Persian Gulf.
The Emirate of Fujairah and the Fujairah Free Zone offer company registration with a virtual office for sales and consulting agents.
There is also a special type of company that can be registered in some free economic zones of the UAE - this is
IBC company (International Business Company) with all the advantages of a classic offshore.
The activities of IBC companies are not subject to licensing; the director and shareholder of the company can be either an individual or a legal entity, a resident of any country. There are also no minimum authorized capital requirements, which greatly simplifies the task of registering a company. Such companies are not required to submit financial statements, and the company’s accounting documentation is stored in any place at the discretion of the company director. Along with the visible advantages of an IBC company, its possibilities from the point of view of taxes and practical activities are interesting.
Establishing an IBC company in the UAE allows you to receive full exemption from corporate and income taxes, 100% repatriation of capital and profits, and there are no capital gains taxes, income taxes and value added taxes. In addition to the obvious advantages in the field of taxation, an IBC company registered in the UAE will open up the following opportunities for your business:
Absolute confidentiality and asset protection (100% foreign ownership)
Access to global markets and the opportunity to work on behalf of an international company
Opening a bank account in one of the UAE banks (which is very interesting from the point of view of maintaining an account with the lowest possible tariffs)
Possibility of owning real estate in the UAE
Denomination of the company's authorized capital
Regardless of what form of company you choose, business in the UAE will be most profitable for you if you are engaged in the following types of activities:
General trade or trade in specialized goods, import-export operations
Consulting, business services and professional services provided internationally
Shipping and shipping company management
Real estate ownership, purchase and sale of real estate, retail
Ownership of assets and corporate rights (as a holding company)
We will be happy to create alternative opportunities for you to achieve maximum profits with the help of an international business company within the framework of a well-created tax structure.
