Establishing an offshore company in Dubai offers several advantages, including tax efficiency, confidentiality, asset protection, and ease of international transactions.
An offshore company in Dubai can operate under specific jurisdictions and cannot conduct business within the UAE, making them primarily useful for international trade, investment holding, and financial structuring.
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This guide provides a detailed breakdown of the legal frameworks, step-by-step incorporation process, and operational considerations for setting up an offshore company in Dubai.
Why set up an offshore company in Dubai
Offshore companies in Dubai are not the same as free zone or mainland companies.
Unlike free zone companies, which can operate within the UAE but only in designated areas, and mainland companies, which require a local partner, offshore entities are primarily used for international business operations and do not require a physical presence in the UAE.
This is important because an offshore company cannot sell goods or services to UAE residents or businesses (with very limited exceptions).
If you intend to operate within the UAE, you’d need a different type of company (free zone or mainland).
Key Benefits of an Offshore Company in Dubai
- 100% Foreign Ownership – No requirement for a local shareholder.
- Zero Taxation – No corporate tax, no VAT, and no income tax for offshore entities.
- Confidentiality – Ownership details are not publicly disclosed.
- Asset Protection – Offshore companies can hold investments, properties (in designated areas), and bank accounts.
- Global Banking Access – Offshore firms can open multi-currency bank accounts in the UAE and abroad.
- No Office Requirement – Unlike free zone companies, offshore entities do not require leased office space.
Choosing the Right Offshore Jurisdiction
Dubai offers two primary jurisdictions for offshore company formation, each governed by specific regulations and authorities.
Jebel Ali Free Zone Authority (JAFZA) Offshore
- The only offshore jurisdiction in Dubai that allows companies to own property in designated areas.
- Allows offshore companies to hold shares in UAE free zone and mainland companies.
- Requires at least one director, one shareholder, and a registered agent.
- Must maintain a registered office address within JAFZA (through an approved agent).
Ras Al Khaimah International Corporate Centre (RAK ICC) Offshore
- A more cost-effective option compared to JAFZA, offering flexible regulations.
- Offshore companies in RAK ICC can hold UAE bank accounts and own property in select areas.
- Also requires one director, one shareholder, and a registered agent.
- No requirement for an annual audit, reducing administrative burden.
Both jurisdictions prohibit offshore companies from conducting business within the UAE mainland and require an approved registered agent to handle the incorporation process.
How to set up an offshore company in Dubai
Step 1: Engage a Registered Agent
The first step in setting up an offshore company in Dubai is to appoint a registered agent, which is a government-approved consultancy firm that facilitates the incorporation process and ensures compliance with local regulations.
Offshore companies in JAFZA and RAK ICC cannot register directly with the authorities and must go through an authorized agent.
The registered agent assists with document preparation, regulatory filings, and corporate bank account opening, making them an essential part of the setup process.
Step 2: Choose a Company Name
The company name must comply with UAE’s naming regulations, which prohibit certain restricted terms such as “bank,” “insurance,” or anything related to government agencies.
The name should accurately reflect the business activities and must not contain offensive, misleading, or restricted words. The UAE regulatory authority has the right to reject names that do not meet these standards.
Step 3: Define Business Activities
An offshore company in Dubai is primarily used for international business operations, asset protection, and wealth management. It cannot conduct direct business within the UAE.
Permitted activities include:
- International trade
- Holding real estate (only JAFZA offshore companies can own property in designated areas of Dubai)
- Investment holding (stocks, bonds, intellectual property rights, etc.)
- Wealth management and estate planning
- Consultancy and advisory services
Offshore companies are also strictly prohibited from engaging in banking, insurance, or financial services unless explicitly authorized by UAE regulators.
Step 4: Determine Ownership Structure
Offshore companies in Dubai require at least one shareholder and one director, with the same individual permitted to hold both roles.
There is no requirement for a UAE resident director, meaning that foreign investors can own 100% of the offshore company without needing a local sponsor.
Some jurisdictions, such as RAK ICC, allow corporate directors, where another company acts as a director instead of an individual.
Step 5: Prepare Required Documents
To register an offshore company, several documents must be submitted to the offshore authority via the registered agent. These include:
- Passport copies of all shareholders and directors.
- Proof of residence (such as utility bills or bank statements from the last three months).
- A bank reference letter for the shareholders to verify their financial standing.
- Memorandum and Articles of Association (MOA & AOA) detailing the company’s business activities, ownership structure, and operational guidelines.
- Duly completed offshore company registration application form.
- Shareholder and director resolutions confirming company formation.
All documents must be notarized and legalized in the applicant’s home country and may require attestation by the UAE Embassy before submission.
Step 6: Submit Application and Pay Fees
Once the documents are completed, the registered agent submits the application for incorporation to the relevant offshore authority, either JAFZA or RAK ICC.
The cost of setting up an offshore company varies between USD 2,500 and USD 6,000, depending on the jurisdiction, type of services required, and the registered agent’s fees.
The processing time for offshore company registration is relatively quick, typically between 3 to 7 business days after submission.
Step 7: Open a Corporate Bank Account
Once the offshore company is officially registered, the next step is to open a corporate bank account in the UAE.
Offshore companies are permitted to hold multi-currency bank accounts in UAE-based international and local banks, facilitating international transactions.
The required documents for bank account opening typically include:
- Certificate of Incorporation of the offshore company.
- Memorandum and Articles of Association (MOA & AOA).
- Shareholder and director details (passport copies and proof of residence).
- Business plan (some banks may require this, depending on the company’s activities).
Some banks require a minimum deposit for offshore accounts, which varies by institution. Account opening can take 2 to 4 weeks, depending on the bank’s due diligence and compliance checks.
Compliance, Legal Considerations & Restrictions
Annual Reporting & Renewals
Offshore companies in Dubai do not require annual audits, except for JAFZA offshore companies, which may need basic financial reporting to remain compliant.
However, all offshore entities must renew their business registration annually, with renewal fees similar to the initial incorporation costs.
Restrictions on Offshore Companies
Dubai’s offshore company structure comes with certain limitations, which must be carefully considered before incorporation:
- Cannot conduct business inside the UAE mainland – Offshore companies are not allowed to trade, manufacture, or provide services within the UAE.
- Cannot lease office space or hire employees in the UAE – Offshore businesses cannot have a physical presence in the UAE, unlike free zone and mainland companies.
- Cannot engage in financial activities – Offshore companies are prohibited from banking, insurance, or financial services unless they obtain a special license.
Legal Considerations for Foreign Investors
Dubai’s offshore company regulations include strict international compliance measures for transparency and financial security.
Some important legal points for foreign investors include:
- No UAE residence visa – Offshore companies do not qualify for UAE residence visas. If visa eligibility is required, a free zone or mainland company should be considered instead.
- Compliance with international financial regulations – Offshore entities must adhere to anti-money laundering (AML) laws and international tax reporting standards such as Common Reporting Standard (CRS) and FATCA (for U.S. citizens).
- No corporate taxes, but home country tax laws apply – While the UAE does not impose corporate, capital gains, or income tax, foreign investors must comply with tax obligations in their country of residence.
Setting up an offshore company in Dubai is a strategic option for international investors, entrepreneurs, and high-net-worth individuals seeking asset protection, tax benefits, and financial privacy.
For more guidance on setting up an offshore company in Dubai, it is recommended to speak to an expat financial advisor.
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