Setting up an offshore company in RAKICC and JAFZA
Offshore structures have gained prominence for their ability to provide financial and operational advantages, drawing the attention of multinational corporations, high-net-worth individuals, and entrepreneurs. These structures offer opportunities to minimise tax burdens, enhance confidentiality, and access global markets efficiently. Among the sought-after destinations for offshore company establishment in the UAE, Ras Al Khaimah International Corporate Centre (RAKICC) and Jebel Ali Free Zone (JAFZA) both stand out as compelling choices due to their unique combination of regulatory ease, strategic geographic location, and access to a broad network of global trade routes.
RAKICC is renowned for its cost-effectiveness and ease of doing business, offering a simplified setup process, with no physical office requirements, making it ideal for startups and small businesses. JAFZA, on the other hand, is recognised as a hub for international trade, benefiting from its proximity to major shipping routes and Dubai’s robust infrastructure, offering zero percent corporate tax, no currency restrictions, and full profit repatriation.
This article looks at the specific benefits and key differences between RAKICC and JAFZA, providing valuable insights into why these UAE jurisdictions are optimal for different types of businesses seeking to leverage offshore advantages in terms of tax efficiency, asset protection, privacy, and ease of entry into the global market.
An overview of offshore companies
An offshore company is a business entity established in a jurisdiction different from where its primary operations are conducted or where its principals reside. Typically, these companies are formed in regions known for their favourable tax laws, simplified reporting requirements, and enhanced privacy protection. Offshore companies are often utilised for various purposes, including tax minimisation, asset protection, international trade, and investment diversification. They provide a legal means to optimise financial activities, often leading to reduced operational costs and increased efficiency in global transactions. Common users of offshore companies include multinational corporations, high-net-worth individuals, and entrepreneurs who seek to capitalise on the benefits offered by these jurisdictions. These benefits often include lower tax rates, confidentiality of ownership, and ease of international business operations.
Benefits of setting up an offshore company in RAKICC and JAFZA
Tax Advantages: The UAE, including both RAKICC and JAFZA, offers a highly tax-friendly environment for offshore companies. Businesses benefit from exemptions from corporate and income taxes, significantly enhancing profitability and financial efficiency. The absence of personal income tax and the UAE’s extensive double tax treaty network further enhance the financial appeal of establishing an offshore company in these zones.
Asset Protection: The UAE’s legal system provides strong asset protection, a feature shared by both RAKICC and JAFZA. Companies benefit from robust laws that legally separate assets against various risks such as legal claims, global economic fluctuations and other financial risks. Additionally, JAFZA offers the benefit of being part of Dubai’s legal framework, which is well-regarded for its efficacy in dispute resolution and its pro-business stance.
Privacy and Confidentiality: Offshore companies in the UAE, whether in RAKICC or JAFZA, enjoy a high level of privacy and confidentiality, while also adhering to Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. These jurisdictions ensure the non-disclosure of shareholders’ and directors’ names or financial details publicly, thus preserving anonymity for business owners. This balance of discretion in business dealings and ownership, coupled with compliance to AML and KYC standards, makes them particularly attractive for multinational corporations seeking to protect their strategic plans and financial information, high-net-worth individuals who prioritize discretion in their wealth management, and entrepreneurs who wish to maintain the confidentiality of their innovative projects and business models. This environment is also advantageous for those engaged in international trade who require privacy to maintain competitive advantages.
Ease of Doing Business: RAKICC’s streamlined and economical approach to company formation, requiring minimal initial investment and less stringent corporate requirements, makes it an ideal choice for smaller businesses and startups that are looking for a cost-efficient entry point into the global market. JAFZA, on the other hand, tends to be favoured by businesses looking for greater access to international markets and logistics advantages due to its proximity to Jebel Ali Port and Al Maktoum International Airport. This distinction is a key consideration for companies choosing between the two jurisdictions.
Compliance and Ongoing Obligations in JAFZA and RAKICC
Annual Licence Renewal: Both JAFZA and RAKICC require offshore companies to renew their licences annually. This process involves the submission of relevant documents and payment of renewal fees. In JAFZA, the process might also include a brief review of the company’s activities to ensure compliance with free zone regulations, while RAKICC typically focuses on the administrative aspect of renewal.
Financial Reporting Requirements: In both JAFZA and RAKICC, there is a general absence of rigorous financial reporting requirements compared to many other jurisdictions. However, maintaining accurate financial records and preparing annual financial statements is essential for internal governance. While RAKICC offers more relaxed rules allowing for greater operational flexibility, JAFZA mandates the submission of annual financial summaries to maintain transparency and compliance with UAE’s economic substance regulations.
Corporate Governance Obligations: Corporate governance obligations in both JAFZA and RAKICC include holding periodic board meetings and maintaining comprehensive records of company decisions and financial transactions. JAFZA places a slightly greater emphasis on corporate governance, requiring more frequent and detailed reporting to ensure adherence to its free zone rules. In contrast, RAKICC offers more flexibility, focusing primarily on the fundamental aspects of corporate governance, making it a more suitable option for smaller businesses or startups.
Establishing an offshore company in the UAE, particularly in RAKICC or JAFZA, offers significant advantages such as a favourable tax regime, robust asset protection, high levels of privacy and confidentiality, and an ease of doing business. However, it’s crucial to be aware of the differences between these two jurisdictions, especially in terms of compliance obligations, corporate governance, and financial reporting requirements. Entrepreneurs should consider these factors carefully to choose the jurisdiction that best aligns with their business needs. It is also essential to adhere to government guidelines and regulations. Engaging with a knowledgeable corporate service provider experienced in both RAKICC and JAFZA can greatly facilitate the process and ensure the success of the offshore venture.
How can Global Link help?
Global Link has over 16 years’ experience working with local and global businesses, providing bespoke consultancy services for company incorporation and financial services in Dubai and the wider UAE.
Registering an offshore company in RAKICC or JAFZA can present challenges without in-depth knowledge of local laws, regulations, and procedures specific to these jurisdictions. Global Link Corporate Services, as a registered agent for RAK International Companies and JAFZA Offshore Companies, is uniquely positioned to assist you with this process. We provide expert guidance in navigating the complexities of setting up your offshore company, liaising with government departments on your behalf, and ensuring full compliance with legal requirements. Our comprehensive support covers everything from document preparation to obtaining final approvals, streamlining the incorporation process. This allows you to focus on your core business activities with confidence, knowing that your offshore company setup in RAKICC or JAFZA is handled efficiently and in full compliance with UAE laws.
If you need advice on offshore company formation in RAKICC or JAFZA or any other company incorporation, visa or PRO service, please get in touch with us on +971 4 553 9901 or email us at [email protected] and we will be happy to assist you.