An offshore company in the UAE is a company registered in a UAE offshore jurisdiction to hold assets or do business outside the UAE, not to trade inside it. People search for it as “offshore company formation in UAE” or “offshore business setup in Dubai”, and the two are often mixed up with a free zone licence. This guide explains what an offshore company is, what it can and cannot do, how it is taxed today, and when a free zone licence is the better fit.
What an offshore company is
The best known offshore jurisdictions in the UAE are the Ras Al Khaimah International Corporate Centre (RAK ICC) and the offshore regime of the Jebel Ali Free Zone (JAFZA) in Dubai. Commercial guides also list an offshore regime in Ajman; we confirm the current rules with the authority before we advise on any structure.
The key difference from a normal free zone company is the paperwork. A JAFZA offshore company receives a certificate of incorporation, not a trade licence (see the Al Tamimi explanation of JAFZA offshore companies, published in 2015, which describes the legal structure; rules and fees have changed since, so treat it as background). In JAFZA, a registered agent licensed by the authority handles the dealings with the authority on behalf of the shareholders and renews the registration every year (see the JAFZA guide on renewal of an offshore agent).
What an offshore company can do
- Hold shares. It can own shares in other companies, including UAE mainland and free zone companies.
- Do business outside the UAE. It can carry on commercial activity with customers and counterparties abroad.
- Open a bank account. This is possible, but it is the bank’s decision and each bank applies its own checks.
- Pledge shares and raise finance. It can secure loans and other facilities.
- Own certain assets. In JAFZA, an offshore company can acquire freehold property in specific designated areas of Dubai, subject to approval.
RAK ICC describes its own features on its official website: 100% foreign ownership, a common-law framework, a corporate director permitted, unrestricted repatriation of capital, and access to local and international bank accounts. RAK ICC states that its site is general information, so check the current rules with the centre before you rely on them.
What an offshore company cannot do
- Trade inside the UAE. A JAFZA offshore company cannot do business with persons in the UAE.
- Act as an operating company. With no trade licence, it is not a route to renting an office or running day-to-day business from the UAE. For that you need a free zone or mainland licence.
If your plan is to operate in the UAE, read our Ajman Free Zone company setup guide and our comparison of free zones in Ajman, Sharjah and Dubai instead.
Offshore companies and UAE tax
Many older guides still describe offshore companies as tax-free. That is out of date. The federal corporate tax law, Federal Decree-Law No. 47 of 2022, applies to UAE companies and other legal entities incorporated in the UAE, and the Ministry of Finance states that free zone entities are within scope and must register for corporate tax (see the Ministry of Finance corporate tax page). Returns and any tax due are generally due within nine months of the end of the tax period.
- The standard rate is 9% on taxable income above AED 375,000.
- A Qualifying Free Zone Person can pay 0% on qualifying income if it meets every condition in the Federal Tax Authority guidance (see the FTA guide on free zone persons). Being an offshore company does not by itself give you that status.
- Economic substance reporting has been cancelled for financial years ending after 31 December 2022 (Cabinet Decision No. 98 of 2024, announced by the Ministry of Finance on 14 October 2024). Obligations for earlier years remain.
Your tax position depends on where the income comes from, who owns the company and where you live. Ask a tax adviser to confirm it before you form a company.
Offshore company or free zone licence?
An offshore company usually suits a holding structure, an asset-holding or ownership vehicle, or international contracts that do not involve UAE customers. A free zone licence suits a business that needs to operate, with premises, staff and customers in or through the UAE. Many founders start by asking for an offshore company when what they need is a licence, so settle the purpose first.
Typical steps to form an offshore company
- Define the purpose. Who will own the company, what will it hold or do, and where will income arise?
- Choose the jurisdiction. Compare RAK ICC, JAFZA offshore and any other regime against that purpose.
- Appoint the registered agent. JAFZA requires one; other jurisdictions set their own rules.
- Prepare identity and ownership documents. The agent and the authority confirm the exact list for your structure.
- Receive the certificate of incorporation.
- Apply for a bank account. Start early, because banks run their own checks.
- Register for corporate tax and plan the annual compliance.
Common questions
Is an offshore company in the UAE tax-free?
Not automatically. UAE corporate tax applies to UAE-incorporated entities, and the 0% rate is limited to Qualifying Free Zone Persons on qualifying income.
Can an offshore company open a UAE bank account?
It can apply. The bank decides, based on its own policy and checks.
Can an offshore company trade with UAE companies?
Under the JAFZA offshore rules, no: it cannot do business with persons in the UAE. Other jurisdictions have their own rules, so confirm them before you plan contracts.
How much does it cost and how long does it take?
Fees and timelines depend on the jurisdiction, the structure and the agent, and published figures conflict or are out of date. We do not print a price here. Ask for a written quote that lists government fees and agent fees separately.
Talk to us before you choose
Not sure whether an offshore company or a free zone licence fits your plan? Our office is inside the Ajman Free Zone (Building C1). Book a consultation and we will compare the options with you and explain the next steps.
This guide is general information, not legal or tax advice. Rules and fees change, so confirm the current position with the authority and a qualified adviser.
Meena Business Consultancy Services is a cross-border market-entry consultancy based in Ajman Free Zone, UAE. We support company setup, legal, accounting and PRO needs for foreign and regional businesses. Book a consultation to talk through your plan.
