UAE Offshore Laws
Federal Law No. 8 of 1984, as amended by Federal Law No. 13 of 1988 – the Commercial Companies Law – and its by-laws govern the operations of foreign business. In broad terms the provisions of these regulations are as follows: The Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines seven categories of business organization, which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures. The seven categories of business organization defined by the Law are: General partnership company, Partnership-en-commendam, Joint venture company, Public shareholding company, Private shareholding company, Limited liability company, Share partnership company. By far the most usual form that businessmen and/or corporations prefer is the limited liability company.
Name of the company
UAE offshore companies must use the suffix Limited or Ltd. to denote limited liability. The following words and their associated activities are prohibited: Banking, Insurance and Re-insurance.
UAE offshore company can have minimum one and a maximum of 50 persons whose liability is limited to their shares in the company’s capital. 100% foreign ownership of the company is allowed. There is no public register of shareholders and directors. Shareholders need to visit Jafza and sign the incorporation documents in the presence of the authorized Registered of Jafza. Alternatively a power of attorney, notarized and legalized by UAE Embassy, can be issued to a nominated person who can then sign before Jafza authorized Registered.
The minimum share capital
UAE offshore company can select its own minimum capital. Usually we recommend share capital to be US Dollars 1,000. All shares must be fully paid when allotted. A company may not create different classes of shares. Bearer shares cannot be issued. Presently, joint shareholding is not allowed.
Directors of the company and secretary
A minimum of two directors and one secretary are required and they cannot be bodies corporate. One of the directors can also be a secretary. A register of directors must be held at the Registered Office, but it is not a matter of public record.
Registered office and local agent
UAE offshore company must maintain a local Registered Agent approved by the local authorities and a local Registered Office, which is usually provided by the Registered Agent.
Tax Treatment of Offshore Operations
UAE offshore companies pay no taxes on profit, capital gains or anything else in UAE.
- Corporate Income Tax: No corporate income tax on profits. The exemption is for a period of 15 years with a guarantee of an extension for a further 15 years in the event that corporate income tax is introduced in UAE.
- Withholding Taxes: No withholding taxes.
Taxation of Foreign Employees of Offshore Operations
No personal income tax is deducted from income earned.
UAE offshore company meetings need not be held in UAE.
Audit and financial returns
No annual reports or accounts need to be filed. Accounts must be audited and accounts must be distributed to shareholders (but NOT filed with the authorities). UAE offshore company may retain their accounting records wherever in the world the directors deem appropriate.
An offshore company’s accounting records shall be kept at such place as the directors think fit and shall at all times be open to inspection by the offshore company’s directors and the secretary.
Accounting records shall be preserved by it for 10 years from the date on which they are made.
The directors of every company shall prepare accounts for a period of not more than 18 months beginning on the date the offshore company was incorporated or, if the offshore company has previously prepared a profit and loss account, beginning at the end of the period covered by the most recent account.
The accounts shall be prepared in accordance with generally accepted accounting principles approved by the Registrar and show a true and fair view of the profit or loss of the offshore company for the period and of the state of the offshore company’s affairs at the end of the period and comply with any other requirements of these Regulations.
An offshore company’s accounts shall be approved by the directors and signed on their behalf by one of them.
An offshore company shall appoint auditors who shall examine and report in accordance with these Regulations upon the accounts prepared by the offshore company.
An offshore company shall at each general meeting appoint auditors to hold office from the conclusion of that meeting to the conclusion of the next general meeting.
The directors or (failing the directors) the offshore company in general meeting may, at any time before the first general meeting, appoint auditors who shall hold office to the conclusion of that meeting.
The directors or the offshore company in general meeting may fill any casual vacancy in the office of auditors and fix their remuneration.
An offshore company’s auditors shall make a report to the offshore company’s members on the accounts examined by them. The auditors’ report shall state whether in their opinion the accounts have been properly prepared in accordance with these Regulations and in particular whether a true and fair view is given.