Traditionally, the Cayman Islands and the British Virgin Islands have been hot favourites for offshore company formation. So much that four out of every ten offshore companies are incorporated in the British Virgin Islands. It is not hard to see why – they offer a high degree of confidentiality as well as zero taxes on personal income. There is also no capital gains tax or corporate tax in the British Virgin Islands and the Cayman Islands, making them very attractive destinations for offshore companies.
The effort involves 11 local and federal agencies in the United Arab Emirates, including the UAE Ministry of Finance, the Central Bank of the United Arab Emirates, the Khalifa Fund for Enterprise Development, and the Mohammed bin Rashid Establishment for SME Development. It will also involve the participation of the Korea Development Institute, the Korea Institute of Government Procurement, Hanyang University, and other South Korean institutions.
The problem is that both the British Virgin Islands and the Cayman Islands are classified as Country/Jurisdiction of Primary Concern with respect to Money Laundering and Financial Crimes by the US Department of State. What that means is that you run the risk of being associated with a place that has a reputation for money laundering. This kind of reputation can’t be good for business, were you to set up your company in either the Cayman Islands or the British Virgin Islands.
Another possible destination for offshore company setup is Mauritius. However, there is a tax of 10% on income generated in the country if it is below MUR 650,000(approximately USD 14,286) or 15% if it falls above this threshold limit.
The United Arab Emirates offers the best destination for offshore companies. There are two Company Registries that offer 100% confidentiality and exemption from all taxes and business fees. One of them is the Ras Al Khaimah International Corporate Centre, which is otherwise known as RAK Offshore and located about an hour from Dubai. The other Company Registry is the Jebel Ali Free Zone, which is only 35 minutes from Dubai.
There are taxes on personal income in the United Arab Emirates. There is also no short-term capital gains tax or long-term capital gains tax anywhere in the United Arab Emirates. There are no export or import duties whatsoever, and Value Added Tax does not come into play when doing business with clients located in free zones. Companies located in free zones are officially exempt from the 9% corporate tax that applies to onshore companies with profits more than AED 375,000 (slightly more than USD 100,000).
The UAE Dirham is also pegged to the US Dollar at the rate of 1 USD = 3.67 AED. This means that you will never take a hit if you were in the business of exports, imports or anything that has to do with payment in USD. The United Arab Emirates is ranked 16th in the world when it comes to ease of doing business, according to data compiled by the World Bank. The IMD World Competitiveness Rankings also rates the United Arab Emirates as one of the top five economies in the world.
If you would like to know more about how you can open your offshore company in Dubai, please get in touch in us. We are New Horizons Business Consultants, a leading provider of business setup services in Dubai, United Arab Emirates. We are led by Francesca Bouwman, who has years of experience in International Business Advisory and fluently speaks several European languages. For more information, please call us at +971 58 500 8643 or email us at [email protected]