Offshore & Onshore Companies in Dubai, UAE

For the owner of an onshore or offshore company in Dubai, UAE, there is a wide array of business opportunities available. First of all, it is worth paying attention to such an aspect as effective tax planning and tax payments optimization. Let’s take a closer look at the opportunities and benefits that onshore and offshore legal entities in United Arab Emirates provide. We also enlighten on how to utilize your company in United Arab Emirates with the maximum efficiency and profitability and also what offshore scheme are available when building your business.

Trade schemes used for products and services export and import presupposes the use of onshore or offshore companies. The products are purchased by a given company and then sold to the end customer by such company. The income received in a course of such trading operations over such solution is attributed to your company in Dubai, UAE.

The use of such trade schemes for onshore and offshore companies in United Arab Emirates enables effective tax planning. When the contract on purchasing of some certain goods is signed by an onshore company, VAT is not applicable. In order to enable VAT return in other country, an onshore company operating in the United Arab Emirates has the option to get all the necessary certification documents that prove company’s tax residency as the country’s inland residing company.

There is one more widespread scheme for working in onshore and offshore zones – onshore or offshore company in Dubai, UAE can be included into the trade scheme as an intermediary who gets a fixed percentage from the overall income from the contract.

In addition, onshore or offshore company in the Emirates can be used as a management / head office company which enables centralized management over the group’s commercial activities or assets management of the companies within the group.

Onshore company has the right to buy commercial properties in the territory of United Arab Emirates, or lease such for its own use. The office lease, hiring qualified employees locally, management of the company from UAE – all this can be done without any tax consequences for the company in UAE. When taking personnel you don’t necessarily have to hire local employees as you have the option of bringing personnel from abroad whereby getting work visas for your own employees does not pose a problem.

Manufacturing solutions / schemes – these solutions are possible only through onshore companies in Dubai, UAE, as offshore companies have certain limitations – they can do business only outside of the country. Onshore company can not only open a real office with staff in the UAE, but can also open, for example, a real manufacturing company. In this case, manufacturing can cover, for example, only a part of manufacturing processes, or be the full manufacturing of some components or ready-made products. Such real working companies in Free Trade Zones of UAE are not subjected to corporate taxes in UAE. The use of a company in such a work scheme is a lucrative solution, especially when we also take into consideration inexpensive workforce and highly competitive energy resources expenses.

The scheme can also work a bit differently - when a UAE company will not manufacture products itself, but import products to the territory of one of Free Trade Zones and will give them to already available factory in the country for its further processing and sale to an end consumer. When implementing this offshore scheme, all the income received in Dubai, UAE can also be fully attributed to the company in Emirates with no requirement to pay taxes in UAE.

Offshore Scheme Types

There is a number of other offshore schemes that are suitable for working in various business industries – logistics, transportation services, service industries, consulting, as holders of bank accounts and foreign assets, etc.

At the same time, we would like to clearly underline that offshore schemes need to be distinguished into two fundamentally different options:

First – the use of regular offshore companies solely for tax optimization. Here it is important to say that the use of such companies is becoming more and more troublesome due to the tax law changes in a vast number of countries.

Second – requires higher expenses, but has a clear grounding – the work is done through foreign companies that offer reduced taxes and are often called offshore, but are called so only because they are located outside of the territory of the company’s main activity, and, in fact, they are considered to be fully-functional onshore companies.

The main difference when working with various offshore schemes through United Arab Emirates is the fact that in UAE both offshore and onshore companies within Free Trade Zones are not subjected to taxes in UAE.

In comparison with offshore, onshore companies are considered to be much more stable solution and also offer a lot of additional opportunities, including the fact that company’s shareholders and their family members have the option of getting residency visas in UAE over such companies.

Should you have any questions regarding offshore or onshore company registration in Dubai, UAE, – send us e-mail or give us a call and we would be pleased to answer your questions.