Dubai is one of the jurisdiction in the world which offers flexibility in terms of company structures for business setup in Dubai. Two of the main structures that a Dubai company usually prefers if it opts for 100% foreign ownership is Free zone and Offshore.
Free zone companies in Dubai offer 100% ownership and also offers flexibility in terms of activities, like commercial, services and industrial activity. They also offer various types of office and warehousing facility depending on the clients requirements.
Free zone company can also offer residence visas in Dubai for the shareholder/ directors, investors and employees. Free zone companies in Dubai can trade locally as well as internationally.
These are also considered as resident company and hence can benefit of the Double taxation treaty (DTAA) of UAE with many countries.
A free zone company in Dubai is subject to local trade laws and also VAT and accounting system. When a free zone company is attached with a resident visa it makes the bank account opening process smoother.
Offshore companies are also very popular in the UAE where they are usually used for International trade, services or as Special Purpose Vehicle (SPV). Offshore companies in Dubai cannot trade locally and hence do not fall under the VAT laws. They are not required to maintain any books or auditing records.
Offshore companies are considered as non-resident and hence cannot benefit from the DTAA. An offshore company cannot also issue any residence visa in the UAE. Banks usually require more due diligence and compliance when it comes to opening accounts for these companies and takes longer than a free zone structure. Offshore companies won’t be able to rent any office or warehouse facilities in the UAE.
A combination between a Free zone and using the Offshore as a Special Purpose Vehicle (SPV) or holding firm would be a good way to structure an incorporation as offshore and can have a Choice of law (common law, civil law or any jurisdiction of your choice). Hence changing the ownership from a Civil Law (Free zone) to Common Law (offshore).
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