Low costs, ease of incorporation and multiple services under one company make offshore setups attractive, says Jitendra Business Consultants
The facility to set up UAE-based offshore companies is attracting new companies and investors because of factors like low costs and multiple services under one company, compared to the more restrictive registration laws of the free zones.
However, UAE Offshore facility and the free zones complement each other and companies can choose between the two, depending on the nature of their business and individual requirements, according to Dubai-based business consultants.
"The concept of setting up offshore company is gaining ground in the UAE," says Jitendra Gianchandani, Managing Partner of Jitendra Business Associates. "Different emirates are competing with each other to offer best offshore setup facilities, and we anticipate this trend will pick up momentum, especially in the post-recession scenario."
Setting up a company through RAK Offshore costs around US$ 600 (AED 2,200) for the first year, without agent fees, and an annual fee of US$ 409 (AED 1,500) subsequently.
At Ras Al Khaimah Investment Authority (RAKIA) offshore office setup costs US$ 1,105 (AED 4,050) for the first year, without agent fees, and US$ 681 (AED 2,500) as annual fees subsequently. RAKIA Offshore formed 3,111 companies between 2007 and 2009, and approx more than 800 companies have been set up so far in the year 2010.
At Jebel Ali Offshore, the setup cost is US$ 2,725 (AED 10,000) for the first year, without agent fees, and subsequently an annual fee of US$ 681 (AED 2,500). Jebel Ali Offshore has incorporated 3,891 companies between 2007 and 2009.
"Many investors who are doing business in UAE and already have visas and even new investors who don't require UAE visa, especially Europeans, are keen to do business in neighboring countries or anywhere in the world. They consider UAE Offshore a good option due to lower costs and multiple services that can be incorporated in one company, compared to limitation on the type of activity imposed in the free zones," said Jitendra Gianchandani.
"UAE offshore is preferred over the foreign offshore, due to ease of the incorporations, less time in the incorporations, tax advantages, better image internationally as UAE is one of the jurisdiction that has substantially implemented the internationally agreed tax standard as set by OECD, efficient banking system and no attestation of the documents required from Ministry of foreign affairs while opening of the bank accounts unlike other foreign offshore centres" said Jitendra Gianchandani
Gianchandani further says UAE Offshore has a distinct edge over virtual offices in free zones, especially for investors who want to do business outside the UAE. In addition, renewal is not compulsory, thus allowing easy closure while free zone deregistration is very complicated and requires time and money.
However, offshore setups have certain limitations as well. For example, visas are not possible and offshore companies cannot do business in the UAE market.
On the other hand, according to Gianchandani, UAE free zones still offer favourable terms, and are attracting small investors and high net worth individuals (HNIs), because of competitive incorporation costs, easy visa facilities and flexi-desk arrangements.
"Corporate and HNIs prefers offshore companies rather than expensive companies with virtual offices in free zones for joint ventures and investment and Holding company as well" said Gianchandani.
"International investors, mainly SMEs and HNIs, finds UAE offshore more practical and preferred choice compared to virtual offices in free zones, which restricts trading and professional services in the one license unlike UAE offshore which allows general trading, services, training, brokerage and any consultancy activity outside UAE
Different emirates are either refining their existing free zones or launching new free zones in a bid to attract small and medium enterprises (SMEs) and HNIs.
The new developments include the Fujairah Creative City Free Zone, which is targeting investors from the media sector. In addition, special incentives have been announced by Ras Al Khaimah Investment Authority (Rakia), RAK Offshore, Dubai Multi Commodities Centre (DMCC) and others.
The Emirate of Fujairah has recently launched Creative City Free Zone to target investors from the Media sector. Here, the cost of incorporating a company is US$ 5,450, with the facility of one visa and a Flexi Desk. Fujairah has also launched the Aviation Free Zone to cater to the aviation industry.
Ras Al Khaimah Investment Authority (Rakia) now offers normal trading license at US$ 3,815, with no visa and single shareholder status. Renewal for the subsequent year costs only US$ 2,180. If up to three visas are taken, the cost is US$ 7,493, with subsequent annual renewal at US$ 4,360.
"So far, in 2010, we have seen dramatic increase in the number of inquiries for business incorporations this year, we have incorporated 100 companies, a number that is almost similar to 2008, before the financial crisis. Our experience is that UAE still remains a preferred destination for investors, compared to other GCC countries, because of factors like transparency, good infrastructure, single-window solution and high comfort level in dealing with the government and free zone officials," added Gianchandani.
Sidebar & Graph Illustration
Comparison cost chart with graph illustrating the UAE offshore v/s UAE free zones(with Virtual office) designed by Jitendra Gianchandani, Chairman and Managing Partner of Jitendra Business Consultants and an expert in Business and Financial Consultancy.
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About Jitendra Business Consultants:
Jitendra Business Consultants is a division of Jitendra Consulting Group, which provides accounts, auditing, business consultancy and trademark and patent registration services to help clients accomplish their business and financial goals of growth, efficiency and profitability. With offices in Dubai, Sharjah, Jebel Ali Free Zone and Mumbai, India, the medium-sized progressive firm has a team of 35 qualified staff including Chartered Accountants, lawyers and MBAs worldwide.
For more information or explanation, kindly contact:
Mr. Jitendra Gianchandani on +971 50 5518860/04 3438022
Email: media@jitendragroup.ae or chairman@jitendragroup.ae
© Press Release 2010
