RAK Freezone or RAK Offshore?
When investors and entrepreneurs choose the UAE as the best place for business, a key question follows.
Should I set up in a Free Trade Zone or offshore?
Which structure is best for my business type?
It is important to know that offshore companies in the United Arab Emirates cannot do business in the UAE.
If you want to trade in the UAE, an offshore company will not work.
However, an offshore company can own real estate in the UAE, if the local authority approves it.
It can also act as a holding company.
The restrictions placed on Offshore Companies are:
- Offshore companies cannot carry out activities in the UAE.
- Offshore companies cannot conduct banking business.
- Offshore companies cannot operate as insurance or reinsurance companies.
- Offshore companies cannot act as insurance agents or insurance brokers.
- Offshore companies cannot conduct any business restricted by the relevant authority.
- This includes restrictions under the regulations where the offshore company is established.
The RAK Investment Authority (RAKIA) launched the International Business Company concept in January 2007.
Since then, it has become a top offshore destination worldwide.
RAK Offshore companies are exempt from all corporate and income taxes.
They are ideal for international business without a physical presence.
They are also not meant for active business in the UAE.
RAK Free Trade Zone Entity
The RAK free trade zone entity is a cost-effective investment destination. It helps you maintain an office or warehouse in the UAE. A free trade zone is a special area in RAK. Normal trade barriers, like taxes, tariffs, and quotas, are removed. Bureaucratic requirements are also reduced. This helps attract new businesses and foreign investment.
With free zone companies, you can use over 50 UAE double taxation agreements. You can also get an investor visa or residency. Free Trade Zone companies are tax exempted for up to 50 years.
Benefits of Free Trade Zone Companies
In many cases, a company with substance and actual presence is required for international tax optimization.
A Free Trade Zone company offers full tax exemption and the benefits of an active local community. For example, the authorities will issue a lease for the company’s office or a shared desk. This will confirm the company’s actual location.
A simple domicile or the address of a “Registered Office” will often not suffice nowadays. With an active company in the free trade zone, it is also much easier to open a business account in Dubai.
In addition, the company founder and employees may obtain residence permits. These permits grant residency and do not require a minimum stay.
By starting a company and getting a residence permit, you may qualify for a full tax exemption. This may apply to you and your company.
For more information, and if you have any questions about “RAK Freezone or RAK Offshore,” contact us. You can also read our fact sheet for more details.
