However, there are a few differences in the company structure, company setup procedures, and nature of business operations for Free Zones and the Offshore jurisdictions in UAE.

What are the Advantages of a Free Zone Company?

The Free Zone company has many business advantages when compared to Offshore companies. The investor can easily setup a Free Zone company in UAE with the help of an experienced business consultant.

A Free Zone company can take an office space in the Free Zone if necessary and coordinate the business operations. The Free Zone company is eligible to can hire employees depending on the visa quota availability.

Free Zones are a preferred investment destination for foreign investors due to the 100% foreign ownership for the company. The investor can also repatriate 100% of the business profits and capital to the home country.

There is no income tax and certain Free Zones in UAE are VAT exempted. The business license in UAE Free Zones starts at AED 11,500 for zero visa quota to up to 6 visa quotas and more.

Free Zone Company – Key Highlights

The Free Zone Company is an onshore company governed by the respective Free Zone jurisdiction and eligible to apply for a UAE residence visa, hire employees, set up an office, open a corporate bank account, buy property, sponsor employee & investor visa, etc.

The Free Zones offer customized office spaces (Flexi-desk, shared office, furnished office -12 sq.m, 25sq.m, 50 sq.m, office + warehouse) and a host of other business benefits for the investors.

The company formation in Free Zones is easy with minimal documentation. However, it becomes quite confusing for the investors to choose the right business activity and Free Zone company package.

Also, depending on the nature of the business activity, it requires a few approvals from the Free Zone authorities and other government authorities in the UAE. It is best advisable for the investor to get the assistance of an expert Business Consultant to carry out the process of the company set up in the Free Zones of UAE.

Top Four Free Zones to explore in UAE

• Dubai Airport Free Zone
• Dubai Silicon Oasis – IFZA
• Sharjah Media City
• Sharjah Publishing City

What is an Offshore Company in UAE?

Offshore company in UAE is a type of business entity that is setup with the UAE offshore jurisdictions. In UAE there are mainly three offshore jurisdictions – JAFZA, RAKICC, and Ajman Offshore.

Offshore Company in UAE – Key Highlights

Offshore companies in UAE are governed by the respective Offshore jurisdictions and are non-resident companies. An offshore company is not eligible for applying UAE residence visa for the investors or the employees.

Also, the Offshore company cannot trade or involve in any trade operations with the mainland of UAE. Offshore companies are aimed at facilitating global trade only and they fall out of the UAE VAT regime and other local company governance.

Companies registered with the RAKICC Offshore have the provision to purchase a property in the Free Hold area in Dubai under the company name. 

Offshore Company Formation in UAE – Key Business Benefits

1. Tax Advantage

Offshore Companies do not fall into the tax regime of any business jurisdiction or country. They enjoy Zero taxation for the revenue generated.

Zero taxation for offshore companies is one of the major driving factors for global investors to choose offshore business.

2. Business Anonymity

One of the key reasons global investors prefer to register an offshore entity is to keep their ownership and assets invested confidentially. There is no requirement for keeping public records for an offshore company.

However, with the new law of global taxation, economic substance regulation filings, anti-money laundering, etc; the anonymity of offshore companies is subject to respective authorities’ inquiry. The company documents, transactions, and other trade details will have to be shared upon request by the Government authorities.

3. Ease of Formation and Low Maintenance Cost

The steps involved in setting up an offshore company are relatively straightforward with minimum documentation. It just takes 2 working days in UAE to complete the process of the offshore company registration. Offshore allows remote company registration without the presence of the shareholder (Ajman & RAKICC).

Also, the company is not eligible to open a physical office in UAE nor apply for an employee residence visa. The maintenance cost of an offshore company is relatively lower than an onshore company.

4. Access to Bank Accounts

Offshore companies registered in RAKICC, UAE are eligible to open a bank account in UAE and other global business locations. Individuals can protect their assets by opening a holding company and moving all the assets under the company name.

Also, by opening a corporate bank account in UAE the offshore company can handle all the business transactions via the bank account and successfully run the business.

To know more about the difference between Free Zone, Mainland, and Offshore Companies in UAE, talk to our expert team right away!

Contact Us: Aurion Business Consultants

The post Free Zones vs. Offshore Companies in UAE – Key Differences appeared first on AURION.

There is growing market confidence due to the launch of the Stimulus package initiated by the UAE Government and Central Bank.

Also, with the availability of Vaccines to curb the spread of the Pandemic, the business scenario in UAE is showing a positive outlook in 2021.

Changing Consumer Behaviour – A Challenge & Opportunity for most Businesses in UAE

Consumer Behaviour globally has drastically changed over the past year due to the Pandemic. Online Marketing and Shopping Carts saw unprecedented traction due to the Governments imposing lockdowns and people not stepping out for buying things due to the pandemic.

On the flip side, many industries witnessed downtime and have to cut down on staff especially the airlines, tourism, retail sector, as most people stayed indoors.

Business Challenges & Opportunities

Businesses have a challenge as well as an opportunity with more consumers adopting the online channel. The challenge is that companies must be technology ready and available to serve customers in the online space.

The Opportunity is the wide scope of the online world can be tapped effectively to expand business across geographies and find new customers.

Business Scenario in UAE

Sectors like tourism, hospitality, and international trade were greatly affected due to the Pandemic. These were the major growth drivers of the UAE. Both Oil and Non-Sectors across the world has a hit in 2020.

Businesses in UAE are anticipating a positive growth rate in 2021 with enormous Government support in the form of initiating the stimulus packages, managing the Covid-19 situation, implementing vaccination drives, and more.

Financial Experts in UAE Forecast a steady growth rate in all sectors once the pandemic gets controlled and life gets back to normal.

Also, with ‘Expo 2020 scheduled for the end of 2021, it throws hope for a total market revival as more tourists and visitors will start arriving in UAE to participate in the show.

How are Businesses in UAE Getting Equipped to Sustain and Grow?

Companies in UAE are all set to scale up and grow. To tap the new opportunities amidst a crisis such as Covid-19, technology adoption seems to be a crucial strategy every business is heavily relying on.

With most of the services moving completely online, it helps people to experience things at an ease and by being at the comfort of their homes.

From Banks to Grocery Delivery, to pharma companies, all have an active digital presence and help customers with satisfying their requirements.

There are some ‘New Normal’ Trends shaping up as more companies are moving to the digital space.

1. Sustainable Businesses

Many businesses especially in retail, aviation, tourism, etc., were on the verge of closing down, or downsizing; this is where a sustainable business model comes into action.

In UAE, with the Government Support and Banking Network’s financial assistance, these companies were turned around and business strategies were restructured so that the companies could run with a lean ecosystem.

Also, with the investors ready to fund the ailing companies in the form of crowd-funding, incubators, venture capitalist funding, etc., will help in sustaining the business ecosystem in the region.

2. Working Remotely

Working remotely is a productive and cost-efficient strategy for most industry sectors. Sectors such as IT, Marketing, Trading, Services, etc., where employees can work on their own and coordinate with the team online without the requirement of physical presence.

3. Restructuring of Food & Beverage Sector

The Food & beverages sector is one of the worst-hit by the pandemic. However, the demand is still on track.  Online food delivery and aggregator apps are on high traction due to their convenience. There is a huge business opportunity for investors in the F &B sector.

Concepts like virtual kitchen, organic food delivery, home-cooked items, etc., are receiving likes among the digital consumers.

4. Adoption to Financial Technologies

The digital payment industry is on a surge as more businesses are moving online and the payment methods are changing from traditional cash-based transactions.

Also, the bank is moving to complete digital services via the app, website, and chat facilities. The modern technology of contactless payment, Artificial intelligence, blockchain, etc., is making the banking sector more efficient and user-friendly.

5. Customer Service

Customers are the center of any business. There must be constant measures to enhance customer service in the digital and offline world to keep customers delighted.

Brands must adopt a hybrid strategy for customer service to deliver personalized attention when communicating with the customers.

6. Technology Adoption

For the brands to stay completive in the modern world, technology adoption is essential. Businesses must have the certain infrastructure in place to be actively present in the digital space and serve customers better.

So, with companies getting ready for the transformation by giving importance to the employees like never before, servicing clients efficiently, etc., are positive signs of market recovery. Businesses are transforming their operation by bringing in new changes to the working environment.

Talk to our team to know more about the growing business opportunities and company formation procedures in UAE.

Read more about “How Businesses in the UAE are Scaling Up After the Lockdown?“.

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