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Offshore in Corporation

Offshore in Corporation

Dubai has more than 20 free zones, each of which has its own licensing body. The free zones include Dubai Media City, Dubai International Financial Centre, Dubai Airport Free zone and Jebel Ali Free zone, one of the largest ports in the world and home to 6,400 companies.

The words offshore business and offshore company have no precise legal, tax or general business meaning. The word offshore often means nothing more than anywhere other than the place of physical location of the person using the word (i.e. overseas). We use the words offshore business and offshore company as terms of definition in connection with matters such as the structuring of international business & family wealth management or tax planning. Incorporation of an offshore company (or non-resident company) can be used for various purposes. One of the most common is the use of an offshore company as a holding company to hold interests in other companies in various jurisdictions, to hold trademarks, copyrights and other intellectual property rights, as well as to serve as the holding company for licensing of franchises. The income from taxable jurisdiction flowing to the offshore company (holding company) is not taxable.

Offshore companies are corporate entities entitled to have mixture of business features and is also regarded as “outsourcing”. This type of company has the same privileges to that of the Free Zone companies. An offshore company is allowed to invest inside and outside of the company. However, conducting business activities inside UAE is not authorized since setting up offices within the country is not allowed too.

Investors often choose to engage in offshore company because of two primary reasons- to minimize taxes and to secure confidentiality. Moreover, offshore companies can reduce the need for physical works such as staffing and accounting by means of utilizing cost-effective virtual offices which in return, is financially and time convenient.  Having less capital requirement may also be added as to why offshore companies are an ideal business set-up.

Other marketing advantages of Offshore Outsourcing include;

  • Competence: leveraging a circle of highly skilled and qualified experts that  otherwise may not be hired locally.
  • Various market opportunities: through the use of “in country-for country” concept, the business reach is allowed to expand, and enter new target market.
  • Minimized Risk:  outsourcing allows the company to create disaster recovery mechanism as a response to emergency situations such as market fluctuations, natural calamities and technical crises.

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