Differences between offshore and onshore companies in Dubai

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Differences between offshore and onshore companies in Dubai

Due to the great tax benefits in Dubai, the amount of both local and foreign business listed within the free zone in Dubai, has noticed a significant growth. Any companies that seek to use that tax free benefits to their advantage may be wondering which business model will be the most profitable for them: choosing local (onshore) or overseas (offshore) business operations?

Here is a guide of comparison for both options:

Cost comparison

Unlike onshore corporations, the cost structures are in much lower levels for offshore corporations, due to the presence of some renunciations offered to offshore corporations.

Tax Agreements

In Dubai, both onshore and offshore companies are not required to submit any tax to the UAE government. With that being said, only onshore businesses can take advantage of the tax agreements the government has arranged with other nations.

Corporate Operations in UAE

An offshore business is prohibited to perform any kind of business operation within UAE zone. On the contrary, an onshore company is allowed to conduct business operations after receiving an official license.

Licensing

Due to the fact that there is no space for offshore corporations to perform corporate operations within UAE zone, they don’t have to obtain a company authorization. On the contrary, an onshore corporation is required to obtain a license that distinctly specifies the company’s operations entitled to perform in the country.

Physical Building/offices

An offshore business does not necessarily need a physical office to be established whereas an onshore business is obliged to possess a physical office—this could be a small office with a desk or even a large building with various departments. The minimum space allowance for offices differs according to the field industry and corporate activities of the business.

Residence Visa Requirements

Offshore businesses in Dubai are not given any residence visas since they don’t have any physical presence in the zone. On the other hand, the UAE government will issue residence visas for onshore corporations under certain terms. The body for issuing of visas will take into consideration the office space and size of the business prior deciding which companies will be issued Visas.

Financial Check Requirements

Last but not least, there is no obligation for an offshore business to reveal their financial reports. On the contrary, onshore businesses are subject to financial checks and obliged to offer their financial reports to the responsible bodies.

By now, we hope you have acknowledged all the main differences between offshore and onshore businesses operating in Dubai/UAE to decide which option will work best for you. Regardless of your choice, we at Freezone Consulting are able to offer personalized advice and professional support from the moment you make your choice.

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