Free Zone and Offshore Companies In Dubai – How Are They Different

December 3, 2015

UAE, one of the major financial hubs in the world, is home to countless small and large scale businesses. It enjoys huge popularity among global businesses as well as investors. Right from its strategic location to excellent infrastructure, there are several factors that make UAE a popular business destination for companies located in Europe, US and other parts of the world.

The process of starting a business in Dubai and other cities in UAE is hassle-free and uncomplicated. The businesses can avail UAE company formation services provided by consultancies. For a company planning to set up itsbusiness in UAE, it is important to be familiar with the concepts of free zone and offshore companies. Most companies in Dubai fall into one of these two categories.

Here’s everything you need to know about free zone and offshore companies in Dubai:

Free Zone Companies

These companies are completely owned by organizations/ individuals who set it up. No partner or sponsor is required to open a company in free zone. In a free zone, a company is allowed to have one of its branches. The branch office of the company is not considered a separate entity. It is merely considered as an extension of the main company. By showing its solvency, a company can incorporate itself as a free zone entity.

Free Zone Companies Enjoy Several Unique Advantages:

Free zones are 100% tax free. Thus, the companies located in free zones don’t have to pay corporate tax or any other type of tax

Free zone companies enjoy 100% ownership. The company doesn’t have to search of local partners or sponsors to set up its business

Free zones provide an attractive business environment that is ideal for growth and expansion. The companies also enjoy common facilities at free zones

These companies can do multiple activities and there is no restriction on doing international business

There are several ways to establish free zone companies in UAE. The guidance provided by UAE company formation services can prove to be very useful in this regard.

Offshore Companies

Offshore companies are corporate entities that have a mixture of features. Unlike free zone companies, off shore companies are allowed to conduct their business outside UAE. In fact, this is the major difference between offshore and free zone companies.

Main Advantages Enjoyed by Off Shore Companies:

Off shore companies are 100% tax and custom duty free

Unlike free zone companies, the offshore companies are not required to have a minimum capital before incorporation

These companies have the liberty to purchase and own real estate in some pre-designated areas of Dubai.

They are free to use any UAE bank to conduct their operational transactions

There are many reliable consultancies that provide UAE company formation services for setting up free zone and offshore companies in UAE. Availing the services of one of these consultancies will make it easier for businesses to establish themselves rather successfully in UAE in no time.

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