How to set up a company in UAE Rak the offshore for business.

We have already talked in this blog about the advantages and disadvantages of offshore companies, also about the four tax systems in the world, and how to transfer your residence, something necessary in case you want to make the most of your offshore company today; we are going to talk of a specific offshore jurisdiction and how to set up an offshore company in uae.

[If you want to set up your company in the Emirates or move your residence there, you will be interested in this most current article: Residence and incorporation of companies in the United Arab Emirates].

The classic offshore jurisdictions, such as Saint Vincent or the Marshall Islands, are very useful in many cases but have some disadvantages.

In many cases, they are inappropriate for businesses where clients need invoices to present to the Treasury. Well, in general, invoices from offshore States are not recognized by the tax authorities of continental Europe. This means that the customer will not be able to deduct tax from that invoice, which is a competitive disadvantage.

The way around this reputation problem is simple but it brings new challenges.

Suppose you found your company within the EU. In that case, you can do so by taking advantage of certain tax advantages, as we already mentioned on other occasions (United Kingdom, Estonia, Ireland, etc.), sometimes even without paying taxes, but always after a certain volume of sales You will be subject to the obligation of the EU turnover tax.

This is a tax you would prefer not to pay, although you may be forced to do so to have a European tax identification number (to be able to use Amazon FBA, for example).

Another option is to incorporate the company in the United States. American companies are very interesting and allow you to remain tax-free as long as you reside in a country with territorial or non-doom taxation (in the classic sense).

Now you will ask me, is there a solution that combines a good reputation and the possibility of invoicing with the classic advantages of an offshore company?

Unfortunately, there is no such golden goose in international tax structures. There will always be certain concessions, at least in price.

This is the case with the offshore option that I presented to you today in Tax-Free Today, that of setting up a company in the United Arab Emirates. It is the perfect solution for many cases, but it is more expensive than others and brings with it certain setup and maintenance costs.

The queen among offshore sites

The queen among offshore jurisdictions is neither an island nor a small state. In reality, it is one of the best-known financial centres in the world, although many are not aware of the decentralization of the State. This is the United Arab Emirates.

When you hear of the United Arab Emirates, you may think of Dubai, maybe even Abu Dhabi, but have you ever heard of Ras al-Khaimah?

Ras al-Khaimah (or, in its acronym, RAK) is one of the seven emirates of the United Arab Emirates. They are hereditary absolutist monarchies ruled by the so-called emirs, hence the country’s name.

Although there is a higher government for the United Arab Emirates (UAE), the different Emirates are quite autonomous and decide on issues of great importance in the Supreme Council with the emirs of the other Emirates.

Since 1700, Ras al-Khaimah has been ruled by the Qasimi family, which also controls the neighboring emirate of Sharjah.

When we think of offshore, we rarely think of the United Arab Emirates, and this is also because it is quite difficult to set up companies and open accounts in the region. For a long time, almost nothing could be done without being there and gaining the trust of the locals.

But in the meantime, international free zone authority dubai have sprung up designed to attract foreign companies. These free zones offer excellent possibilities for entrepreneurs and those who sell products.

If you incorporate a company in a free zone, the company will be tax-free, and the founder and his family will be entitled to a tax-free residence anywhere in the Emirates. To maintain residence in the United Arab Emirates, you will only have to visit the country once every 183 days.

UAE free zone companies are highly recommended vehicles for international tax structuring and will soon receive the attention they deserve. However, they require high costs of constitution and administration; we are talking about at least five figures (about 15,000 a year for the constitution and half for the following ones) which does not make it economical.

On the reputation of the UAE

Luckily you can also take advantage of the many advantages of the UAE by paying much less money since the good reputation of the free trade zone affects other options in the United Arab Emirates.

As you now know, offshore companies in Ras al-Khaimah do not pay taxes; however, the case of this area is not an exception within the UAE since it is one of the few jurisdictions in which, in general, taxes are not paid without depending on any exceptional law applicable to a specific area. The UAE is one of the 23 countries with no direct taxes.

The difference is that it is not a State like the Bahamas, Cayman Islands or Bermuda, where we only find shell companies (without real business activity), but an economically strong country with a lot of industry.

The Emirates is home to several of the world’s busiest ports, as well as multinational exporters in all kinds of sectors.

This makes the UAE’s reputation very different from the Caribbean islands. Even though not all free trade zones meet the same international standards, it is tolerated. After all, the United Arab Emirates is an important partner for the United States, Europe and China in the fight against Islamic terrorism.

La RAK International Company

Apart from a good reputation (which is essential), offshore companies in Ras al-Khaimah (RAK) do not differ much from those in other jurisdictions: Apart from the tax exemption, there are no provisions on how accounting is to be kept; there are no mandatory public registries, nor is it necessary to disburse a social capital. The partner and the administrator can be the same person, and they do not have to have their residence in the United Arab Emirates.

Precisely regarding discretion, companies from Ras al-Khaimah have many advantages over other offshore jurisdictions. Foreign tax authorities try in vain to find the beneficial owners of these offshore companies. Although Emirates signed the agreement on the automatic exchange of information, it has practically no effect in practice.

After all, the still numerous gaps are also contained in the clauses stipulating that the free trade zones are exempt from this exchange. And precisely in one of them, the RAK International Company is incorporated.

Also important is the fact that it is an International Company (IC) and not an International Business Company (IBC), which is correspondingly stated in the incorporation documents. With this alone, the company has a different position and should not be compared to the many classic offshore IBCs from jurisdictions with a worse reputation.

Another advantage is that, generally, the invoices do not show IC but Limited.Offshore companies in Ras al-Khaimah are distinguished by being globally recognized limited liability companies, companies that can invoice Spanish, Mexican, American, Argentinean or wherever they are without problems.

This is also because there is often no desire or chance to find out who is behind a company in Ras al-Khaimah since the company address that appears on the invoice is rarely a Ras al-Khaimah address.

Instead, incorporation agencies are usually based in Dubai or Abu Dhabi, where no offshore legislation exists.

In practice, offshore companies in Ras al-Khaimah can simulate a legitimate FTZ company, such as those in Dubai, by having their business address there.

Furthermore, there is even the unique possibility of using a jurisdiction other than Ras al-Khaimah for some operational business aspects, e.g., local company law.

This way, you can attract investors who do not trust RAK with different legislation or legally simulate a registered office in another country. Of course, it must be taken into account that the local authorities of the respective country do not have any obligation to deal with any disputes if the company was not incorporated there.

Despite everything, keep in mind the recognition of the offshore company in Ras al-Khaimah. However, it is greater than the typical Caribbean offshore companies and is still not guaranteed (contrary to what happens with a company in the free zone trade).

Bank accounts and Paypal for companies in Ras al-Khaimah

One of the many reasons for choosing a company in Ras al-Khaimah is the chance to break into the very stable banking system in the region. After all, banking is complicated in the Emirates, and it is almost always necessary to have an address to open accounts.

On the other hand, with an offshore company in Ras al-Khaimah, you could open a business account anywhere in the UAE and benefit from the advantages of banking in Abu Dhabi or Dubai. This is especially interesting for entrepreneurs from traditionally Islamic countries, for example, Turkish or Moroccan businessmen who, due to current political developments, have great difficulties doing business with Turkey or withdrawing their money.

So, the country and its banking system are very stable. Its currency, the United Arab Emirates dirham, is directly linked to the US dollar, trading from 1 to 3.6725. Coupled with the high level of confidentiality, the IBAN standard and modern banking, opening an account in the Emirates can be very interesting.

Unfortunately, it is essential to be present at the time of opening, and it is also essential to have lasting personal contact with the bank’s interlocutors.

Those who do not wish to carry out their banking operations in the UAE will have more difficulty opening an account outside the country. This is because the Emirates is not a party to the UN Convention on apostilles to legalize documents. Therefore, certifying company documents can be long and expensive since an embassy must legalize them.

Whoever needs Paypal for their company will have hit the spot with the company in Ras al-Khaimah. Paypal gives problems in many offshore countries, but not in this case. In other jurisdictions, collecting payments through Paypal without paying high commissions is difficult. This almost always requires a US account if you can’t provide a local account.

Suppose you have incorporated your company in Hong Kong, but you have not obtained a bank account there. In that case, you should consider moving your company to Ras al-Khaimah, which has similar prices but is a location with many more advantages.

After all, this way, you can transfer your Paypal balance to any prepaid, debit or credit card you have.

Incorporation of a company in the Ras al-Khaimah Arab Emirate State (RAK)

The body responsible for setting up a RAK offshore company is RAKIA, the RAK InvestmentAuthority. The International Company (IC) are part of the free zone of Ras al-Khaimah, but they are managed as non-residents.

As far as the company’s administration is concerned, the IC-RAK does not require a physical presence, but it cannot conduct business within the Emirates either.Those who wish to build a warehouse within the free zone must resort to the FTZ company, a type of company that may be presented in a future article.

Incorporation cannot be processed through the Investment Authority but, as usual, must be done through an incorporation agency. The requirements to incorporate a company in Ras al-Khaimah are relatively strict.

Thus, for the constitution, it is necessarily required to present a legalized copy of the passport and the original supply invoice. Today, this is needed for most bank accounts, but it makes incorporating a company more difficult for those without an address.

Constitution expenses in Ras al-Khaimah with Tax-Free Today

Tax-Free Today offers to set up a RAK offshore company for €2,640. Annual administration fees amount to €2,020.

The intermediation service to obtain a business account has an additional price because it is more expensive for the reasons mentioned. For an additional €565, we put you in contact with the following UAE banks.

Mashreq Bank (€6,250 minimum deposit)

Noor Bank (€2,500 minimum deposit)

Emirates NBD (€50,000 minimum deposit)

RAK Bank (€25,000 minimum deposit)

These banks offer modern online banking in euros, pounds, US dollars and dirhams. However, you will generally only be able to get your debit card if you are domiciled in the Emirates. In any case, to open your account, you will need to be physically present.

It is also possible to obtain international business accounts.

Instead of an address in Ras al-Khaimah, having a virtual office in Dubai is convenient to gain even more prestige from incorporating in the UAE. A business address with postal forwarding costs €355 per year, and an own telephone number with call forwarding costs € 630.

Now it’s up to you to analyze the possibility of setting up your company in Ras al-Khaimah and write to us if you want our help.

An International Company in Ras al-Khaimah is an excellent opportunity, and the country is undoubtedly one of the best options among offshore jurisdictions.

The option to make the RAK offshore company formation look like a free trade zone company with residence in the United Arab Emirates is a great advantage that allows you to benefit from Dubai’s reputation, which is even better. Well, setting up a company there is considerably more expensive.

Conclusion

As you can see, the small but distinguished Emirate of Ras al-Khaimah offers all the advantages of the classic offshore companies, as well as good invoice recognition, very good bank accounts and the full functionality of Paypal.

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