The facility to set up UAE-based offshore companies is attracting new companies and investors because of factors like low costs and multiple services under one company, compared to the more restrictive registration laws of the free zones.

However, UAE Offshore facility and the free zones complement each other and companies can choose between the two, depending on the nature of their business and individual requirements, according to Dubai-based Jitendra Business Associates.

“The concept of setting up offshore company is gaining ground in the UAE,” said Jitendra Gianchandani, managing partner of Jitendra Business Associates.

“Different emirates are competing with each other to offer best offshore setup facilities, and we anticipate this trend will pick up momentum, especially in the post-recession scenario,” he explained.

'Setting up a company through RAK Offshore costs around $600 for the first year, without agent fees, and an annual fee of $409 subsequently. At Ras Al Khaimah Investment Authority (Rakia) offshore office setup costs $1,105 for the first year, without agent fees, and $681 as annual fees subsequently.'

'The Rakia Offshore formed 3,111 companies between 2007 and 2009, and more than 800 companies have been set up so far this year,' said the business consultant.

At Jebel Ali Offshore, the setup cost is $2,725 for the first year, without agent fees, and subsequently an annual fee of $681. Jebel Ali Offshore has incorporated 3,891 companies between 2007 and 2009.

'Many investors who are doing business in UAE and already have visas and even new investors who don’t require UAE visa, especially Europeans, are keen to do business in neighboring countries or anywhere in the world,' said Gianchandani.

'They consider UAE Offshore a good option due to lower costs and multiple services that can be incorporated in one company, compared to limitation on the type of activity imposed in the free zones,' he added.

According to him, the UAE offshore is preferred over the foreign offshore, due to ease of the incorporations, less time in the incorporations and tax advantages.

Besides, the UAE has a better image as it is one of the jurisdiction that has substantially implemented the internationally agreed tax standard as set by OECD, efficient banking system and no attestation of the documents required from Ministry of foreign affairs while opening of the bank accounts unlike other foreign offshore centres” said Gianchandani.

He further pointed out that the UAE Offshore had a distinct edge over virtual offices in free zones, especially for investors who wanted to do business outside the UAE.

“Corporate and HNIs prefer offshore companies rather than expensive companies with virtual offices in free zones for joint ventures and investment and Holding company as well,” said Gianchandani.

"International investors, mainly SMEs and HNIs, finds UAE offshore more practical and preferred choice compared to virtual offices in free zones, which restricts trading and professional services in the one license unlike UAE offshore which allows general trading, services, training, brokerage and any consultancy activity outside UAE," he added.-TradeArabia News Service