Blog

INTERSHORES I Is R.A.K. the New B.V.I.?

The government of Ras Al Khaimah (R.A.K.) has launched an offshore facility, the second in the UAE, that is expected to lure investors looking for a new tax haven.  The R.A.K. allows foreign investor to register offshore companies in the Ras Al Khaimah Free Trade Zone (RAK FTZ) without the need to establish a physical presence.  It is hoped that foreign companies finds their offshore system more appealing than the Jebel Ali Offshore centre, which was established by Dubai in 2003 to position itself as a tax haven like the Cayman Islands, Bahamas and Liechtenstein.


The free zone has continued to attract new businesses in industries spanning IT, Consulting, Manufacturing and Trading. RAK FTZ is recognised not only regionally but globally, as offering strategic and cost-effective solutions to companies that strive to reach international markets.


R.A.K. has rapidly gained a reputation for being a transparent, tax-free, corruption-free and no-red-tape location to do business. Its booming economy and proximity to other major international centres like Dubai has attracted hundreds of large, medium and small businesses from every part of the world.

R.A.K. has added to its free zone portfolio by enabling the formation of offshore companies and combined this with a rapidly expanding list of Double Tax Avoidance Agreements, including many major jurisdictions.


Some basics to be reminded of:

An offshore company is a company which is incorporated outside the jurisdiction of its primary operations.

 

An Offshore company is a very flexible corporate entity commonly used in international tax planning, and can be used in a wide variety of international business structures. Tax optimization, asset protection and confidentially are often the drivers behind such formations.

 

There are a number of business activities which are suited to be operated through an offshore company, these include:

 

1.  General Trading.

2.  Consulting and Advisory Services.

3.  Holding Company (buy/hold/sell stakes of companies).

4.  Investments and Joint Investments Company.

5.  Property Owning.

6.  Management Services.

 

With this need of the international client in mind  R.A.K. has launched its offshore company service.


The International Business Companies (IBC) Registry allows foreign investors to register offshore companies without the need to establish a physical presence in the UAE.

 

So what does RAK offer that others may not?

1.  Simple incorporation and filing requirements

2.  The availability of Double Taxation Avoidance Agreement (DTAA)

3.  International standard banking system

4.  Arguably unrivalled telecommunication facilities


Other jurisdictions list the above. However, in addition, and something which adds substantially to this list, is the fact that the UAE is not a dependent or 'overseas' territory of another country.   UAE is obviously not an EU or OECD member, so not subject to internal directives and regulation that goes with such membership, it has no exchange of information agreements in place, but is also not on the OECD or FATF “blacklists”.


Main activities of a UAE Offshore Company

1.  General Trading.

2.  Consulting and Advisory Services.

3.  Holding Company (Buy/Hold/Sell stakes of companies).

4.  Investments and Joint Investments Company.

5.  Property Owning.

6.  International services.

7.  Professional Services.

8.  Shipping and ship management companies.

9.  Commission Agents Company – Intermediary Brokers (IB's).

Fiscal & Regulatory benefits of a UAE Offshore Company

1.  100% income tax exemption.

2.  100% corporate tax exemption.

3.  100% capital and profit repatriation.

4.  100% ownership in Free Zones.

5.  No Import or Export taxes.

6.  No capital gains tax.

7.  No Value-added tax.

8.  No Withholding tax.

9.  Access to regional and world markets.

 

Main features of a UAE Offshore Company

1.   It does not need to have physical offices in the UAE.

2.   It may not carry on business within the UAE.

3.   It may not obtain UAE Residency Visa.

4.   It may have non UAE resident as director or shareholder.

5.   It may have UAE resident as director or shareholder.

6.   It may have corporate shareholder/corporate director.

7.   It does not require the shareholder/director to be physically present in the UAE for incorporation.

8.   It may own real estate in the UAE, with prior authorization from RAK Investment Authority.

9.   It may not do banking and insurance business without special license.

10. It may maintain bank accounts and deposits in the UAE or worldwide.

11. It is not obliged to maintain books and records.

12. It may hold shares in other UAE and worldwide companies.

A light regulatory touch, but an effective one

Day-to-day operations of offshore companies  are managed by the Registrar, under the control of the RAK Investment Authority (RAKIA), and the independent and dedicated RAK Financial Services Authority (RAKFSA), as well as the Central Bank of the United Arab Emirates. In delivering its functions and in considering applications by organisations and individuals wishing to establish businesses within or through Registered Agents, the Registrar and RAKFSA has a stated aim to adopt a firm but flexible regulatory approach.

 

It is of paramount concern to the government that R.A.K.’s reputation is not tainted by the use of the jurisdiction for money laundering or other illegal purposes. Therefore, any R.A.K. licensed Registered Agent is expected, in accordance with a set of strict guidelines, to carry out proper due diligence and “know your customer” checks so that we are satisfied as to the identity of the clients and the legitimate origin of the clients and their funds. Although total confidentiality is ensured by the legislation, the authorities cooperates with law enforcement agencies and regulators in case of illegality.

 

So is it the new BVI?

Not yet, is the simple answer. Nevertheless the fact that it is now a regional powerhouse in terms of offshore companies is unlikely to remain at this level if the statistics of the free zone company expansion into the Asian, European and Russian markets referred to in the introduction are repeated at the offshore level. There is certainly a distinct possibility that service providers, confronted by nervous clients reading of new pacts between taxing authorities, want to return in a sense to the “old days” when pressures were few, incorporation was simple and uses flexible. It looks as though those days may be returning.

 

Whatsapp : (852) 6499 4686

Phone : (852) 2186 6936

Email : info@intershores.hk

 

 

Disclaimer:

Whilst reasonable care has been taken in provision of information above, it does not constitute legal or other professional advice. INTERSHORES does not accept any responsibility, legal or otherwise, for any error omission and accepts no responsibility for any financial or other loss or damage that may result from its use.  In particular, readers are advised to take appropriate professional advice before committing themselves to any involvement in jurisdictions, vehicles or practice.

 

Categories:

 

 

 

 

 

 

 

Self Photos / Files - Awards