Dubai Offshore Company Formation (JAFZA Offshore): Cost, Rules and Requirements

What is a Dubai offshore company?

A JAFZA Offshore Company is a limited-liability company incorporated under the Jebel Ali Free Zone Offshore Companies Regulations 2023. It receives a certificate of incorporation. It does not receive a trade licence.

This page is about that corporate structure. It is not about offshore energy work, marine contracting or offshore IT outsourcing, which share the same word.

The company has the capacity and the rights of a natural person under Reg 13.1. It can own shares, hold a bank account and own property, within the limits in the Regulations. What it cannot do is trade inside the UAE on the strength of its incorporation alone, because it holds no licence.

JAFZA lists offshore as one of five ways to form a company in the free zone, alongside the FZE, the FZCo, the PLC and the branch. Those four take premises and a trade licence. The offshore company takes neither, which is what makes it cheaper to run and narrower in what it may do.

JAFZA does not call this entity an IBC. Some agents do. The registrar’s term is offshore company, and the governing instrument uses the same term throughout.

For the wider choice between a free-zone company, a mainland company and an offshore company, see UAE company formation.

Sources: JAFZA guide to setting up an offshore company · JAFZA company formation · Regulations 2023 Regs 13.1, 14.3.

JAFZA or RAK ICC? Which UAE offshore registry, and which rules apply

JAFZA is Dubai’s offshore registry, and there is no separate Dubai offshore registry beyond it. The UAE’s other widely used offshore registry is RAK ICC in Ras Al Khaimah, which is a different product under different regulations. Agents also market an Ajman offshore company, though Ajman Free Zone publishes no offshore registry page we can cite.

If you are comparing the two, the full RAK product sits on our RAK ICC offshore company formation page. This page does not re-cover it.

RAK ICC’s figures come from the RAK ICC fee schedule. JAFZA’s come from Schedule 2 of the Regulations 2023, linked in the cost section below.

The version that is actually in force

The Regulations 2023 repeal and replace the Offshore Companies Regulations 2018. Reg 4.1 says so in terms, and Reg 1 gives the instrument its title.

This matters because guidance citing the 2003 or 2018 editions is out of date, and a good deal of it still circulates. Two of the specific claims corrected further down this page trace to material written before the current rules existed. If you are checking a fee, a director count or an audit requirement against something you read elsewhere, check the edition first.

See also all offshore jurisdictions we cover.

Sources: Regulations 2023 Regs 1, 4.1.

What JAFZA requires: shareholders, directors and a secretary

A JAFZA Offshore Company needs at least one director and one secretary. Reg 33.1 sets the director minimum. Reg 44 requires the secretary. One person may be both, and a director may be a person of any nationality.

You will read in several places that JAFZA requires two directors. It does not. That claim comes from a law-firm note published in September 2015, which predates both the 2018 and the 2023 Regulations. We have not linked it, because it is a competitor domain and the point is that it is out of date.

The rest of the requirements:

• One or more shareholders, no maximum, individual or corporate or a mix
• Directors aged 18 or over, not disqualified and not undischarged bankrupts (Reg 33.2)
• Nominee directors expressly permitted (Reg 33.3)
• A register of directors and secretaries kept at the registered office (Reg 45.1)
• No minimum share capital, and shares must be fully paid when allotted (Reg 18.3)
• Bearer shares unlawful (Reg 22)

Because nominee directors are permitted, one thing should be said plainly. A nominee is a governance and privacy arrangement that is lawful where we offer it. It does not conceal beneficial ownership from regulators, from banks, or from tax authorities. Anyone who tells you otherwise is describing something we do not provide.

Natural persons appointed to a JAFZA offshore company are reported to undergo screening by Dubai’s Criminal Investigation Department. That comes from a single legal commentary rather than a published JAFZA rule, so treat it as market practice rather than a stated requirement.

Sources: Regulations 2023 Regs 18.3, 22, 33.1, 33.2, 33.3, 44, 45.1 · JAFZA offshore guide.

Does a Dubai offshore company pay UAE corporate tax?

Yes, on the ordinary analysis. A JAFZA Offshore Company falls under the standard corporate tax regime: 0% on taxable income up to AED 375,000, and 9% above that threshold.

The reasoning matters, because it is the opposite of what most of this market publishes, and it runs differently from RAK ICC.

Step one. The Federal Tax Authority defines a Free Zone Person as a juridical person incorporated, established or otherwise registered in a Free Zone. A JAFZA Offshore Company is incorporated in the Jebel Ali Free Zone and registered with the Authority under Reg 4.2. So it is a Free Zone Person. This is where it diverges from RAK ICC, which is a registry rather than a Free Zone.

Step two. Being a Free Zone Person is not enough to reach 0%. To be a Qualifying Free Zone Person, the company must maintain adequate substance in the Free Zone: its core income-generating activities there, plus adequate assets, qualified full-time employees and operating expenditure in the Zone.

Step three. An offshore company holds no trade licence, no premises and no staff in the Zone. That is the design of the product. So in the ordinary case it cannot satisfy the adequate-substance test and cannot be a Qualifying Free Zone Person.

Step four. The standard regime then applies, at 0% to AED 375,000 and 9% above.

Put in one line: a JAFZA Offshore Company is a Free Zone Person, but on the ordinary analysis it cannot meet the adequate-substance conditions for Qualifying Free Zone Person status, so the standard 0% and 9% regime applies.

One detail that is counter-intuitive and rarely published: a Qualifying Free Zone Person is not entitled to the 0% band on its first AED 375,000. The 0% band belongs to the standard regime. So the QFZP route is not simply a better version of the same thing.

This is a conclusion drawn from the instruments cited below. No authority has published a ruling naming JAFZA Offshore companies specifically, so treat it as reasoning you can check rather than as a quotation, and take advice on your own facts.

Sources: FTA Corporate Tax Guide on Free Zone Persons · UAE corporate tax · Regulations 2023 Reg 4.2.

What you send

• Certified passport copies for every shareholder, director and secretary
• Proof of address for each of them, usually a utility bill or bank statement
• The completed application form, signed
• The Memorandum and Articles of Association
• A declaration of ultimate beneficial ownership
• Whatever the agent's own KYC file requires

That last line is not a formality. The agent, not JAFZA, sets the document standard, and agents differ on what certification they accept. Ask before you pay for notarisation you may not need.

What you get back

The Certificate of Incorporation, together with the registered Memorandum and Articles and the company’s registers. There is no trade licence to follow, and no lease. A Certificate of Good Standing or a Certificate of Incumbency can be ordered later from the registry at AED 200 and AED 500 respectively, and banks often ask for one.

Sources: JAFZA offshore guide · JAFZA guide to ultimate beneficial owners.

What you still owe at home

Owning a JAFZA Offshore Company removes no reporting duty in the country where you are resident. The UAE’s tax position is not the whole tax question, and for most buyers it is not the important half.

United Arab Emirates. Corporate tax registration is a duty of the company. Where the company falls outside the Qualifying Free Zone Person conditions, the standard 0% and 9% regime applies as set out above.

India. This is the block that catches the most people. Outbound investment by an Indian resident runs through FEMA and is governed by the RBI Master Direction. Individual remittances use the Liberalised Remittance Scheme and its annual limit. Acquiring shares in a foreign company is Overseas Direct Investment, with its own reporting route and filings. Getting the route wrong is a FEMA contravention, not a tax question.

United Kingdom. A UK-resident individual holding a foreign company should look at the transfer of assets abroad code, ITA 2007 sections 714 to 751. Corporate shareholders look at the controlled foreign company rules. HMRC’s International Manual is the starting point on residence.

United States. A US person with an interest in a foreign corporation is likely to owe Form 5471, and a foreign bank account over the threshold brings an FBAR. Controlled foreign corporation analysis follows if US ownership is high enough.

Across all of these, account information moves. The OECD Common Reporting Standard and FATCA mean your bank reports to your country of residence. Structure on the assumption that the information arrives, because it does.

If the reporting position in your country is the part you are unsure about, that is worth resolving before you incorporate rather than after. Get a free consultation and we will work through which structure fits where you are resident.