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Tax optimization by opening an offshore company in the UAE

Article image: Tax optimization by opening an offshore company in the UAE

How to optimize taxes and get more income - the answer to this question is important for almost every businessman. Let’s consider such a popular instrument for tax optimization as an offshore formations and jurisdictions. In this case, the corporate laws of particular jurisdictions, which involve tax incentives for offshore companies, serve as the basis and framework for optimization of taxation. Offshore companies, by definition, are not allowed to be engaged in economic and commercial activities on the territory of these jurisdictions. In particular, we will focus on the specialized economic areas in the UAE.

The main principles and steps of the setting up of an offshore structure

Among basics of the construction of offshore schemes in the UAE, the following dominant principles can be singled out:

  • Legal protection of ownership rights and strict confidentiality of information;
  • Relatively simple procedure of registration of an offshore company and the minimum requirements;
  • An established infrastructure for any entrepreneurial business, including modern banking industry;
  • Flexibility of the norms of corporate law and absence of restrictions on the repatriation of financial assets and income;
  • Profitability of the structure and its economic rationality.

If you've been wondering how to optimize taxes, an offshore company in the UAE will be the best solution. The offshore structure, in the practice, remains the most efficient and effective method for international tax planning.

To build a profitable and 100% legal offshore scheme you should execute several successive steps, in particular:

  • Setting the strategic goals for offshore formation;
  • Selection of an appropriate jurisdiction, which will satisfy all the demands and needs of your business;
  • Determination of the structural components of the offshore company (method of corporate management, the necessity of a nominal service, splitting of management functions, and so on);
  • Assessment and analysis of opportunities for incoming and outgoing financial assets (taxes, restrictions on repatriation, the country exchange control, and so on);
  • A preliminary calculation of the profitability and efficiency of the offshore structure;
  • Selection of the appropriate offshore banking institution and the possibility of account management (personal or remote).

How to optimize taxes through offshore companies - general recommendations

For tax optimization, it is recommended to use an offshore company as one of the parties of the transaction, but not as the main entity. A local company in the UAE, which has a good business reputation, can serve as the main company. An offshore company in the UAE, in its turn, can act as a holder of this company.

When building an offshore structure, it is much more efficient to use a set of onshore and offshore companies. Thus you will provide your assets with maximum protection and will minimize the risks, and tax optimization will become a real opportunity for increasing profits.

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