A UAE offshore company is a non-resident holding vehicle, not an operating business. JAFZA states plainly that an offshore company "is not issued with a business licence, only a certificate of incorporation" and "cannot conduct any commercial activity with persons within the United Arab Emirates" (JAFZA, 2026). So let's bust the biggest myth first. An offshore company on its own cannot sponsor UAE residence visas, cannot employ staff and cannot trade inside the country. It holds shares, intellectual property, real estate and international invoicing flows. This guide explains what the two UAE offshore regimes, RAK ICC and JAFZA Offshore, actually do, how they compare, and how the 9% corporate tax regime now applies.
For the full picture across mainland, free zone and offshore options, see our pillar guide to Dubai company formation: mainland, free zone and offshore.
Key takeaways
- A UAE offshore company is a non-resident holding vehicle, not an operating company; JAFZA issues "only a certificate of incorporation," not a business licence (JAFZA, 2026).
- It cannot sponsor UAE residence visas and cannot trade onshore; it is "authorised to operate internationally" only.
- Two regimes exist: RAK ICC in Ras Al Khaimah and JAFZA Offshore in Dubai.
- Both can now hold Dubai freehold property via the Dubai Land Department, with a no-objection certificate and a development on the DLD-approved list.
- An offshore company is not automatically tax-free; the 9% corporate tax can apply depending on activity and income source.
What a UAE offshore company is (and is not)
A UAE offshore company is an international business company that holds assets and cannot trade locally. JAFZA confirms an offshore entity receives "only a certificate of incorporation" and "cannot conduct any commercial activity with persons within the United Arab Emirates," operating internationally only (JAFZA, 2026). That single rule defines everything that follows.
Here is the distinction that matters most. Because an offshore company holds no trade licence, it has no legal capacity to sponsor a UAE residence visa, employ people or lease a local office. It exists only through a licensed registered agent at the agent's address. RAK ICC and JAFZA both require this agent. So anyone promising a residence visa from a standalone offshore company is describing something the regime does not permit.
What is it good for, then? Quite a lot, in our experience advising holding-structure owners. An offshore company suits holding shares in UAE free-zone or mainland subsidiaries, holding intellectual property, owning real estate, invoicing international trade, layering joint ventures and SPVs, asset protection and succession planning. RAK ICC offers a wide menu of company types for exactly these uses, from a company limited by shares to segregated portfolio and holding structures (RAK ICC, 2026).
One careful exception, so we don't over-promise. RAK ICC offers a "Premium Product" company type under which an offshore IBC can own 100% of a RAKEZ free-zone company, and that free-zone company can then issue visas. Note what this is: a combined offshore-plus-free-zone structure, not the offshore company itself granting residency. The visa mechanism detail here is agency-reported, so confirm it with a registered agent before relying on it.
Citation capsule: A UAE offshore company is a non-resident holding vehicle, not an operating business. JAFZA states an offshore company receives "only a certificate of incorporation," not a business licence, and "cannot conduct any commercial activity with persons within the United Arab Emirates" (JAFZA, 2026). It therefore cannot sponsor UAE residence visas, employ staff or lease local premises on its own.
RAK ICC vs JAFZA Offshore: how do the two regimes compare?
RAK ICC and JAFZA Offshore are the two UAE offshore regimes, and both require a registered agent. JAFZA confirms an offshore company needs a minimum of one shareholder, one director and one secretary, with a registered agent mandatory (JAFZA, 2026). RAK ICC permits incorporation of an IBC within roughly two working days of receiving documents (RAK ICC, 2026).
The table below sets out the main features side by side. One point to flag on directors: the official JAFZA position is one director and one secretary, although some agencies state two directors. Trust the official figure and confirm the current requirement with a registered agent before filing.
| Feature | RAK ICC | JAFZA Offshore |
|---|---|---|
| Regulator and location | RAK International Corporate Centre, Ras Al Khaimah | Jebel Ali Free Zone Authority, Dubai |
| Minimum shareholders | One or more (CLS) | One or more; no maximum; individual or corporate |
| Minimum directors | One or more; corporate directors permitted if at least one is a natural person | Official: one director plus one secretary (some agencies say two, confirm with an agent) |
| Company secretary | Required | Required |
| Minimum share capital | No stated statutory minimum; flexible | No specific capital required; at least one share |
| Hold Dubai freehold | Yes, via the RAK ICC-DLD MoU since 2019; NOC from RAK ICC to the DLD | Yes, long recognised; NOC plus a Dubai-resident contact |
| Property outside the UAE | Yes, worldwide | Yes, worldwide |
| Privacy | Registers inspectable by directors, shareholders and the agent; UBO held with the agent, not public | Registers not public; bearer shares not allowed |
| Redomiciliation | Inward transfer preserves legal status and banking history (five-step process via agent) | Available under the offshore regulations; less emphasised |
| Incorporation speed | IBC within roughly two working days of documents | Via registered agent; comparable |
| Company types | CLS, restricted purposes, segregated portfolio, holding, IP holding, foundation, Premium Product, Global Product | Single offshore IBC, plus holding-company conversion of an FZE or FZCO |
| Indicative all-in cost | Roughly USD 2,000 to 4,000 incorporation; renewal around AED 9,000 plus (agency estimate) | Comparable or slightly higher (agency estimate) |
So which one fits? RAK ICC offers a broader range of company types and an inward redomiciliation route that preserves an existing company's legal status and banking history through a five-step process (RAK ICC, 2026). JAFZA carries the Dubai address and a long track record of holding Dubai property directly. For most holding and asset-protection uses, the choice turns on flexibility of structure and adviser preference rather than a single decisive feature.
Citation capsule: The UAE has two offshore regimes: RAK ICC in Ras Al Khaimah and JAFZA Offshore in Dubai. JAFZA requires at least one shareholder, one director and one secretary, with a registered agent mandatory (JAFZA, 2026), while RAK ICC incorporates an IBC within roughly two working days and offers inward redomiciliation that preserves legal status and banking history (RAK ICC, 2026).
Offshore vs free zone: which should you choose?
Choose offshore for a pure holding vehicle and a free zone for an operating business with UAE residence. The defining split is legal capacity: an offshore company holds "only a certificate of incorporation" and cannot trade onshore or sponsor visas (JAFZA, 2026), whereas a free-zone company holds a trade licence and can hire and issue visas.
The decision rule is short. If you need to live or work in the UAE, hire staff or run a real operating business, choose a free zone. If you want a clean holding or asset vehicle with no UAE presence, choose offshore. If you need both, pair a free-zone company with an offshore holding company above it. Cost follows the same logic: offshore is cheaper because it carries no premises or visas, while a free zone costs more.
For operating businesses, our companion guides go deeper. Compare the leading options in our review of the best free zones in the UAE for 2026, and budget realistically with our breakdown of the cost to set up a company in Dubai in 2026.
Citation capsule: Choose a UAE offshore company for a holding or asset vehicle and a free zone for an operating business with residence visas. An offshore company holds "only a certificate of incorporation" and cannot trade onshore or sponsor visas (JAFZA, 2026), while a free-zone company carries a trade licence and can hire staff. Owners needing both can layer offshore above a free-zone entity.
Tax and substance in 2026: is a UAE offshore company tax-free?
No, a UAE offshore company is not automatically tax-free. The UAE applies 0% corporate tax on taxable income up to AED 375,000 and 9% above that threshold under Federal Decree-Law 47 of 2022, for financial years starting on or after 1 June 2023 (UAE Ministry of Finance, 2026). An offshore holding company sits within this corporate tax net.
So where does the 9% bite? Treatment depends on activity and income source. The FTA confirms 9% is the standard rate, with 0% reserved for a Qualifying Free Zone Person on Qualifying Income, while profits attributable to a permanent establishment are taxed at 9% (UAE Federal Tax Authority, 2024). Genuine passive holding of qualifying dividends and capital gains is generally favourable in principle, but the position is fact-specific. Confirm your treatment with a UAE tax adviser before assuming 0%.
What about economic substance reporting? Here is the 2024 change many older articles miss. Cabinet Decision No. 98 of 2024 cancelled Economic Substance notification and reporting for financial years ending after 31 December 2022 (UAE Ministry of Finance, 2024). Obligations and prior penalties remain only up to 31 December 2022. So do not file annual ESR returns for current years. The requirement no longer exists for those periods.
A short caution for US persons, who are not our target audience here. United States citizens and green-card holders face worldwide taxation plus controlled-foreign-company rules, PFIC treatment and FBAR and Form 5471 filings, regardless of UAE rules. If that describes you, take specialist US tax advice before forming any offshore company. For wealth-protection structures, our reference notes on DIFC foundation benefits and the DIFC wealth-protection route explain the alternatives.
Citation capsule: A UAE offshore holding company is not inherently tax-free. The UAE charges 0% corporate tax up to AED 375,000 and 9% above it (UAE Ministry of Finance, 2026), and only a Qualifying Free Zone Person earns 0% on Qualifying Income while permanent-establishment profits are taxed at 9% (UAE Federal Tax Authority, 2024). Economic Substance reporting was cancelled for financial years ending after 31 December 2022.
Thinking about which vehicle and which regime fit your holding structure? You can talk to Ancova Associates about company formation and get a structure mapped to your assets, your residency goals and your tax position before you file anything.
Frequently asked questions
Can a UAE offshore company get residence visas?
No. A UAE offshore company cannot sponsor residence visas because it holds no trade licence, employs no staff and leases no premises. JAFZA confirms it receives "only a certificate of incorporation" and operates internationally only (JAFZA, 2026). Residency requires a free-zone or mainland entity instead.
RAK ICC vs JAFZA Offshore: which is better?
Neither is universally better. RAK ICC offers more company types and inward redomiciliation that preserves legal status and banking history (RAK ICC, 2026), while JAFZA carries a Dubai address and a long record of holding Dubai property directly. The right choice depends on your structure, your assets and your adviser's view.
Can an offshore company own Dubai property?
Yes. Both RAK ICC and JAFZA Offshore companies can own freehold property in Dubai through the Dubai Land Department, subject to a no-objection certificate. RAK ICC gained this route through its 2019 MoU with the DLD. Always confirm the specific development sits on the current DLD-approved list before committing.
Does a UAE offshore company pay corporate tax?
It can. A UAE offshore company is within the corporate tax net, charged 0% up to AED 375,000 and 9% above that under Federal Decree-Law 47 of 2022 (UAE Ministry of Finance, 2026). Treatment depends on activity and income source, so confirm your position with a UAE tax adviser.
Can a UAE offshore company trade inside the UAE?
No. An offshore company is "authorised to operate internationally" only and "cannot conduct any commercial activity with persons within the United Arab Emirates" (JAFZA, 2026). To trade onshore you need a mainland or free-zone licence held by a separate, licensed entity.
Sources
- JAFZA, "What you need to know about starting an offshore business in the Jebel Ali Free Zone," retrieved 2026-06-13, https://www.jafza.ae/resource-centre/insight/what-you-need-to-know-about-starting-an-offshore-business-in-the-jebel-ali-free-zone/
- JAFZA, "New offshore company guide," retrieved 2026-06-13, https://www.jafza.ae/resource-centre/guides/new-offshore-company/
- RAK ICC, "Company Limited by Shares (CLS)," retrieved 2026-06-13, https://www.rakicc.com/services/company-limited-by-shares-cls/
- RAK ICC, "New Incorporation FAQs," retrieved 2026-06-13, https://www.rakicc.com/faqs/new-incorporation/
- RAK ICC, "Transfer of Domicile," retrieved 2026-06-13, https://www.rakicc.com/services/transfer-of-domicile/
- UAE Ministry of Finance, "Corporate Tax" (Federal Decree-Law 47 of 2022), retrieved 2026-06-13, https://mof.gov.ae/en/public-finance/tax/corporate-tax/
- UAE Ministry of Finance, "Ministry of Finance announces amendment to Cabinet Decision on Economic Substance Requirements" (Cabinet Decision 98 of 2024), retrieved 2026-06-13, https://mof.gov.ae/en/news/ministry-of-finance-announces-amendment-to-cabinet-decision-on-economic-substance-requirements/
- UAE Federal Tax Authority, "Basic Tax Information Bulletin - Free Zone Persons" (May 2024), retrieved 2026-06-13, https://tax.gov.ae/Datafolder/Files/Pdf/2024/CT%20Bulletin/Basic%20Tax%20Information%20bulletin-%20Free%20Zone%20Person-English.pdf
- Al Tamimi & Company, "What is a Jebel Ali Free Zone Offshore Company?" retrieved 2026-06-13, https://www.tamimi.com/law-update-articles/what-is-a-jebel-ali-free-zone-offshore-company/
- MS & Co, "Company set-up in RAK ICC to hold freehold property" (RAK ICC-DLD MoU), retrieved 2026-06-13, https://ms-ca.com/news-and-blogs/company-set-up-in-rak-icc-hold-freehold-property
- Indicative cost figures are agency estimates (Tier 4, businesssetuphq and legarithm); confirm against the official RAK ICC 2025 Fee Schedule or a registered-agent quote before relying on them.
Written by
Amine Derag
Director of Strategy, Ancova Associates
Amine Derag is Director of Strategy at Ancova Associates, the Dubai advisory firm for company formation, residency, citizenship by investment, and cross-border tax structuring. He advises founders and private clients relocating to the UAE on how a UAE structure interacts with their home-country tax and reporting obligations.
Connect on LinkedInThis article is general information for educational purposes only and is not legal, tax, financial, or immigration advice. Investment thresholds, processing times, and program terms change — speak with a qualified Ancova adviser before acting.
