- Alternative to offshore - available solution!

Alternative to offshore - available solution!

Alternative to offshore - available solution!Offshore companies for the last few decades have become extremely popular and are often applied by international business with different specialization and various areas of business - holdings, investments, consulting, trade, logistics, etc.

For this reason, significant numbers of businessman have operated offshore companies for many years, through which they achieve their goals successfully. However, for almost at least past 10 years there has been a systematic and general change of legislation in most countries of the world aimed at creating obstacles for facilitation of offshore companies. And for these reasons, a matter of finding possible alternatives to offshores is becoming increasingly important.

As part of measures to combat the use of offshore companies various laws and regulations have been enacted. At the same time, in most cases, to determine the status of offshore company, the following parameters are used - availability or absence of a real office in the country of incorporation, confirmed real business control in the country of incorporation and performance of real business activity in the country of domicile.

In case of offshore companies in most jurisdictions they cannot meet all these requirements, and therefore cannot be tested for "non-offshore" status, which, respectively, entails a difficulty or complete impracticality to use them.

At the same time, if such offshore company still finds opportunities to meet these parameters - it loses its offshore status and becomes a regular company in the country of domicile with the relevant applicable taxation in the country, and thus loses its main benefit.

What solution can be applied? What can be done in order to fully comply with the status of onshore company which can be an alternative offshore company in terms of tax exemptions?

Answer - onshore resident company in the UAE in one of the country’s free trade zones. There are more than 35 free trade zones in the United Arab Emirates, which combine the following main characteristics: tax exemption and possibility of one hundred percent foreign ownership. From this point of view, these companies comply with those parameters due to which offshore companies have become so popular. This type of companies can also have real office in the country, have a director - a resident of the country, as well as to operate in the country and not to lose itd status of tax exemption.

Such companies can also get a certificate of tax residency in the UAE, which enables to use this type of companies subject to agreements on avoidance of double taxation signed by the UAE, which the UAE signed with large number of countries.

This type of companies entails higher costs compared to ordinary offshore companies, but has very different status and image component. And most importantly - confirmed status of a tax resident of the country. At the same time, this type of companies also provides additional significant benefits:

  • It is possible also to arrange residence visa in the UAE for shareholders, directors and employees of a company through them.
  • Account of the company can be opened in reliable and convenient banks in the UAE
  • Upon couple of years such company may receive loans for its business from banks in the UAE.

In conclusion of the aforesaid - a company in Free Trade Zone of the UAE - is in fact a reasonable substitute/alternative to offshore company with a wide range of additional benefits that offshore legal entity cannot offer.