Setting up an Offshore Company in the Jebel Ali Free Zone Authority (“JAFZA”), Dubai, UAE
Jebel Ali is an area located in the Emirate of Dubai home to the Jebel Ali Free Zone and the Port of Jebel Ali, which is the largest manmade sea port in the world and the busiest sea port in the Middle East.
The Port of Jebel Ali was constructed in the late 1970s after a directive by the then ruler of Dubai, His Highness Sheikh Rashid bin Saeed Al Maktoum to supplement the limited facilities at Port Rashid. The Jebel Ali Free Zone is the free zone of Jebel Ali and has emerged as one of the premier destinations within the UAE and internationally to establish manufacturing and trading operations. The Jebel Ali Free Zone, often abbreviated as “JAFZA”, was established in 1985 as the first free zone in the United Arab Emirates and is currently the largest free zone in the world. The introduction of a free zone in 1985 helped spur investment and development of the Port of Jebel Ali, which is expected to become the largest sea port in the world by 2030.
In addition, JAFZA is now widely credited with serving as the benchmark for all future free zones in the Emirate of Dubai, United Arab Emirates, and the member states of the Gulf Cooperation Council (“GCC”). In addition, JAFZA has played an important role towards the UAE’s goal of diversifying into non-oil revenue streams.
As a result of the resounding success of JAFZA, it is no surprise that about a half of Dubai’s exports pass through JAFZA, which contributes to an estimated 25% of Dubai’s Gross Domestic Product. The benefits of establishing operations at JAFZA include:
- 100% foreign ownership;
- International recognition;
- World-class regulatory environment and infrastructure;
- 0% corporate tax rate for 50 years;
- 0% personal income tax;
- Onsite customs;
- No restrictions on the repatriation of profits;
- Access to local banking markets; and
- Close proximity to the Port of Jebel Ali.
The JAFZA Offshore Company was introduced in 2003 in accordance with the Jebel Ali Free Zone Authority Offshore Companies Regulations of 2003, and superseded by the Offshore Companies Regulations of 2018, which is the governing legislative framework for the formation and regulation of JAFZA Offshore Companies.
As the first free zone in the UAE to introduce the Offshore Company to domestic and international investors in January 2003, the JAFZA Offshore Company has proved to be quite popular by investors seeking access to offshore banking, as well as traditional holding company activities within an internationally recognized licensing authority.
This is due to the numerous benefits, modern infrastructure, and low cost offered. In addition, the JAFZA Offshore Company is the only destination available to purchase real estate in Dubai, as other offshore companies in the UAE and internationally are not permitted to purchase real estate in Dubai in accordance with the registration requirements of the Dubai Land Department.
In accordance with the Jebel Ali Free Zone Authority Offshore Companies Regulations, the JAFZA Offshore Company may not perform the following activities:
- Carry on business with persons resident in the United Arab Emirates;
- Own an interest in real property situated in the United Arab Emirates unless approved by the Jebel Ali Free Zone Authority;
- Carry on banking business;
- Carry on business as an insurance or reinsurance company, insurance agent or insurance broker; or
- Carry on any other business which may be prohibited by the Jebel Ali Free Zone Authority.
Note that the JAFZA Offshore Company shall not be treated as carrying on business with persons resident in the United Arab Emirates by reason only that:
- It makes or maintains professional contact with legal consultants, accountants, management companies or other similar persons carrying on business within the UAE;
- It prepares and maintains books and records within the UAE;
- It holds a lease of property for use as a registered office or owns real property in select locations as approved by the Jebel Ali Free Zone Authority;
- It holds within the UAE meetings of its directors or members; or
- It holds an account in a bank in the UAE for the purpose of conducting its routine operational transactions. Note that if the JAFZA Offshore Company wishes to conduct trade or other business in the Jebel Ali Free Zone or elsewhere in the UAE, it must obtain the appropriate license to conduct the trade or other business activity from the competent authorities.
Similar to other free zone entities in the UAE, the benefits of forming a JAFZA Offshore Company include:
- 100% foreign ownership;
- 0% corporate or personal income tax rate;
- No minimum capital requirements;
- Ability to purchase real estate;
- Efficient regulatory environment;
- Proximity to major airports and ports;
- Access to banking facilities; and
- International credibility.
Note that the purchase of real estate includes the right to purchase in Dubai, but is limited to approved developments open to foreign ownership, unless the company is owned by a GCC national.
The JAFZA Offshore Company is registered through the approved Registered Agent which is responsible for maintaining the affairs of the Offshore Company in accordance with the rules and regulations of the Jebel Ali Free Zone Authority.
In addition, the address of the Registered Agent will be used for all legal documents of the Offshore Company and will represent the Offshore Company in front of the Jebel Ali Free Zone Authority for all services with the free zone.
Unlike an onshore free zone company or local UAE company, the Offshore Company will be incorporated without a trade license at the point of incorporation.
Rather, an original and duly executed Memorandum of Association and Certificate of Incorporation will be issued at the time of formation by the Jebel Ali Free Zone Authority.
As one of the first Registered Agents with the Jebel Ali Free Zone Authority, we would be pleased to provide further information on the benefits of the formation of an Offshore Company, including the timeline, documentation requirements, and fees.
Disclaimer on Use
The information presented is intended for general information only and is not meant to be a substitute for professional advice or to be used for decision-making.
Professional advice relies on an assessment and understanding of the specific situation for each person and, therefore, the application of changing laws and regulations in the UAE, will vary widely from case to case.
The information contained herein is based on facts available from sources we believe to be credible at the time of publication and is subject to change.