Looking to purchase real estate in the UAE? Here’s why you need to set up a JAFZA offshore holding company

20 June 2018 Category:
Setting up an offshore company in Dubai

The UAE property market has long produced steady returns for its investors. Despite slowing a little in recent years, there’s plenty of reason to believe we could be in for another notable rise in the value of the country’s real estate.

For example: The introduction of a new 10-year visa, announced on 20 May 2018, which would allow investors to stay in the country longer, has already had an impact on the market. Property stocks were on the up after the announcement, with many feeling that this move will have an ongoing positive effect.

Investors looking for returns in this promising market can often gain a further advantage by purchasing property through an offshore holding company. Not only can this approach help to increase ROI but there are also many other benefits with regards to limiting personal liability and retaining privacy and confidentiality when investing.

Offshore companies & JAFZA

There can be few better places to set up your real estate holding company than Jebel Ali Free Zone Authority (JAFZA). Located in the west of Dubai, JAFZA offers entrepreneurs a straightforward and affordable way to establish an offshore company. The free zone is so highly regarded by overseas investors that it is currently home to 7,000 businesses from more than 100 countries – bringing in over 20% of the UAE’s foreign direct investment.

Located in the west of Dubai, JAFZA offers entrepreneurs a straightforward and affordable way to establish an offshore company.

Why set up a UAE real estate holding company?

Before we further explore the benefits of setting up in Jebel Ali, let’s look at why many investors choose to buy real estate through an offshore holding company.

Perhaps the main reason for setting up a real estate holding company is to retain anonymity. Many investors wish to keep their property portfolio out of public record for a number of reasons, and a holding company is the easiest way to do this. Purchasing property in this way not only allows for greater privacy but often also for greater tax efficiency.

Real estate paperworkAs well as the tax advantages that can help to further increase ROI, owning property through a company rather than as an individual also reduces an investor’s personal liability and allows for better asset protection. Here in the UAE, it can also offer some protection from the convoluted inheritance process.

If an expatriate business owner was to die in the UAE without a will, all business assets would be frozen immediately. With no will in place, assets would then likely be distributed in accordance with Shariah law which dictates the exact percentage of an estate that each family member will receive. While it is possible to elect to use the inheritance laws of your home country, this is very rarely permitted. As a property can never die, an offshore holding company is a useful way to protect your assets and eventually pass them down in accordance with your own wishes.

Why set up in JAFZA?

If you’re keen to take advantage of purchasing property in the UAE through an offshore holding company, JAFZA offers an attractive business setup package. Here is why so many foreign entrepreneurs choose to call the free zone home.

If you’re keen to take advantage of purchasing property in the UAE through an offshore holding company, JAFZA offer an attractive business setup package.

Usual flexibility of being an offshore company: An offshore company is an extremely flexible way to run a business.

Confidentiality: Any investor looking to protect the anonymity of their property portfolio can do so with ease when setting up here. When registering an offshore company, as opposed to a free zone company, JAFZA does not disclose any information about the company owners.

Tax advantages: As well as the potential improvements in tax efficiency that can result from anonymity, there are other tax advantages to be had for investors who set up offshore in JAFZA. UAE-registered offshore companies benefit from the UAE tax regime – which means zero tax levied on corporate income.

Taxes
Greater protections: On top of the liability protections that come with owning an offshore holding company, JAFZA also offers further safeguards to those who set up here. For example, non-Muslim, offshore company owners setting up in a Dubai jurisdiction are permitted to create a Last Will and Testament in DIFC courts – affording them greater long-term protection for their businesses than other company setup types.

How to set up in Jebel Ali Free Zone Authority

So you’re sold on the benefits of setting up an offshore holding company in JAFZA – what next?

There are a number of steps that need to be taken, some complex, some less so. The first step is to make your application. Providing all documents are filed correctly, this is an incredibly straightforward process. However, any errors in your application or the documents provided to the free zone could result in the delay or even rejection of your application. That’s why it’s a good idea to work with a company formation specialist who can manage the entire application process for you, and ultimately ensure it takes no more than a few hours of your time.

Setting up your own business has never been easier. Virtuzone takes care of it all so you can focus on what matters – building your business. For more information about company formation in the UAE mainland or free zones, please call us on +971 4 457 8200, send an email to info@vz.ae, or click here.

About the author: Olga Melnik, Head of Business Development, Virtuzone.
About the author: Olga Melnik, Head of Business Development, Virtuzone.

Having spent the past seven years working in the field of legal company incorporation, Olga now works closely with entrepreneurs both locally and internationally in assisting them with their UAE company setup requirements. This includes both free zone and onshore in Dubai and other emirates across the UAE. Olga always advises each of her clients on the best legal setup for their particular needs, and in so doing she supports across the entire range of company setup, from legal translation to document certification to management of the entire communication and legalities with the local UAE company setup authorities. Olga was born and raised in the Ukraine and has a degree in Business Administration and International Law.