Many business owners believe in several misconceptions on offshore companies, which are preventing them from setting up offshore corporations and benefitting from them. These mistaken beliefs they have acquired can cost them even more money, preventing them from conducting businesses freely.
If you have thought about offshore company formation in Dubai or setting up an offshore company in Dubai or anywhere in UAE, you should learn what these common misconceptions are, Once you learn what the myths and facts are regarding these corporations, then you can decide whether it’s best for your specific situation. Hopefully, you will see how moving your business onto an offshore jurisdiction will help you in meeting your goals.
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Myth: Offshore Businesses are Illegal
This is perhaps what’s most damaging out of all misconceptions on offshore companies as it prevents savvy entrepreneurs from actually taking full advantage of all the benefits that are offered with offshore business setup.
It is important that you to know for a fact that establishing offshore companies is not illegal. As a matter of fact, offshore companies can be formed in the United Arab Emirates, which is a conservative Muslim country.
Like any pernicious myth, thinking that offshore business is illegal is built on misunderstanding local legislation. It’s not illegal for you to own and setup offshore company. However, an offshore company, like any other company, can break laws. When this happens, it still has to answer to regulators. The public is often confused about illegal activities and offshore companies, which is why they assume an offshore company is illegal.
Business owners have to understand that a lot of countries across the globe have tax legislation which forces businesses in revealing the exact earnings of the companies. Depending on where exactly you live right now, you may need to settle your dues to the government in relation to tax. Tax legislation can vary from one country to another. For those who don’t like following the laws as they are detrimental to the growth and success of the business, they don’t have the option of not paying tax as that can make the guilty of evading tax.
No one wants to be sentenced to prison for tax evasion. This is why corporations and businesses opt for offshore company setup in UAE as it can help stay compliant to regulations while getting the most out of a business. Talk to our Business Setup Experts on offshore company setup in UAE to help ensure your +avoid legal troubles.
Read more: Requirements for Company Formation in RAK Offshore
Myth: Offshore Businesses are to do Illegal activities
UAE offshore companies have lots of flexibility in running their businesses. They get to operate any business venture they wish to develop. However, UAE doesn’t permit offshore companies in committing acts that are against humanitarian laws recognized around the world.
Offshore companies in UAE have privacy protection which prevents the government from investigating the finances of the businesses UNLESS the government possesses evidence that the businesses are participating in any illegal activity. The investigators that have evidence can access the bank records of a company in order to make sure it is only working in a legitimate industry, provided they have evidence.
UAE offshore companies can’t participate in:
- Extortion
- Murder for hire
- Prostitution
- Drug trafficking
Yes, a UAE offshore company can make its own decisions business-wise without government interference, unless the government is given evidence on illegal activities that are being conducted by the offshore company.
Read more info: 10 Unbelievable Reasons Why You Should Think About Forming An Offshore Company in UAE
Myth: An offshore company is completely unregulated
There are those that think offshore companies don’t follow any regulations. This is not true. UAE offshore companies have more freedom in comparison to companies that are established in mainland jurisdictions, but that does not mean at all that offshore businesses get to evade regulations.
UAE authorities require offshore companies a specific number of directors and to file legal corporate documents such as a memorandum of association and articles of association before they are allowed to conduct business.
It is not a free-for-all – offshore companies don’t allow their owners in doing whatever they way and without any oversight. However, as we mentioned earlier, they are given more freedom in making business decisions and transactions with little to without political interference.
Myth: Offshore Business setup is a Brand new Trend
Offshore business setup in UAE has gained lots of media attention nowadays. The reason behind this is because more and more people have realized the benefits they bring to the table. However, establishing offshore companies is actually not something new. This particular activity has quite a long history. There’s nothing new with international business owners. There are even writers that say offshore activities have begun way, way back approx. 200 years ago.
The only difference is offshore company formation in UAE was limited to massive corporations with very deep pockets from the issues with communication systems and transportation. Now, anyone can establish an offshore business thanks to advanced global banking systems and the internet.