RAS Al-Khaimah (RAK)
Ras Al Khaimah is the fourth-largest emirate in the United Arab Emirates. It is estimated to have a total population of about 350,000. The emirate has a diverse economy and booming with business, with no single sector contributing more than 30% to overall GD.
Offshore or Freezone
When business owners decide to start businesses in the UAE, the most common question arises: Offshore or Free Zone – which one is more suitable for my type of business?
It is important to know that offshore companies in the United Arab Emirates are restricted from carrying out activities in the UAE. For business owners who want to operate their business within the UAE, an offshore company is not feasible. But an offshore company can own interest in real estate (approved by the relevant authority where the offshore company is registered) and can act as a holding entity in the UAE.
The Labuan offshore companies are also restricted from carrying out certain activities in the UAE. The offshore company cannot carry on a banking business or undertake the business of an insurance or reinsurance company, insurance agent or an insurance broker. The offshore company cannot carry on any business which may be restricted by the relevant authority and its regulations under where the offshore company is established.
The RAK Investment Authority (RAKIA) launched the concept of the International Business Company (IBC) in January 2007 and has since become one of the most popular offshore destinations in the world. RAK Offshore company is exempted from income tax and is ideal for international businesses that do not require physical presence and business operation in the UAE.
RAK Freezone Entity
The RAK free zone entity is cost-effective for businesses who need to maintain an office or warehouse in the UAE. A free trade zone or free zone is a special area of RAK where taxes, tariffs and quotas are eliminated and company requirements are made easy to attract new businesses and foreign investments. With free zone companies, it is possible to benefit from over 50 double taxation agreements of the UAE. Business owners and investors are also eligible to obtain visa/residency. Rak Free Zone companies are tax exempted for up to 50 years.
In many instances, a company with substance and actual presence is preferred for international tax optimization. A free zone company combines the benefits of full tax exemption with the benefits of an active, local presence. For example, the authorities will issue a lease for the company’s own office or ‘shared desk’ to attest the actual location of the company.
A simple domicile or a ‘registered office address’ will often not suffice in today’s world. With a company in the free zone, it becomes much easier when it comes to opening a business banking account in Dubai. In addition, business owners and employees of the company may obtain residence permits with a minimum period of presence in the UAE. By incorporating a company and obtaining a residence permit, you can thus enjoy complete tax benefits at both private and corporate level.
However, A free zone company in UAE must undergo VAT registration if the taxable turnover reaches Dhs 375,000. The company can also register voluntarily if its annual taxable supplies reach between Dhs 187,500 and Dhs 375,000. The standard VAT is 5%
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