Offshore Company Formation in UAE: Comparing Ajman, JAFZA, Dubai (DIFC), and RAK

UAE Offshore Companies Introduction

The United Arab Emirates (UAE) has emerged as a leading choice for both onshore and offshore company formation, offering tax benefits, simple regulations and access to the global market. Choosing the right jurisdiction is very important for business as each free zone and offshore setup in the UAE has its own advantages. This guide will compare Free Zone and offshore company formation in Dubai (DIFC), Ajman, JAFZA and RAK, a financial hub that is licensed and regulated and does not provide offshore company registrations (a common misconception!), to help entrepreneurs and investors make the right choice for their business.

Offshore vs. Free Zone Companies in the UAE: Understanding the Difference

Before diving into specific jurisdictions, it’s important to understand the difference between free zone companies and offshore companies in the UAE:

UAE Offshore Company:

These are corporate entities incorporated in the UAE but these companies are not permitted to operate within the UAE. Offshore companies are used mainly for international trade, tax efficiency, asset protection and wealth management. They are exempt from paying corporate taxes and do not require a physical office.

UAE Free Zone Company:

These businesses operate in specific areas of the UAE and are permitted to engage in business within the UAE and internationally (under specific conditions). Free Zones offer 100% foreign ownership, tax advantages and residency visas but this often requires the company to have a physical office.

Now, let’s explore the best UAE jurisdictions for Free Zone offshore company formation!

Free Zone vs. Offshore Companies in UAE

Ajman Offshore Company Formation

Ajman Offshore is regulated by the Ajman Free Zone Authority (AFZA) and is one of the cheapest ways of setting up an offshore company in the UAE.

Ajman Offshore Benefits & Key Features:

• Low Setup Costs – One of the cheapest offshore companies in the UAE.                                            
• 100% Foreign Ownership – Local sponsor is not required.
• Zero Corporate Tax – Exempt from income, capital gains and corporate profits tax. Offshore companies remain tax-exempt unless they generate taxable income within the UAE.
• Quick Incorporation – Registration is done within 2-5 business days.
• No Office Requirement – A virtual office is permitted.
• Confidentiality – The identity of the shareholders is not disclosed to the public.
• Easy Banking Access – Companies can open corporate bank accounts in the UAE as well as in other countries (although, not all UAE banks allow offshore company bank accounts due to compliance requirements).

Ajman Offshore is Best For:

1. International trading companies
2. Holding companies
3. Consulting and professional services firms

➡ Find out more about Ajman Offshore Company Formation.

Ajman Free Zone Company Formation

Ajman Free Zone (AFZ) is one of the most affordable and easily accessible free zones in the UAE, ideal for start-ups and small and medium sized businesses seeking to establish a presence in the region.

Ajman Free Zone Benefits & Key Features:

• Low Setup and Operational Costs – One of the cheapest free zones in the UAE.
• 100% foreign ownership – Local partner not required.
• Tax Free Business Environment – No corporate or personal income tax in UAE.
• Visa Eligibility – Investors and employees can obtain UAE residence visas.
• Strategic Location – Located near Ajman Port to enhance the export and import business.
• Diverse Business Licenses – Trading, e-commerce and consultancy licenses are available.
• Easy Expansion – Additional facilities and services can be used to increase business operations.

Ajman Free Zone is Best For:

1. Startups and SMEs
2. E-commerce companies
3. Trading and consulting companies

➡ Find out more about Ajman Free Zone Company Formation.

JAFZA Offshore Company Formation

Jebel Ali Free Zone (JAFZA) is one of the most recognized and reputable offshore jurisdictions in the UAE, providing strong legal and regulatory framework as well as international credibility.

JAFZA Offshore Benefits & Key Features:

• Established Reputation – JAFZA is a well-established jurisdiction for the formation of an offshore company.
• Property Ownership – JAFZA Offshore companies are permitted to own property in specified freehold areas in the UAE but not in non-freehold areas.
• Zero Taxation – Exemption on income and corporate profits tax. The UAE has introduced a 9% corporate tax, but offshore companies are typically exempt unless they generate income within the UAE.
• Banking Access – An easy corporate bank account can be opened in the UAE as well as in other countries.
• Flexible Business Activities – Ideal for holding companies, investment vehicles and international trade.
• No Physical Presence Required – There is no need for office space or local staff.

 JAFZA Offshore is Best For:

1. Large corporations and multinational companies
2. Holding companies and wealth management
3. Organizations that require ownership of property in Dubai

➡ Find out more about JAFZA Offshore Company Formation.

JAFZA Free Zone Company Formation

JAFZA Free Zone is one of the biggest and most famous free zones in the Middle East and has the best infrastructure and facilities to connect with international trade.

JAFZA Free Zone Benefits & Key Features:

• 100% Foreign Ownership – Local sponsor not required.
• Strategic Location – Located near Jebel Ali Port, the biggest port in the region, to enhance the trading link.
• Zero Corporate and Personal Income Tax – Exemption on income and corporate tax for businesses registered with the free zone.
• Visa Eligibility – Provides for visa rights for investors and employees.
• Diverse Licensing Options – Industrial, trading, logistics and service licenses are available.
• World-Class Infrastructure – It has offices, warehouses and industrial facilities.
• Access to Global Markets – A centre for international businesses wishing to enter the Middle East, Africa and Asia markets.
• Easy Expansion – Additional facilities and services can be used to increase business operations.

JAFZA is Best For:

1. Logistics and supply chain companies
2. Large-scale industrial and manufacturing enterprises
3. Trading companies that have direct access to the global market

➡ Find out more about JAFZA Free Zone Company Formation.

RAK Offshore Company Formation

 The RAK Offshore is licensed by the Ras Al Khaimah International Corporate Centre (RAK ICC) and is a popular and affordable offshore jurisdiction for asset protection and confidentiality.

RAK Offshore Benefits & Key Features:

• Lower Setup Costs – cheaper than Dubai and JAFZA Offshore.
• Zero Corporate & Income Tax – No taxes on the global income or business profits. Offshore companies remain tax-exempt unless they generate taxable income within the UAE (9% over 375,000 AED).
• 100% Foreign Ownership – Ownership without the need for a UAE partner.
• No Office Requirement – Virtual office is allowed.
• Banking Access – Companies can open corporate accounts in leading UAE banks.
• Privacy & Confidentiality – The director and shareholder details are protected.
• Property Ownership in Dubai – RAK Offshore companies are permitted to own property in freehold areas, subject to developer and regulatory approval, but not in non-freehold areas.

RAK Offshore is Best For:

1. Entrepreneurs and start-ups who are searching for a low-cost offshore structure
2. Export and import companies, as well as multinationals
3. Asset protection and estate planning

➡ Find out more about RAK Offshore Company Formation.

RAK (RAKEZ) Free Zone Company Formation

The Ras Al Khaimah Economic Zone (RAKEZ) is one of the most dynamic and cost-effective free zones in the UAE, which offers a great business environment for startups, SMEs, and industrial enterprises. As one of the fastest-growing business hubs in the region, RAKEZ provides flexible business setup solutions, competitive pricing, and a strategic location with the access to global markets.

Key Features & Benefits of RAKEZ Free Zone Company Formation

• 100% Foreign Ownership – Investors hold full ownership rights without needing a local partner.
• No Corporate & Personal Income Tax – RAKEZ businesses enjoy tax exemptions, but corporate tax may apply depending on revenue and activity. The UAE has introduced a 9% corporate tax applicable to businesses exceeding AED 375,000 in taxable profits.
• Many Business Activities – RAKEZ allows trading, e-commerce, consultancy, industrial and manufacturing businesses, however trading activities require special permits or additional regulatory approvals.
• Cost-Affordable Business Setup – RAKEZ provides the most affordable free zone company formation in the UAE with regards to the licensing fees.
• Strategic Location – Situated near RAK Port and Saqr Port to have a better access to the international shipping routes.
• No Currency Restrictions: Companies have no restrictions in repatriating their capital and profits.
• Flexible Office & Facility Options – We offer flexi-desks, shared workspaces, private offices, warehouses, and industrial land plots to meet the business’s operational requirements.
• Access to Free Zone and Mainland Markets – On the contrary to offshore companies, RAKEZ free zone companies can trade internationally and within the free zone. To operate in UAE Mainland, a local distributor or branch setup is required.

Business License Types in RAKEZ

 Here are the different types of business licenses offered by RAKEZ:

• Commercial License – For trading and general business activities.
• E-commerce License – For online businesses and digital entrepreneurs, it is the best choice.
• Consultancy License – For legal, accounting and advisory professionals.
• Industrial License – For manufacturing, production and industrial activities.
• Freelancer Permit – For solo entrepreneurs and independent consultants (does not allow hiring employees).

RAKEZ Free Zone Companies Are Best For:

1. For Startups & SMEs and Small Business Owners – RAKEZ offers low-cost licensing options.
2. E-commerce & Online Businesses – RAKEZ is the best for digital businesses due to the dedicated e-commerce licenses.
3. Manufacturing & Industrial Companies – Industrial zones and warehouses make RAKEZ suitable for production-based businesses.
4. Consulting & Professional Services Firms – Business-friendly regulations make RAKEZ a suitable option for advisory, legal, and financial consultancies.

➡ Find out more about RAK (RAKEZ) Free Zone Company Formation.

DIFC Free Zone Company Formation (Not an Offshore Jurisdiction)

Unlike Ajman, JAFZA, and RAK, DIFC (Dubai International Financial Centre) is a free zone and not an offshore jurisdiction. It is a leading financial centre governed by English Common Law and is well placed for tailored for banking, investment, and financial services.

DIFC Free Zone Company Benefits & Key Features:

• A Highly Regulated Business Environment – Operates under the DIFC Authority and Dubai Financial Services Authority (DFSA) to meet international financial standards.
• Zero Corporate Tax – Guaranteed 50 years of no corporate or personal income tax.
• 100% Foreign Ownership – Local sponsor or UAE national partnership not required.
• World-Class Banking & Financial Services – DIFC provides specialized banking access for financial institutions, investment firms, and wealth management companies, but may not be the best choice for general corporate banking needs.
• An Independent Legal Framework – DIFC follows an English Common Law system with its own courts and arbitration centre.
• Global Business Hub – It serves as a hub to the Middle East, Africa and South Asia (MEASA) region.
• Premium Office Spaces – We offer Grade A office buildings, co-working spaces and business centres.
• Visa Sponsorship – Employees, investors and dependents can apply for UAE residence visas.

DIFC Free Zone is Best For:

1. Financial services companies (banks, asset managers, hedge funds, reinsurance firms)
2. Professional services firms (law firms, consulting firms, accounting, auditing) Professional services firms
3. FinTech and wealth management startups

 DIFC is Not Suitable For:

• General trading
• Industrial businesses
• Retail operations

The DIFC Free Zone is best for banking, investment and professional services and does not allow general trade, industrial production and retail sales. DIFC banking services are primarily for financial institutions, and it is not ideal for general business banking.

➡ Find out more about DIFC Free Zone Company Formation.

Offshore vs Free Zone Companies in UAE: Comparison

* (Corporate tax applies if applicable)
** (Specific Free Zones or Special Approvals may be required)

Corporate Tax Rules for Free Zone Companies in UAE (JAFZA, Ajman Free Zone, RAKEZ)

• Corporate Tax Rate: 9% corporate tax applies to Free Zone companies in the UAE if their taxable profits is more than AED 375,000 per year.
• Qualifying Free Zone Businesses: Some free zone businesses may still benefit from 0% corporate tax if they meet the UAE’s Qualifying Free Zone Person (QFZP) criteria, which includes:
• Earning qualifying income (e.g., transactions with non-UAE entities or other free zone companies).
• Maintaining substance in the free zone (having an office, employees, and core operations).
• Not conducting business with UAE Mainland unless through a branch subject to corporate tax.
• Mainland Transactions: If a free zone company does business with UAE Mainland, profits derived from those activities are subject to corporate tax.

What about DIFC Corporate Tax in UAE? Check out our other article on UAE Corporate Tax for Offshore and Free Zone Companies: What Investors Need to Know in 2025

Choosing the Best Offshore or Free Zone Jurisdiction in UAE: A Conclusion

The choice of the best offshore or free zone jurisdiction in the UAE depends on your business objectives, financial resources and operational requirements:

• Searching for the most cheapest offshore company option? Ajman Offshore.
• Need property ownership in Dubai? Choose JAFZA or RAK Offshore.
• Looking for banking and asset protection? Choose RAK Offshore.
• Setting up a financial services company? DIFC Free Zone.

For a personalized offshore company formation service please contact Offshore Company Reg today!

📞 Get a Free Consultation → Schedule a Call.

Frequently Asked Questions (FAQs) on Offshore Company Formation in UAE

Setting up an offshore company in the UAE offers tax benefits, full foreign ownership, and asset protection. Below are answers to the most common questions, covering DIFC, Ajman, JAFZA, and RAK Offshore and Free Zone jurisdictions.

1. What is the difference between an free zone and offshore company in the UAE?

The key difference lies in business operations and regulations:

✅ Offshore Company Formation in UAE:

• Designed for international business, asset protection, and tax efficiency.
• Cannot conduct business within the UAE but can hold assets and bank accounts.
• No physical office required and no UAE residence visas available.
• Offshore companies cannot own assets in the UAE except JAFZA & RAK Offshore, which can own designated freehold properties.
• Ajman, JAFZA, and RAK Offshore are used primarily for international business and asset protection, but cannot conduct business within the UAE.

✅ Free Zone Company Formation in UAE:

• Can trade internationally and within the UAE (with restrictions).
• Requires a physical presence (office space or flexi-desk).
• Allows UAE residence visas for business owners and employees.

Examples: Ajman Free Zone, JAFZA Free Zone, and DIFC Free Zone (for financial firms).

2. What are the benefits of offshore company formation in UAE?

3. Can an offshore company in UAE open a bank account?

Yes, offshore companies in Ajman, JAFZA, and RAK can open bank accounts in the UAE and internationally. However, banks may require:

• ✅ Company incorporation documents
• ✅ Shareholder and director details
• ✅ Proof of business activity
• ✅ KYC (Know Your Customer) compliance

Banking access depends on compliance checks, and some UAE banks have restrictions on offshore accounts. Offshore banking is subject to compliance checks, and some UAE banks do not accept offshore companies.

💡 Some banks may request a business plan and financial statements for due diligence.

4. How long does it take to register an offshore company in UAE?

Company registration is fast and efficient, typically completed in:

• ✅ Ajman Offshore Formation: 2–5 business days
• ✅ JAFZA Offshore Company Formation: 5–7 business days
• ✅ RAK Offshore Company Formation: 24–48 hours (fastest option)

💡 Factors like document verification and compliance checks may affect processing times.

5. Can an offshore company in UAE own property?

Yes, but only JAFZA Offshore and RAK Offshore companies in UAE can own property in designated freehold areas in Dubai.

🚫 Ajman Offshore does not allow property ownership.

6. Which UAE offshore jurisdiction is best for international business?

It depends on your needs:

• ✅ For global banking & credibility → JAFZA Offshore
• ✅ For asset protection & estate planning → RAK Offshore
• ✅ For low-cost setup → Ajman Offshore

7. Are offshore companies in UAE subject to VAT or corporate tax?

No. Offshore companies in UAE are 100% tax-exempt from:
❌ Corporate tax
❌ Income tax
❌ VAT (Value Added Tax)

Offshore companies are tax-exempt unless they generate UAE-source income. Free Zone companies may qualify for 0% corporate tax but are taxed at 9% if generating income from UAE mainland on income over 375,000 AED.

See our other blog article on Free Zone and Offshore Company in UAE: All You Need to Know About Corporate Tax in 2025

💡 Free zone companies may be subject to 5% VAT if trading within the UAE.

8. How can I start my offshore company formation in UAE?

Starting an offshore company in UAE involves a simple and efficient process:

1. 🔹 Step 1: Choose a jurisdiction (Ajman, JAFZA, or RAK Offshore).
2. 🔹 Step 2: Submit the required documents (passport copies, shareholder details, business plan, etc.).
3. 🔹 Step 3: Complete company registration and open a corporate bank account.
4. 🔹 Step 4: Receive your incorporation certificate and begin operations.
   

💡 Some jurisdictions, such as JAFZA Offshore, may require additional compliance steps like audited financial statements.

9. What are the advantages of Dubai offshore company formation?

💡 Dubai does not have a separate offshore jurisdiction; JAFZA Offshore is the designated offshore company structure available in Dubai.

JAFZA Offshore Company Formation in the UAE offers:
✅ Zero Taxation – No corporate tax, income tax, or VAT for offshore companies.
✅ 100% Foreign Ownership – No local sponsor required.
✅ Global Business Recognition – Strong reputation as an international hub.
✅ Property Ownership – JAFZA Offshore companies can own property in designated freehold zones.
✅ Access to International Banking – UAE banks offer corporate accounts for JAFZA Offshore companies.
✅ Confidentiality & Asset Protection – Shareholder details are protected.

Make sure you pick the right jurisdiction for YOUR business– need expert guidance? Book a FREE discovery call with the Offshore Company Reg team.