UAE issues more than 5,500 offshore licences

Ras Al Khaimah: More than 5,500 offshore licences have been issued by two offshore licensing authorities in the UAE, including 600 by RAK Offshore as international investors are increasingly channeling their money into the UAE's real estate sector to make 'quick bucks', a top official said.

“A lot of European and international investors are opening up offshore companies in the UAE to invest in land and properties as the sector is booming and there are lots of opportunities and good return,'' Peter Michael Schuster, general manager of RAK Offshore told Gulf News on Monday.

An offshore company is a company which does not conduct substantial business in its country of incorporation. They are sometimes known as non-resident companies.

Offshore companies are usually prohibited from conducting business or retaining employees in their jurisdiction of incorporation.

An investor could open an offshore company with a minimum of Dh10,000 capital, while RAK Offshore charges Dh4,000 to issue the licence.

“We have witnessed a greater interest in recent times for offshore licences, especially following the latest Liechtenstein offshore scandal involving the LGT Bank which shook confidence among investors,'' he said.

“We have issued 600 offshore licences through RAK Offshore in 12 months and I believe, the total number of offshore licences in the UAE has already crossed 5,500,'' he added.

The biggest offshore licensing authority in the UAE is Jebel Ali Offshore, which implements tight audit regulations. He said, a lot of investors use the channel to evade tax in their country.

“With RAK Offshore, companies could purchase properties and hold bank accounts with cheque books,'' he said.

Offshore companies organise assets and transactions in such a way that assets are shielded from future liabilities. “Moreover, an offshore company could form another entity to shield its assets and liabilities,'' Schuster said.

Offshore companies could carry out transactions in the name of a private company, the name of the underlying principal may be kept out of documentation.

Many offshore companies have been accused in the past of being an outlet for money laundering. The current anti-money laundering regulations often require banks and other professionals to look through structures.

Ras Al Khaimah Government is establishing a financial city in the emirate, that could be modelled like the Dubai International Financial Centre (DIFC).

Schuster said, his organisation won't compete with DIFC, but complement it. “The newly established RAK Financial City is expected to become a new generation offshore financial centre,'' he said.

Boat, Yacht and Maritime registry

Schuster said, RAK Offshore is to finalise a deal with the UAE's federal National Transport Authority to offer maritime registry services to more than 5,000 private yachts.

“Due to the development of marinas in the UAE, we see a large opportunity in registering the yachts and private boats,'' he said.

“We are waiting the government to finalise an agreement with RAK Offshore to facilitate this.''