Ras Al Khaimah (RAK)

Register your company in RAK
United Arab Emirates

Ras Al Khaimah is one of the fastest growing emirates in one of the fastest growing economies in the world, the United Arab Emirates. Renowned for its natural beauty and art de vivre, Ras Al Khaimah has also gained a reputation for being a transparent, tax-free, corruption-free and no-red tape to do business.

Its booming economy and proximity to other major international centres like Dubai has attracted hundreds of large, medium and small businesses from every part of the world.

Why choosing to incorporate a company in RAK?

Why a RAK Offshore IBC (RAK ICC) is an excellent corporate structure:

UAE looks set to reap the rewards of the EU ruling under which banks are now forced to reveal information to tax authorities; the EU Savings Directive obliges financial institutions in all EU member states to either disclose tax and bank information to the relevant tax authority, or charge clients a hefty withholding tax.

Though the new directives will specifically affect EU residents, a number of banks in ‘tax havens’ have also agreed to exchange customer information, including Jersey, Guernsey, the Isle of Man, the British Virgin Islands, the Cayman Islands, Switzerland, Liechtenstein, Monaco and San Marino. The reputation of discretion for some of these countries is being eroded. In order to keep details of their wealth private, bank customers now have the option of paying a withholding tax which will be levied directly in the country in which their savings are held.

UAE has long enjoyed a reputation as a secure, tax-free jurisdiction for international banking and company incorporation. With this latest development from Europe, RAK company registration and corporate and personal banking options are becoming more popular with international businesses and high net worth individuals.

Main advantages of RAK Offshore company

RAK ICC companies that do not conduct business within the UAE are not subject to corporate tax. Since RAK ICC companies are primarily used for international operations and offshore holding purposes, they are not taxed on profits generated outside the UAE.

Free Zone companies may benefit from a 0% corporate tax rate on qualifying income if they meet certain conditions (e.g., not conducting business in the UAE mainland).

There is no personal income tax in the UAE, which remains unchanged even after the introduction of corporate tax.

No income tax applies to individual shareholders or employees of RAK ICC companies, as these entities are structured offshore and are not considered UAE residents for tax purposes.

The UAE does not impose capital gains tax on the sale of assets, shares, or property, whether for individuals or businesses. Capital gains generated by RAK ICC companies from the sale of international assets or shares are not subject to capital gains tax in the UAE. This makes RAK ICC a favorable option for holding companies, investment vehicles, and international trade.

Businesses operating in the UAE can repatriate 100% of their profits and capital without any restrictions. RAK ICC companies allow for the full repatriation of profits and capital to their home countries, as they are not subject to UAE withholding taxes or profit transfer restrictions. This remains a key benefit for foreign investors using RAK ICC for holding and international trade purposes.

Free zone entities in the UAE, including RAK Free Zone, allow 100% foreign ownership without the need for a local Emirati sponsor or partner. RAK ICC companies also offer 100% foreign ownership since they are offshore entities. This structure allows international businesses to retain complete control over their operations, holdings, or assets.

The UAE does not impose withholding tax on dividends, interest, royalties, or other payments made to foreign entities or individuals. RAK ICC companies can remit payments such as dividends, interest, or royalties to foreign shareholders without incurring withholding tax. This is a major benefit for businesses using RAK ICC as part of a global tax planning strategy.

The introduction of corporate tax in the UAE last June 2023 has had a minimal direct impact on RAK ICC companies because these entities:

– Do not generate income from UAE sources (which is key for them to remain exempt from corporate tax).
– Are structured for offshore purposes, holding international assets, conducting global trade, and facilitating cross-border transactions.

After the introduction of Corporate Tax (CT) in the UAE in June 2023, a RAK ICC (Ras Al Khaimah International Corporate Centre) company must adhere to certain limitations and regulations regarding its activities to maintain its tax-exempt status. The Corporate Tax (CT) applies to companies generating income in the UAE, but RAK ICC companies, being offshore entities, can still enjoy tax benefits if they follow specific guidelines.

Here’s a breakdown of what a RAK ICC company may and may not do under the new tax regime:

What a RAK ICC Company May Do

1 – Operate Internationally
RAK ICC companies can engage in business activities that are international in nature. They are commonly used as:
– Holding companies for shares in foreign entities.
– Trading companies conducting international trade (outside the UAE).
– Asset protection vehicles for global investments.
– Investment structures for real estate or intellectual property located outside the UAE.
– Wealth management entities for family offices or estate planning.

2 – Hold International Assets
– RAK ICC companies can hold assets such as real estate, intellectual property, or shares in companies located outside the UAE. This is one of the most common uses of RAK ICC structures due to the asset protection and confidentiality they provide.

3 – Engage in Offshore Financial Transactions
– These companies are used to facilitate offshore banking, international financial transactions, and investments in foreign jurisdictions. Since RAK ICC companies are not subject to UAE corporate tax on foreign income, they can receive dividends, interest, and capital gains from international sources without tax liabilities in the UAE.

4 –  Enter Into Contracts with Non-UAE Entities
– RAK ICC entities can sign contracts and agreements with international parties and foreign companies. They can participate in joint ventures, partnerships, or investment agreements with non-UAE-based entities.

5 – Benefit from Double Tax Treaties
– A RAK ICC company can still benefit from the UAE’s network of double taxation treaties with more than 130 countries, which helps to mitigate or avoid tax on foreign-sourced income in those jurisdictions.

6 – Own Intellectual Property (IP)
– RAK ICC companies can hold intellectual property rights (such as trademarks, copyrights, or patents) for products or services used internationally. They can license these IPs to foreign entities, creating a global revenue stream without being subject to UAE corporate tax, provided that the income is from outside the UAE.

7 – Repatriate Profits and Capital Freely
– RAK ICC entities may repatriate 100% of their profits and capital to any jurisdiction without any restrictions. This makes them a tax-efficient option for investors looking to transfer profits abroad from their global operations.

What a RAK ICC Company May Not Do

1 – Conduct Business Within the UAE
RAK ICC companies cannot operate within the UAE mainland or in free zones. This means:
– They cannot provide goods or services to UAE-based businesses or residents.
– They cannot have UAE-sourced income, as this would trigger corporate tax obligations.
– They cannot enter into contracts or agreements with UAE-based entities or individuals for business activities in the UAE.

2 – Lease Office Space in the UAE
– Unlike free zone companies, RAK ICC companies do not require a physical office in the UAE and are not permitted to lease or maintain office space in the country for conducting operations. Their activities are meant to be offshore, without a physical presence in the UAE.

3 – Employ Staff or Operate Within the UAE
– RAK ICC companies cannot hire employees within the UAE to conduct business or provide services in the country. Employment of staff in the UAE would be considered local business activity, which is subject to UAE corporate tax and other regulations.

4 – Generate UAE-Sourced Income
– A RAK ICC company must not derive income from UAE sources, including profits from UAE-based operations or investments. Any income earned from UAE sources would fall under the corporate tax regime, potentially negating the benefits of operating as an offshore entity.

5 – Trade Goods or Services in the UAE
– RAK ICC companies cannot trade goods or services within the UAE market, whether through direct sales or intermediaries. Their activities are restricted to international markets. Conducting local trade would classify them as operating in the UAE, thus subjecting them to the corporate tax.

6 – Rent Property or Engage in UAE Real Estate
– RAK ICC companies cannot invest in or manage real estate within the UAE for commercial purposes. Real estate business activities within the UAE (buying, selling, or renting property) would fall under the UAE’s real estate tax and corporate tax framework.

7 – Advertise Services in the UAE
– RAK ICC companies are restricted from advertising or marketing services within the UAE for local clients or consumers. Their focus must remain international, and engaging in advertising for UAE customers would trigger tax and compliance obligations.

RAK ICC Company Post-Tax Regulations

After the new corporate tax regulations introduced in June 2023, RAK ICC companies continue to benefit from the tax-free status on foreign-sourced income as long as they do not engage in local UAE business activities. The key to maintaining the tax advantages of a RAK ICC company is ensuring that all business operations are conducted offshore and that no revenue is derived from UAE-based activities.

Compliance information

Key corporate features

The corporate requirements for a RAK ICC (Ras Al Khaimah International Corporate Centre) company are relatively straightforward and designed to facilitate offshore business activities. These requirements allow businesses to operate with flexibility and confidentiality, while ensuring that certain governance and compliance standards are maintained. Below is an overview of the key corporate requirements for establishing and maintaining a RAK ICC company:

Shareholders

– Minimum Number of Shareholders: A RAK ICC company can be incorporated with a single shareholder, making it highly flexible for sole proprietors and individual investors. There is no maximum limit on the number of shareholders.
– Shareholder Nationality: There are no restrictions on the nationality of shareholders, allowing 100% foreign ownership.
– Corporate Shareholders: Shareholders can either be individuals or corporate entities, meaning that another company can own shares in a RAK ICC company.

Directors

– Minimum Number of Directors: A RAK ICC company must have at least one director. The director does not need to be a UAE resident.
– No Restriction on Nationality: Directors can be of any nationality and are not required to reside in the UAE.
– Corporate Directors: Corporate entities can also serve as directors of a
RAK ICC company.
– Director’s Duties: Directors are responsible for managing the affairs of the company, including its compliance with RAK ICC regulations. However, directors are not required to physically operate from the UAE.

Company Secretary

– Appointment of a Secretary: RAK ICC companies are required to appoint a company secretary. This can be an individual or a corporate entity, and it may be one of the directors or shareholders.
– Secretary’s Role: The company secretary is responsible for ensuring that the company complies with local regulations, maintaining statutory records, and filing required documents with the authorities.

Registered Office and Agent

– Registered Office: Every RAK ICC company must have a registered office in Ras Al Khaimah, UAE. This is typically provided by the registered agent.
– Registered Agent: It is mandatory to appoint a registered agent licensed by RAK ICC. The registered agent assists with the incorporation process and ongoing compliance requirements, such as the filing of annual reports and renewals.
– No Physical Office Requirement: RAK ICC companies are offshore entities, meaning they do not require a physical office in the UAE. The registered agent typically provides the registered address for legal purposes.

Capital Requirements

– No Minimum Share Capital: There is no minimum share capital requirement for a RAK ICC company. The company can determine its capital structure based on its business needs.
– Capital Denomination: Share capital can be denominated in any currency and may consist of different classes of shares (e.g., ordinary, preferred) depending on the company’s Articles of Association.
– No Requirement to Deposit Capital: Share capital does not need to be deposited in a bank account at the time of incorporation.

Accounting and Auditing

– No Audited Financials Required: A RAK ICC company is not required to file audited financial statements with the authorities. However, it must maintain proper accounting records for at least seven years and provide them upon request.
– Optional Auditing: While it is not mandatory, companies can choose to have their accounts audited for internal or shareholder purposes.
– Annual Return: A RAK ICC company is required to file an Annual Return with its registered agent but is not required to submit detailed financial statements to the RAK ICC authorities.

Meetings

– No Mandatory Physical Meetings: RAK ICC companies are not required to hold physical meetings in the UAE. Shareholders’ and directors’ meetings can be held anywhere in the world.
– Virtual Meetings: Meetings can be conducted electronically, and resolutions can be passed through written resolutions without the need for in-person meetings.

Memorandum and Articles of Association (MAA)

– MAA Document: Like most companies, a RAK ICC company must have a Memorandum and Articles of Association (MAA), which outlines the structure of the company, its business activities, and internal regulations.
– Customizable Articles: The Articles of Association can be customized to suit the specific needs of the business, offering flexibility in governance and management structure.

Permissible Activities

– Offshore Business Activities: A RAK ICC company is allowed to engage in a wide range of offshore business activities, including:

– Holding assets and investments outside the UAE.
– Conducting international trade.
– Owning intellectual property rights.
– Serving as a holding company.

– Restrictions: RAK ICC companies cannot conduct business within the UAE mainland or with UAE-based entities, except in the capacity of holding real estate in designated freehold areas (if approved).

Compliance and Regulatory Obligations

– Anti-Money Laundering (AML) and Know Your Customer (KYC): RAK ICC companies must comply with UAE regulations regarding AML/KYC requirements. This includes providing information about shareholders, directors, and beneficial owners to ensure transparency.
– Beneficial Ownership: RAK ICC companies must file details of their beneficial owners (ultimate owners) with the authorities. This requirement enhances transparency but does not impact the confidentiality of the company’s shareholders to the public.

Renewal of License

– Annual Renewal: RAK ICC companies must renew their license annually. This involves paying a renewal fee and updating any information related to the company, such as the details of directors or shareholders.
– Non-Compliance Penalties: Failure to renew the license or comply with regulatory obligations may result in penalties, including the company being struck off the register.

Confidentiality and Privacy

– Confidentiality: RAK ICC companies benefit from a high degree of confidentiality, as shareholder and director information is not publicly available, though it is disclosed to the registered agent and RAK ICC authorities for compliance purposes.
– Privacy of Shareholders and Directors: The details of shareholders, directors, and beneficial owners are kept confidential by the RAK ICC authorities and are not disclosed to the public unless required by a legal order.

Economic Substance Regulations (ESR)

– Not Applicable for Purely Offshore Entities: RAK ICC companies generally do not need to comply with Economic Substance Regulations (ESR) unless they are conducting activities that fall under the ESR regime (e.g., banking, insurance, fund management). Since RAK ICC companies are offshore entities, they typically fall outside the scope of ESR.