Company Registration in the Emirate of Ras Al Khaimah (Rak)

By Jony - On Dec 07, 2023

Ras Al Khaimah was formed in 1869. It is a northern emirate with mangrove trees, majestic mountains, and wonderful clean beaches. It borders on Oman and it is located within an hour drive from the pearl of the Middle East, the city of Dubai. The oasis on the shore of the Persian Gulf has become an industrial center of the United Arab Emirates. There you will find a favorable tax climate too: no profit tax, no VAT, and no personal income tax. The opportunities for withdrawing capital are unlimited and this fact attracts a great number of foreign investors to Ras Al Khaimah.

Main advantages of registering an offshore company in Ras Al Khaimah (RAK):

stable political environment;
relatively inexpensive company registration procedure;
favorable climate;
foreigners can own 100% of the company;
stable national currency;
confidentiality;
free trade zone;
inexpensive labor and energy resources;
highest level of personal security;
no annual audit requirements;
no charter capital requirements;
no currency control;
favorable geographic position;
various programs to support small and medium-sized businesses;
rapidly developing economy.

You should be aware, however, that each emirate and each Free Economic Zone will have its own rules and regulations governing company incorporation. You have to be prepared to certain ‘specifics’ of any particular place and if you fail to take a certain factor into account, you may waste your time, effort, and even sometimes money when setting up a company in RAK. If you click here, you can request professional assistance in forming a company in the UAE.

RAK issues various licenses including commercial, trade, consultation, manufacture, etc. licenses. The most significant restriction is probably the following one; companies registered in a Free Economic Zone (FEZ) cannot perform any business operations in the mainland UAE. On the other hand, the advantages of registering a company in RAKEZ FEZ found in Ras Al Khaimah are tremendous indeed. The advantages include the following ones:

full ownership of the company by a foreigner;
no restrictions on capital withdrawal;
access to international markets;
zero taxes;
no customs duties;
opportunity to hire personnel;
opportunity to qualify for a resident visa in the UAE:
opportunity to register a local company;
opportunity to register an offshore company;
advanced infrastructure;
access to logistic centers;
access to manufacturing and other business facilities;
proximity to international air and sea ports;
opportunity to construct buildings;
affordable land plots;
affordable warehouses;
opportunity to build residential accommodations on a rented land plot;
availability of housing for the personnel;
availability of all utilities.

You have to pay a personal visit to the country to register a company in Ras Al Khaimah. Please note that you can register both an offshore company in the emirate and an onshore one.

Steps in the process of registering a company in Ras Al Khaimah

You have to take the following steps to register a company in the emirate:

choose a licensed registration agent;
choose the company type;
choose the company name (it has to reflect the company’s activities and be unique);
collect the application document package;
submit the package for company registration;
pay the registration fee and cover the cost of the agent’s services;
collect the company statutory documents;
open a corporate bank account.

Opportunities for offshore companies registered in the jurisdiction

You can make full use of the following bonuses if you register an offshore company in Ras Al Khaimah:

100% foreign company ownership is permitted;
both individuals and legal entities can be company shareholders;
virtually any lawful activity is permitted, except banking, insurance and trust activities;
company can manage third parties’ assets;
no taxes;
no reporting requirements.

Requirements that an offshore company has to meet in the jurisdiction

At the same time, you will have to meet the following requirements when setting up an offshore company in Ras Al Khaimah:

you have to hire a registration agent;
you have to obtain a registered legal address;
your company cannot do any business in the mainland UAE;
your company has to have at least one director and at least one shareholder (both roles can be fulfilled by one person).

Registering a local company in Ras Al Khaimah

In addition to an offshore company, you can set up an onshore company in the jurisdiction. This move will have the following advantages:

opportunity to do business in the mainland UAE;
no restrictions on types of business activities;
opportunity to participate in government tenders;
resident visas for the company founders, members of their families, and company officers;
opportunities to apply for loans to local banks.

These advantages, however, may be overweighed by one important disadvantage. Namely, in many business areas, at least 51% of the company has to be owned by a local resident. You can find a nominee senior partner who will own 51% only on paper but you would have to give up 20% of your profit anyway. Besides, finding a foreigner that you can trust can be a difficult task too.

Types of offshore companies

It would probably make much more sense to set up an offshore company in RAKEZ. In all likelihood, you would prefer having a limited liability company there. LLCs can come in the following types:

An offshore company limited by shares

The liability is limited to the amount of the initial capital. The Company Charter has to specify the maximum number of shares that the company can issue. Otherwise, it can specify that the number is unlimited. Besides, the classes of shares need to be specified too. The names of the shareholders have to be entered into the Register. The company has to have at least one director.

An offshore company limited by guarantee

This type of company can issue shares or abstain from issuing shares. In any case, one of the company founders has to be a ‘guarantee participant’. If the company is authorized to issue shares, the guarantee participant can simultaneously be a shareholder. If the company is liquidated, its liabilities cannot exceed the amount of the guarantee.

An offshore company for special tasks

You can also set up an offshore company in RAKEZ to perform a special task (to make a single deal, for example). The company has to be a ‘special task’ company from the very beginning as you cannot change the offshore company type once it is registered.

Offshore company re-domiciliation

You can re-domicile your offshore company to RAKEZ from another jurisdiction.

A subsidiary company in Ras Al Khaimah

This is an option highly popular with foreign investors. The name of the subsidiary is going to be equivalent to the name of the parent company. The subsidiary has to have a local ‘service agent’. The permitted types of activities will depend on the license that the subsidiary acquires and on the types of the parent company’s activities.

A representative office in Ras Al Khaimah

You can also open a representative office in Ras Al Khaimah but the only function that it can perform is promoting the parent company. A national ‘service agent’ is required.

Taxes in the jurisdiction

The taxation system is highly favorable in the UAE:

offshore companies pay no taxes;
a local company pays taxes if its income exceeds 1 ,00,000 AED;
rental tax is 5%;
hotel service tax is 5%;
rental tax on commercial property is 10%;
tax on entertainment activities is 5%;
no personal income tax is payable in the jurisdiction.

Disadvantages associated with offshore companies registered in Ras Al Khaimah

Admittedly, the list of advantages that an offshore company can bring if you register it in the jurisdiction is impressive. However, some limitations also apply. The main disadvantages of having an offshore company in RAKEZ are as follows:

offshore companies cannot engage in business activities in the mainland UAE;
offshore companies cannot rent offices in the mainland UAE;
onshore companies are favored in government tenders.

It is important to know the legislation of the UAE, the legislation of the particular emirate and the rules applied in the particular FEZ when registering an offshore company in the country. Professional assistance is going to be required in any case.

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