When investors and entrepreneurs explore opportunities in the UAE, Ras al Khaimah often comes up as a strategic choice. Two of the most popular company formation structures – RAK Offshore and RAK Free Zone – offer lucrative incentives while serving very different practical purposes. Understanding the distinction between these two forms of company structure is key to a company’s success, as the decision ultimately influences market access, compliance requirements, costing, and long-term company vision.
Here is a deep dive into the essentials, so you can take an educated call on whether a RAK Offshore company in the UAE or a RAK Free Zone is better for you.
RAK Offshore explained
RAK Offshore is an entity registered under the Ras al Khaimah International Corporate Centre (RAK ICC). It is mostly structured for international business as opposed to local trading. The key purpose of setting up a RAK Offshore company is for holding intellectual property, holding assets, managing wealth, and conducting international business.
Benefits of setting up a RAK Offshore Company:
- Full company ownership without the requirement for a local sponsor
- No personal income tax or corporate tax
- Minimum compliance requirement
- Low operating costs since there is no requirement for physical office space
Key limitations
- No permission to conduct business within the UAE
- No eligibility to sponsor UAE residence visas
- No permission to practice restricted business activities related to finance and healthcare.
RAK Free Zone
Similar to Dubai Free Zone, a RAK Free Zone company, commonly established through Ras Al Khaimah Economic Free Zone (RAKEZ), is more aligned towards businesses that want a local footprint.
Benefits of setting up a RAK Free Zone Company:
- Full company ownership without the requirement for a local sponsor
- No personal income tax or corporate tax
- Provision for visa sponsorships
- Ability to import and export freely with no limitations
Key limitations
- Limitations on direct trade with the UAE Mainland. May require special approvals.
- It is mandatory to maintain a physical presence within the Free Zone, even if it is just a flexi-desk.
RAK Offshore or RAK Free Zone: How do you choose?
The decision of choosing between a RAK Offshore business license or a RAK Free Zone license ultimately comes down to a few key factors:
If your operations are mostly international and you are looking for a holding vehicle where your key priorities are confidentiality, cost effectiveness, and ease of doing business, then RAK Offshore could be a good fit for you. However, if the UAE is your primary market and you need to secure visas, then this option is not the best fit for you.
If you need a physical presence, eligibility for visas, and the ability to trade within the UAE region while simultaneously enjoying tax benefits, then RAK Free Zone is a better fit for you. While there are limitations in doing business directly with the mainland, RAKEZ now offers dual licensing options, giving Free Zones a workaround.
Both RAK Offshore and RAK Free Zone structures are vital cogs in the UAE’s investor-friendly business ecosystem. A RAK Offshore in UAE provides confidentiality and efficiency for global trade and asset holding, while a Free Zone entity provides credibility, infrastructure, and access to regional markets.