ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Learn More About: Avoiding Taxes with Offshore Accounts

Updated on July 26, 2015


An Offshore Bank account is located outside your country of residence. Many individuals prefer offshore accounts for several reasons including the possibility to earn interest while keeping funds fluid for a short or medium term. Offshore accounts can be used as a source from which you could send funds to other centers, including an account in your native country. Offshore accounts provide several benefits such as the option of depositing money in various currencies. Also, you could benefit from guaranteed anonymity and most importantly, tax-free interest on your salary.

Offshore Banking
Offshore Banking

You can open avail of offshore banking services in 50 tax havens across the world such as the Isle of Man, Channel Islands (Jersey and Guernsey), the Virgin Islands and Gibraltar. What’s more, several American and European banks offer offshore facilities various countries.

According to a recent PricewaterhouseCoopers report, ‘Paying Taxes 2015 Middle East,’ Qatar and the UAE have the least demanding tax framework in the world in that they have the lowest average total tax rate and time to comply.

Located strategically along an East to West trade route, UAE offers several benefits such as tax-free zones and privacy on par or even rivalling that of Swiss banks. A large chunk of the incoming funds in the UAE constitute cash or gold.

Offshore Banking and Tax Evasion

Offshore banking is widely viewed with a single lens of tax evasion which could be, in more ways than one, prove detrimental to the countries offering such services in the long run. Consequently, several nations that offer competitive tax benefits enter into double tax agreements with other countries to identify tax evaders. Significantly, the Organization for Economic Co-operation and Development (OECD) has mooted strict guidelines to minimize such practices.

Nevertheless, more often than not, many open offshore accounts in the UAE to benefit from the tax breaks it offers. However, experts suggest that one would do well to read expatriate financial publications and avail of specialist financial advisory services including a tax accountant or lawyer for efficient tax planning. Some expats may be liable for tax in their native country and should therefore seek a tax advisor to help with the filing process in their native country.

Offshore Accounts have higher yields and returns with no taxation.
Offshore Accounts have higher yields and returns with no taxation.

UAE Offshore Accounts

Although offshore accounts can be set up online, it is advisable to have an experts at hand for a proper understanding of the process of different kinds of requirements from parking funds in a non-Sharia jurisdiction to availing of loan facilities.

An offshore account may support your home finance plans. UAE tax year starts on 1st July and ends on December 31st. There are no personal taxes in the UAE except local charges to Dubai Municipality. Car owners may, however, have to shell out money for registration. If you are making money from the property you own, you are charged 10 percent tax on your rental income. Rented stalls in market places involves a certain fee. You do not have to file income tax returns every year. Also, there is no capital gains tax but VAT may be introduced in the UAE.

UAE Offshore Company

UAE is one of sought-after jurisdictions in the world for offering ‘tax-free’ business territories. Some of the perks offered include 100% foreign ownership, ownership of real estate on approved areas, multi-currency bank accounts, no foreign currency restrictions, 100% repatriation of profits and low setting-up costs among others. Offshore companies can be formed only through the registered agents, located either in the free zone or elsewhere in the UAE approved by the respective authorities. Several agents offer services such as preparation of Memorandum of Association, Articles of Association and other legal documents, incorporation procedures, opening bank accounts and follow up services among many others. There are several restrictions in place such as no offshore company is allowed to conduct business with persons resident in the UAE, own real property other than a lease approved by authority, open banking operations, insurance, reinsurance or any other business as mandated by the authority.

By setting up of an offshore company, you effectively bypass Islamic Sharia law inheritance legislation (shares in a company come under the UAE civil code). In terms of asset protection, UAE and specifically Dubai offer greater privacy, no taxation and no disclosure requirements. Asset protection strategies include making assets difficult to recover in the event of legal proceedings by clients or creditors.

The following are the three free zone authorities in the UAE for offshore companies

  1. Jebel Ali Free Zone Authority (JAFZA)
  2. RAK Investment Authority (RAKIA)
  3. RAK Free Trade Zone.

Intriguingly, according to a recent study, UAE has to improve its electronic filing and payment mechanisms which leave a lot to be desired. Consider this: A mere 15 per cent of GCC economies implemented electronic systems for payment of taxes by companies.

Advantages of Offshore Accounts

Offshore accounts offer several advantages such as exchange convertibility, free remittance of profits and capital, secure property rights, low set up costs, enhanced privacy, facility of offshore experts, insurance and reinsurance, foreign investment sops, customs and duty exemptions, sophisticated banking facilities, higher yields and returns and little or no taxation among others.


The accounting rules are not clearly formulated but companies are asked to comply with IAS/IFRS norms.

Offshore Banking is always a money-saver deal!
Offshore Banking is always a money-saver deal!

Tax Facts of UAE

  • Residents and non-residents Individuals are not taxed.
  • Property tax is anywhere between 2 and 15% of the property rate.
  • Dubai imposes 5% tax on the annual rent for the lessors.
  • Municipalities deduct tax on services offered by restaurants and hotels varying from 10% in Dubai to 16% in Abu Dhabi.
  • There is a 2% tax on the transfer of real estate in the UAE.
  • There is no special tax regime for expatriates.
  • There are no capital tax and withholding taxes.
  • The Cooperation Council for the Arab States of the Gulf (CCASG) is mooting introduction of a VAT of 5%.
  • No taxes are levied on income of companies and individuals except oil and gas companies and subsidiaries of foreign banks.
    • 10% tax is imposed on oil and gas companies or foreign bank subsidiaries with an income between 1,000,000 AED and 2,000,000 AED.
    • 20% tax is imposed on companies with an income between 2,000,000 AED and 3,000,000 AED.
    • 55% tax is imposed on companies with income higher than 5,000,000 AED.
  • 30% sales tax is imposed on alcohol in Dubai. There is a tax on cigarettes as well (limited to 200 cigarettes).
  • Import duty: 10% on luxury goods, 4% on the rest.
  • No social security taxes imposed on expatriates. However, UAE nationals must contribute to retirement and pension funds in accordance with specific regulations.
  • No VAT: UAE has been considering enhancing its existing tax systems by imposing alternative sources of revenue, widely recognised as value added tax (VAT). UAE has been contemplating introducing VAT ever since 2007 with the aim to increase the revenue base of GCC countries.
  • Double taxation: Several treaties reduce the burden of taxation on foreign companies and citizens in the UAE. Some of the countries with which UAE has a double taxation treaty include Algeria, Egypt, Morocco, Sudan, Tunisia, China, India, Indonesia, Japan, Malaysia, Mongolia, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Thailand, Turkmenistan, Belgium, Bosnia, Finland, France, Germany, Italy, Malta, Netherlands, Poland, Romania, Spain, Switzerland, Greece, Holland, Belarus, Turkey, Bulgaria, Jordan, Kuwait, Lebanon, Syria, Yemen Canada New Zealand. In the last six months UAE has been expanding its network by signing new treaties with Hong Kong, Kyrgyzstan and Uruguay. Also, protocols related to existing treaties with Singapore, Luxembourg and Poland have already been signed.

What Do You Think?

So, what's your take on Offshore Banking?

See results


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)