International Business Company (IBC) vs. Free Zone Company (FZCO) – why not both?

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* Dubai - Dubai - United Arab Emirates

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DUBAI, UAE - July 8, 2019 - PRLog -- Imagine a potential client who can't decide whether to set up an IBC or FZCO.

But what if they didn't have to choose?

Now with the Premium Product, a collaboration between Ras Al Khaimah International Corporate Center (RAK ICC) and Ras Al Khaimah Economic Zone (RAKEZ) it's possible for clients to register their IBC with RAKICC first, then set up a subsidiary in RAKEZ all in one seamless process.

This comes with six key advantages:

1. Gain residency
Despite the many benefits of IBC with RAK ICC, a downside is the lack of a UAE residency visa. This is made possible through the FZCO subsidiary.

A FZCO can apply for visas for employees or shareholders as long as a valid trade license has been issued by RAKEZ.

These visas generally last two to three years and the number a company can apply for is dependent on the office size – one visa for every nine square metres.

Also be aware of age and time restrictions. For example, for the employment residency visa, the minimum age is 21 and the maximum is 60. Holders cannot be outside the UAE for more than 180 consecutive days.

What does this mean for your client?
Some of your clients may well be searching for the financial security and asset protection that an IBC brings.

The ability to spend more time in the UAE may greatly enhance their business prospects. It will help them to access offices, provide accommodation for employees, rent warehouses, and expand their businesses into the Gulf.

2. Banking made easier
If your client has a UAE business license through RAKEZ and their residency visa set up, they will find banking a lot easier. Opening a corporate bank account in the UAE can be a challenge, so by owning a company through the free zone you are more likely to get approved.

What does this mean for your client?
Internet banking now means clients can access funds set aside in the UAE, 24 hours a day, from anywhere in the world. Therefore, your client has the possibility to control and manage their company finances both in the UAE and abroad. The banking flexibility this affords can rarely be found anywhere else in the UAE.

3. Widening office options
One of the huge benefits of a RAK ICC IBC is that no physical office in the UAE is required. But what if your client requires space?

With a RAKEZ FZCO, your client has a range of office options. Depending on their requirements, they could opt for a short-term flexible office package. But if they're looking for something more permanent, then there are a range of office solutions with 24-hour security, free cleaning services, and renewable one-year leases.

For those with very large businesses (or expansion plans in the future), there is even the opportunity to develop land for business premises.

What does this mean for your client?
With a RAKEZ subsidiary, options are well and truly wider. Flexi-desks and short leases are a great a way for clients to test the water and see if a physical presence in the UAE is really for them. Such a low-risk business proposition is rarely found elsewhere.

4. Trade locally and globally
With a RAK ICC IBC, clients continue to trade globally, but there is no possibility of trading within the UAE. This is fine for some, but problematic for others.

With a RAKEZ subsidiary, it's possible to trade locally within the free zone, and even trade throughout the UAE. There is no impact on global trade either.

What does this mean for your client?
Businesses evolve. So while an IBC in RAK ICC may currently have no need to trade within the UAE, this doesn't mean it will always be that way. Having the option will offer huge peace of mind to your client that all options remain open.

5. Keep taxation benefits
Taxation benefits is one of the major considerations for clients to choose a jurisdiction for investments. While the RAK ICC IBC is not eligible to apply for a Tax Residency Certificate (TRC), the RAKEZ FZCO is. Therefore, through the Premium Product, your client can benefit from the zero taxation in the UAE and access to the 210 double tax treaty agreements currently signed or being signed by the UAE Ministry of Finance.

What does this mean for your client?
One of the biggest, if not the biggest reason, for starting businesses in the UAE is to take advantage of the many taxation benefits. With either RAK ICC or RAKEZ (or both), your clients can maximise the benefits from the UAE treaty network.

6. Achieve 'Substance' and more
Operating through both RAK ICC and RAKEZ gives your client's company a new level of advantages. They start by registering a RAK ICC company, with all the benefits that come with it. Then by adding a subsidiary in RAKEZ the door opens to a whole new market and the global benefits of being a company with "substance".

What does this mean for your client?
The net result is that their company will be treated as a business enterprise of real substance. It has all the benefits of an IBC and all the advantages of a FZCO and the global tax benefits too.

Best of both worlds
This is something discerning investors have craved in the UAE: the best of both worlds at very competitive rates.

It's worth adding that from a structuring perspective, thinking in terms of flexibility for shareholders, it's a good idea to have the IBC above the FZCO, as the IBC can be sold or have several shareholders.

So next time your client is juggling with the decision to go RAK ICC or RAKEZ, you can now suggest doing both through our Premium Product.

For more information, visit https://www.rakicc.com.
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