RAK offshore company formation explained: Structure, tax, and compliance in the UAE (2026)

No. RAK Offshore companies are not permitted to conduct commercial activities or issue invoices within the UAE. They are designed for international and holding purposes only. 

Not automatically. Corporate Tax applicability depends on where the company is managed and controlled, the source of its income, and whether it meets substance requirements under UAE law. 

Yes, but approval is not guaranteed. Banks assess offshore entities based on business activity, transaction flows, jurisdictions involved, and overall compliance readiness. 

With those fundamentals clear, it’s easier to understand what a RAK Offshore company actually is and why it works well only in specific scenarios. 

To understand why these limitations exist, it’s important to first clarify what a RAK Offshore company actually is. 

A RAK Offshore company is incorporated under the Ras Al Khaimah International Corporate Centre (RAK ICC). It is not a Free Zone license and not a Mainland company. 

Think of it as a legal holding and international business structure, not an operating license inside the UAE. 

A RAK Offshore company: 

• Has no physical office requirement in the UAE 

• Cannot carry out commercial activities within the UAE 

• Is commonly used for international trade, holding assets, or investment purposes 

• Is governed by RAK ICC regulations, not Free Zone authorities 

This distinction matters far more today than it did before 2023. 

This is where most incorporation pages stay vague. Let’s be clear. 

A RAK Offshore company is suitable for: 

• Holding shares in other companies (UAE or overseas) 

• Acting as a holding or parent company 

• Conducting international trading outside the UAE 

• Owning intellectual property 

• Managing overseas investments 

• Structuring family wealth or group entities 

In short, it works best when money flows across borders, not within the UAE economy. 

A RAK Offshore company cannot: 

• Trade within the UAE mainland 

• Issue invoices to UAE customers 

• Lease office space in the UAE 

• Hire employees locally 

• Register for UAE VAT 

• Conduct regulated activities within the UAE 

If your business model requires a local UAE presence, offshore is the wrong answer no matter how attractively it’s priced. 

Before UAE Corporate Tax, offshore structures were often promoted as “simple and tax-free.” That narrative no longer works. 

The answer is not automatic but not exempt either. 

Corporate Tax exposure depends on: 

• Where the company is managed and controlled 

• Where income is generated 

• Whether the company has economic substance 

• Whether it qualifies as a taxable person under UAE law 

If a RAK Offshore company: 

• Is effectively managed from the UAE 

• Earns income linked to UAE activities 

• Has directors, decision-makers, or control in the UAE 

…it may fall within the scope of Corporate Tax. 

This is why bookkeeping, documentation, and clarity of purpose matter more than ever even for offshore entities. In practice, many offshore structures incorporated before 2023 now require reassessment under the Corporate Tax framework. 

Many businesses are drawn to RAK Offshore for its simplicity, but it works best when used intentionally rather than as a shortcut.  

Founders commonly use RAK Offshore entities to: 

• Hold shares in Free Zone or overseas subsidiaries 

• Centralize ownership 

• Simplify exits or investment rounds 

When structured correctly, this approach is clean, flexible, and widely accepted. 

If your customers, suppliers, and operations are outside the UAE, RAK Offshore can act as a neutral trading vehicle, provided compliance and banking are structured correctly. 

RAK Offshore entities are commonly used to: 

• Hold intellectual property 

• Own overseas real estate 

• Manage long-term investments 

This separation of operating risk from asset ownership is a principle many founders adopt too late. 

For families and investors, offshore entities can support: 

• Wealth consolidation 

• Succession planning 

• Group structuring alongside foundations or SPVs 

That said, RAK Offshore is often chosen for reasons it was never designed to support. A RAK Offshore company is not suitable if you: 

• Plan to operate inside the UAE 

• Want to invoice UAE clients 

• Need VAT registration 

• Intend to hire locally 

• Require physical presence or day-to-day operations 

In these cases, a Free Zone or Mainland company is almost always the correct structure. Starting offshore “to save cost” and converting later often ends up being far more expensive. 

The documentation process itself is relatively straightforward: 

• Passport copy of shareholders and directors 

• Proof of address 

• Brief profile or CV 

• Shareholding and ownership structure 

• Description of business activities 

What matters more than documents is how the structure is explained, especially for banking and compliance. 

Here’s what the process looks like in practice: 

Step 1: Structure Validation 

Before incorporation, the business model should be reviewed to ensure offshore is the right jurisdiction, not just the cheapest. 

Step 2: Name Reservation 

Company name approval through RAK ICC. 

Step 3: Incorporation 

Submission of documents and issuance of incorporation certificates. 

Step 4: Banking Strategy 

Bank account opening is not guaranteed. It depends on: 

• Business activity 

• Countries involved 

• Transaction flow clarity 

• Compliance readiness 

Step 5: Ongoing Compliance Setup 

Even offshore entities need: 

• Accounting records 

• Substance review 

• Corporate Tax assessment (where applicable) 

Skipping this step is where long-term risk begins. 

Banking is often the biggest bottleneck and the least honestly discussed. 

Banks today apply strict, risk-based assessments for offshore entities. Approval typically depends on: 

• Clear business purpose 

• Transparent ownership 

• Proper financial records 

• Expected transaction volumes 

• Jurisdictions involved 

A well-structured offshore company with clean bookkeeping has far better outcomes than one formed purely for cost savings. 

The right structure depends on what you plan to do, not where you plan to save. 

• Using offshore for UAE operations 

• Ignoring Corporate Tax exposure 

• Not maintaining proper accounts 

• Assuming banking is automatic 

• Treating offshore as “maintenance-free” 

Offshore is simpler, not careless-proof. 

At Kitaab, we don’t start with incorporation. We start with intent. 

We help founders: 

• Decide whether offshore is appropriate 

• Structure entities for tax clarity 

• Maintain compliant accounting records 

• Prepare for Corporate Tax assessments 

• Avoid future restructuring surprises 

Because incorporation is the easy part. Staying compliant quietly and correctly is where most businesses struggle. 

When structured correctly, they remain a powerful tool for international founders, investors, and holding structures. When chosen blindly, they become a ticking compliance issue. 

If you’re considering RAK Offshore, the right question isn’t 

“How fast can I register?” 

It’s: 

“Will this still work for me two years from now?” 

At Kitaab, we routinely review offshore structures formed before 2023 that now require reassessment under the UAE Corporate Tax framework. 

That’s the difference between incorporation and building something that lasts.