RAK ICC: An International Structuring Option Beyond Mainland and Free Zone Companies

Background

For businesses and investors considering the UAE for international holding structures, overseas asset ownership, family wealth planning or cross-border business, there is another option beyond the more familiar UAE Mainland and Free Zone structures — the RAK International Corporate Centre (RAK ICC).

RAK ICC is an international corporate registry based in Ras Al Khaimah. According to RAK ICC materials, it serves corporate clients from a wide range of countries and regions.

Unlike a conventional UAE Mainland operating company, the primary value of an RAK ICC structure generally lies in areas such as:

  • cross-border ownership;
  • asset holding;
  • international investment;
  • family wealth planning;
  • corporate structuring; and
  • specific transactions and asset segregation.

PART 01

Where May RAK ICC Be Relevant?

The core value of RAK ICC generally lies in cross-border ownership, asset holding and corporate structuring rather than operating a conventional day-to-day business directly in the UAE Mainland.

1. Holding & Investment Structures

RAK ICC companies may be used to hold shares in UAE or overseas subsidiaries, as well as certain securities, aviation, maritime or other investment assets.

For example, when a Chinese company expands into the UAE, Saudi Arabia or other GCC markets, it may assess whether a regional or international holding layer should sit above its operating entities, depending on the broader tax, financing, investment and operational structure.

A simplified structure may look like:

Ultimate Shareholder / Group Parent
↓
RAK ICC Holding Company
↓
UAE / Overseas Operating Companies

Whether such a structure is appropriate should still be assessed in light of ownership objectives, financing arrangements, tax residence, management and control, and applicable regulatory considerations.

2. Real Estate & Asset Holding

RAK ICC may also be used to hold eligible real estate and other assets, including certain properties in Ras Al Khaimah and Dubai.

However, whether a specific property can be held does not depend solely on the company being registered with RAK ICC.

Other factors may also need to be considered, including:

  • the relevant Emirate’s Land Department requirements;
  • developer requirements;
  • property type;
  • buyer and seller status;
  • transaction structure; and
  • other applicable regulatory conditions.

Property holding arrangements should therefore be reviewed on a case-by-case basis.

3. Family Wealth & Succession Planning

In addition to a standard Company Limited by Shares, RAK ICC also offers structures such as a Foundation.

For families seeking to:

  • consolidate asset ownership;
  • establish succession mechanisms;
  • define governance arrangements;
  • organise long-term wealth structures; or
  • manage family investments

it may be useful to compare:

  • a standard RAK ICC Company;
  • an RAK ICC Foundation;
  • Family Office / SPV structures; and
  • other UAE or international wealth-holding structures.

Different structures may produce different outcomes in relation to control, succession, governance, taxation, asset protection and compliance.

4. Cross-Border Trade & Contracting

RAK ICC companies may also support certain international trading and cross-border commercial activities outside the UAE.

For example, where a company mainly serves non-UAE customers and is engaged in:

  • international procurement;
  • international sales;
  • cross-border contracting;
  • overseas projects; or
  • international asset management,

RAK ICC may be considered as one of the possible structuring options.

However, where actual business activities take place in another country or jurisdiction, the relevant local:

  • licensing;
  • taxation;
  • permanent establishment;
  • regulatory;
  • customs; and
  • employment requirements

must still be considered.

An RAK ICC structure does not replace local compliance obligations in the jurisdiction where the business is actually carried on.

5. Special Purpose & Structured Transactions

For financing, asset ring-fencing, defined projects or specific asset pools, RAK ICC also offers structures such as:

  • Restricted Purpose Companies (RPCs); and
  • Segregated Portfolio Companies (SPCs).

These structures are generally not conventional operating companies.

They are more commonly used for:

  • defined transactions;
  • financing arrangements;
  • risk segregation;
  • specific asset holding; and
  • structured asset management.

Their suitability should be assessed based on the purpose of the transaction and the relevant legal documentation.

PART 02

Key Features of RAK ICC

According to RAK ICC materials, its corporate structures offer a number of flexible features.

Key Features

  • 100% foreign ownership;
  • generally no minimum capital requirement for a standard RAK ICC company;
  • generally no requirement for a separate conventional physical office;
  • Registered Office and Registered Agent requirements still apply;
  • corporate directors may be permitted;
  • multiple share classes may be available;
  • share pledge registration may be available;
  • migration / continuation options may be available; and
  • applications for UAE or international bank accounts may be possible, subject to bank review.

An important distinction, however, is that an RAK ICC company is a corporate structure.

It is not equivalent to obtaining a conventional Commercial Licence that permits unrestricted day-to-day business operations in the UAE Mainland.

RAK ICC Is Not Suitable for Every Business

This is one of the most important points to understand when considering RAK ICC.

If the client’s main objective is to:

  • conduct day-to-day business in Dubai or the UAE Mainland;
  • operate from physical premises;
  • provide local services on an ongoing basis;
  • conduct local retail or trading activities;
  • obtain UAE residence visas for employees; or
  • undertake regulated activities,

it will usually be necessary to assess an appropriate Mainland or Free Zone Operating Company rather than relying solely on a standard RAK ICC company.

RAK ICC is generally better understood as an international ownership and structuring vehicle rather than a substitute for a conventional UAE operating licence.

PART 03

Banking: Applications Are Possible, but Approval Is Never Automatic

When reviewing an RAK ICC company, banks generally look beyond the place of incorporation.

They may also assess:

  • commercial rationale;
  • ownership transparency;
  • Ultimate Beneficial Owners;
  • Source of Wealth;
  • Source of Funds;
  • transaction countries;
  • customers and suppliers;
  • expected turnover;
  • expected account balance;
  • UAE nexus; and
  • evidence of genuine commercial activity.

A relatively complete banking file may need to demonstrate the following.

Why Was RAK ICC Selected?

The applicant may need to explain:

  • why the structure fits the proposed business;
  • why the UAE was selected;
  • why RAK ICC was selected; and
  • what role the company plays within the wider group structure.

Clear Shareholder and UBO Structure

Banks will usually want clarity around:

  • shareholders;
  • Ultimate Beneficial Owners;
  • control arrangements;
  • intermediate holding entities; and
  • the ultimate natural persons behind the structure.

Source of Wealth / Source of Funds

The applicant may need to explain:

  • how the client’s overall wealth was accumulated; and
  • where the funds entering the account originate.

Appropriate supporting documentation may also be required.

Key Customers and Suppliers

The bank may request information regarding:

  • major customers;
  • suppliers;
  • counterparties;
  • contractual relationships; and
  • the commercial rationale for the business.

Transaction Countries and Currencies

Banks may consider:

  • major transaction jurisdictions;
  • payment destinations;
  • currencies;
  • exposure to higher-risk jurisdictions.

Expected Turnover and Account Balance

Applicants may need to provide reasonable estimates regarding:

  • annual turnover;
  • average account balance;
  • transaction size; and
  • transaction frequency.

Relevant UAE Nexus

Banks may also assess whether there is a reasonable commercial connection with the UAE, for example:

  • shareholders or directors;
  • UAE investments;
  • UAE business partners;
  • UAE customers;
  • regional headquarters arrangements; or
  • other relevant commercial links.

Commercial Evidence

Supporting documents may include:

  • contracts;
  • invoices;
  • business plans;
  • group structure charts;
  • existing bank statements;
  • investment documents; and
  • other evidence of genuine commercial activity.

For this reason, company incorporation and banking should ideally be planned together from an early stage, rather than considering banking only after the company has already been incorporated.

A Common Misconception

RAK ICC Does Not Automatically Mean 0% Corporate Tax

This point requires particular care.

RAK ICC is a corporate registration and structuring option. The company’s actual UAE Corporate Tax treatment must be assessed separately.

Relevant considerations may include:

  • tax residence;
  • business activities;
  • income profile;
  • management and control;
  • the entity’s status under the UAE Corporate Tax regime;
  • whether any specific Free Zone tax treatment is available; and
  • other applicable Corporate Tax rules.

Accordingly, an RAK ICC registration should not by itself be interpreted as automatically resulting in a 0% Corporate Tax position.

Where an entity seeks to rely on a particular Free Zone Corporate Tax treatment, it is necessary to assess whether the relevant legal conditions are actually satisfied, taking into account the entity type, business activities, income profile, compliance requirements and other applicable rules.

Even where certain income may qualify for a 0% Corporate Tax rate under applicable rules, ongoing tax and compliance obligations may still apply.

CA Perspective

The value of RAK ICC is not simply that it may be relatively straightforward to establish.

Its value lies in its potential use as one component of a broader cross-border ownership, asset management, wealth planning or international business structure.

Before establishing an RAK ICC structure, businesses and investors should consider questions such as:

  • What is the company actually intended to do?
  • Where are the underlying assets located?
  • Where will the actual operations take place?
  • Who are the shareholders and UBOs?
  • Where will the funding come from?
  • Is UAE local operation required?
  • Are employee visas required?
  • Is bank financing expected?
  • Will there be cross-border transactions?
  • How will tax residence be managed?
  • Will succession planning or asset segregation be required?

Once these questions are clear, it becomes easier to assess whether an:

RAK ICC company, Mainland company, Free Zone company, SPV, Foundation or another structure

may be more appropriate.

For cross-border structuring, the more important question is usually not simply:

“Can the company be incorporated?”

but rather:

“Will the ownership, banking, tax, operational and ongoing compliance arrangements work together as a complete and sustainable structure after incorporation?”