Branch Office in Dubai is a popular business structure entrepreneurs from abroad prefer when they are looking to expand to the UAE. This article highlights the steps in setting up a branch office in the UAE.
Often entrepreneurs are doubtful about ways to expand their business to the UAE. Opening a Branch Office of their company overseas is the most direct way for the business owner to maintain the ownership intact.
Branch Office in Dubai
So, a Branch Office is a fully own entity of the parent company but functionally it has its own characteristics. A Branch Office in Dubai, UAE can indulge in local business operations in the region.
Additionally, through the branch office, the parent company can bring in their products and services to Dubai, UAE. They can hire employees in UAE, appoint a director or Managing Director to oversee the international operations by making Dubai the base.
Moreover, a branch company in Dubai will enjoy all benefits offered by the specific licensing authority. They can take office space in Dubai, open bank accounts, and do business seamlessly in the region.
Advantages of opening Branch office in Dubai
Dubai is a perfect choice for foreign investors and entrepreneurs to start their company’s branch. Starting a branch office in Dubai is a hassle-free option if you hire a business consultants.
Above all, there are numerous business advantages in setting up a new branch company in Dubai. As a global business hub, Dubai has a lot to offer investors. It has one of the best business infrastructure for entrepreneurs to easily expand their business to the UAE markets and beyond.
1. Get 100% Foreign Ownership
The branch office is not a separate legal entity but as an extension of the parent company. Hence enjoy 100% ownership in the branch office and conduct the same business activities as the parent company.
2. Rent an Office Anywhere in UAE
The branch office can be setup anywhere in Dubai as per the business requirements of the company shareholders.
The company can opt for renting office space at a lower cost in Dubai Mainland to keep the administrative cost low. For organizations that do not require an office space at the center of the city, they can opt for offices with low rent anywhere in UAE.
3. Trade-in Mainland of UAE
Setting up a branch office in the mainland of Dubai enables the company to actively trade-in the local markets of UAE.
Branch Office allows a business to trade in the mainland of Dubai directly without the requirement of a local distributor, or agent.
4. Tax Benefits
UAE has Zero Corporate and Income Tax, and Companies can gain maximum benefits out of this tax regime.
By setting up a Branch Office in Dubai, the company can leverage the Double Taxation Avoidance Agreement (DTAA) and save tax in the home country.
5. Audit Report Requirement
Auditing a large company with daily financial transactions is tedious. Setting up the Branch Office will help in legally tracking all the transactions between the branch and the parent company.
6. Low Administrative Cost
The overall cost of opening a new branch is lower than setting up a new company in multiple countries. In UAE there is no requirement for branch offices to maintain audit reports. Also, taking a small office for your branch in Dubai will keep the administrative and costs low.
7. Cost-Effective Route to New Markets
Setting up a Branch Office provides an easy way to enter a new market. The running cost of a branch office in Dubai is relatively lower than setting up a new company as a whole.
Why Establish a Branch office in Dubai?
So, a Branch office will help the business owner in many ways. It will help them easily start their business operations in Dubai. There are few procedures to follow for opening of a Branch office in Dubai. The branch office will have a separate trade license with the activities listed. They can provide seamless services to the customers across UAE and other regions by establishing a branch office in Dubai.
A branch company in Dubai can operate independently and manage the business operations overseas. They can conduct business operations, prepare invoices, hire employees and more.
Procedure to Open a Branch Office of a Free Zone or Mainland Company in Dubai
There are certain procedures to open a branch office of a Free Zone or Mainland Company in Dubai. The Investor must get certain approvals and attestations from the respective authorities.
Internally, the board of Directors, of the company must come to an agreement on opening a new branch in UAE. Then, get the documents attested from the UAE Embassy and counter-attested from the Ministry of Foreign Affairs in UAE.
1. Approval from the Board of Directors
The approval from the board of directors is the first step. They must agree to the proposal of setting up a new branch company as part of the company’s expansion plans.
They must pass the board resolution and sign to agree to set up the new branch company in UAE. The Board of Directors can appoint one director to carry out the setting up of the branch company and oversee the operations.
2. Branch Office Registration
Following the board resolution, the company can proceed with branch registration. The Company can follow the above-represented steps to secure its business license and register the branch in mainland of Dubai. Aurion will assist you with end-to-end business support services to register your company’s branch office in Dubai in the most comfortable way.
For a Free Zone Company with a service License category, the cost of setting up a branch office in Dubai is Approx. AED 30,000. The branch office will have the same name as the Parent Company with ‘Branch’ as the Suffix. It is entitled to conduct all the business activities of the parent company.
Types of Branch Offices You Can Operate in UAE?
A branch office in UAE can be set up two ways. FIrstly, with the Department of Economic Development in the Mainland of UAE. Secondly, it is through the Free Trade Zones. There is no special permission required from any government department to start a branch office of a foreign company. However, depending on the chosen business activity, there would be a pre-approval required for certain selected industry sectors such as healthcare, pharmaceuticals, food-stuff trading, etc.
Also, there are a few additional documentation requirements for the setup of the branch office in Dubai. Expert Business Consultants at AURION will help in obtaining the required paperwork and approvals for opening the branch company in UAE.
Additionally, the difference between a branch and an LLC is mainly in the company structure. For setting up a branch office, there has to be a parent company in the home country or in UAE. Whereas, for a Limited Liability Company (LLC),the ownership rests with the business owner (100%) and acts as an independent entity. The LLC Company will be eligible to render services as per their trade license.
To know more about, read – LLC Company Setup in UAE
Steps Involved in Opening a Branch Office in Dubai
To start a branch office in Dubai of a Free Zone Company or Mainland Company, there are a few steps to be followed. For opening a branch of a foreign company the procedures and steps vary slightly.
So, to open a branch office in Dubai, the investor must follow certain steps. The business consultants will guide you through the process to avoid any hassles. There are differences when it comes to opening a branch of a foreign company viz a branch of a Free Zone or Mainland Company in UAE.
Often, opening a branch office for a foreign company in a new land is essential as part of business development and expansion. For the companies to keep their brand name, identity, and ownership intact, the branch of their foreign company is the right option.
1. Prepare an Application to Open the Branch Office
To open a branch office in Dubai, the investor must prepare the application form, arrange for the company documents, and proceed with the Embassy Attestation. Then, submit the documents, along with the application form to the Dubai Economy.
Aurion will guide you through the process of opening a branch office in Dubai. The team will coordinate with the investor and provide the right support for setting up the branch office in Dubai.
2. Obtain the Required Permits
There are few permits to be obtained to start a branch office in Dubai for selected business activities such as Healthcare, Electronics (Mobile) Trading, Education, etc. The Ministry of Economy has to approve the application by assessing the requirements and nature of business activities.
For a foreign company branch, the process includes further attestation from the Embassy of UAE in the parent company’s home country. Also, a clearance from the Ministry of Foreign Affairs in UAE.
3. Secure the License from the Dubai Economy & Tourism
The Branch Company in Dubai is best to be set up in the Dubai Mainland. It is the Dubai Economy and Tourism that issues the Branch office license to the investor.
After reviewing the parent company’s documents, the attested documents, and the application form; the Branch Company License is issued by the Dubai Economy. The parent company can use the same brand name and marketing assets to expand its business in the UAE.
4. Register with the Chamber of Commerce
After obtaining the Branch Office License in UAE, the company is legally allowed to be operational in the country. The investor can register the company with the Chamber of Commerce in the UAE.
Documents Required for Opening a Branch Office in Dubai
- Trade name Approval Certificate
- Parent Company Documents – Memorandum of Association, Articles of Association, Certificate of Incorporation, and Certificate of Good Standing
- Board Resolution for setting up a branch office in Dubai
- Power of attorney for the General Manager
- General Manager’s Passport copy
- 2-Year Audited financial statements of the parent company
- List of major business activities and trade activities that will be carried out in Dubai
- Local Service Agent Agreements and identification documents copy.
Opening a branch office seems to be a feasible option for free zone companies or other mainland companies for their expansion into the UAE local market more aggressively and exploring new business opportunities.
Licensing a Branch of Foreign Company
In UAE, it is the Department of Economy of the respective Emirate or the Free Trade Zone are the licensing authority for a Branch Company. Depending on the business owners requirements they can choose the right option for their business.
For example, if the company deals with import export and selling of goods abroad, opening a branch office in any of the Free Zones near to the Seaport or Airport such as the Dubai Airport Free Zone or the Sharjah International Airport Free Zone will be the right choice.
The branch of a foreign company will act as a business entity in UAE and will comply with the business rules and regulations in the country. The renewal of the foreign company is a mandatory requirement yearly.
Renewal, Re-structuring and Cancellation of Foreign Company Branch in UAE
Similarly, if the operations are to be restructured or the company has to windup their business, the business owner must follow the cancellation of the company license. AURION will guide the company owners the right way to operate, manage, and terminate the company operations as required.
So, in conclusion, opening a branch office in Dubai is a lucrative business operation for the company owner. It has many evident benefits and business growth opportunities for the entrepreneur.
The highlights of opening a branch office of a foreign company in Dubai is the ease of migration of the company operations, tax savings by leveraging the Double Taxation Avoidance Treaty Agreement, the top class lifestyle and business brand value creation by establishing the presence in Dubai, and more.
How Aurion will Assist you in setting up a branch office in Dubai?
AURION will assist in the end-to-end process of setting up and managing a branch office of a foreign or locally established company in the UAE. The team will guide the company owners at all stages of the process and coordinate with the authorities to get the required clearances, attestation, approvals, etc.
The team of expert Business Consultants at AURION are well aware of the nuances of successfully opening a branch company in Dubai with the minimal paperwork and administrative processes. Entrust AURION with the assignment and you will see the magic of our expert Business Consultants right away!
To know more about opening a branch office in Dubai or a Subsidiary Company in Dubai, talk to our expert consultants right away!
