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How to setup a Subsidiary in Dubai, UAE?

UAE is one of the best countries for starting a business establishment. Many entrepreneurs choose Dubai, UAE as there are a lot of emerging business opportunities in the region. This article highlights the steps and process involved in Opening a Subsidiary Company in Dubai. Entrepreneurs already having a business in their home country who wish to move to Dubai and start a business entity in the region have many options to look forward to. Depending on their business requirements they can choose the right company structure. The low taxation, the improved business infrastructure, ease of doing business, reduced documentation, complete company ownership, top-class banking support, and more are few reasons why Dubai, UAE remains the top choice for business owners. Starting a Subsidiary Company in UAE Dubai is the perfect choice for Opening a Subsidiary Company for foreign investors. Opening a subsidiary is a strategic way of establishing a presence in a new market and expanding the business network easily. Registering a subsidiary in Dubai is relatively easy with a few additional attestations from the embassy and the Ministry of Foreign Affairs due to the compliance and laws. Else, the process is very straightforward and the investor can operate their branch in UAE as an independent entity driving business and contributing to the economy of UAE. Advantages of Establishing a Subsidiary Company in Dubai There are many advantages in establishing a Subsidiary Company in Dubai. Dubai offers the perfect infrastructure, economy, and governance. The business owner will have many benefits from being in Dubai. However, there are few attestation requirements and documentation to issue the trade license for the subsidiary company. Opening a Subsidiary in Dubai is lucrative to the business owner in many ways. Few of the benefits are as follows Full ownership of the company in Mainland or Free Trade Zone in the UAE Improved lifestyle, business infrastructure, and skilled labor, and more Favorable tax structure, cost effective company setup, ease of documentation Faster processing times, easy document attestation and approvals Ability to easily expand to newer markets Ability to take office space and get a bank account in UAE & more. So, there are many benefits in setting up a Subsidiary in Dubai for the business owners. They can easily expand their business to new geographies by making Dubai their base. Also, the ease of doing business in Dubai is an add-on for faster document clearance and obtaining the trade license for the company. Types of Subsidiary Companies in Dubai Subsidiary Company in Dubai is established either as a foreign company’s subsidiary or as a subsidiary of a local mainland company. There are two major business jurisdictions where foreign investors can start a subsidiary company in UAE. It is the Mainland and the Free Zone. The cost of setting up a subsidiary company in Dubai depends on varying business requirements. However, the trade license and a virtual office setup for the first year will cost approx. AED 28,000 for a services company. Also, a subsidiary can be set up with a general trading activity with a physical office. However, the cost of setting up the subsidiary company in Dubai will be significantly high for general trading with office type of business. By registering a Subsidiary company in UAE, the company can hire employees locally. It can also conduct trade operations in the region and abroad. In fact, the process of setting up a subsidiary is almost similar across the business jurisdictions as below. 1. Opening a Subsidiary in the Mainland of UAE In the mainland of UAE, the foreign company branch is set up as a new Limited Liability Company (LLC). If the foreign company wants to extensively expand in the UAE market, starting it as a new LLC Company is the ideal option for enhanced flexibility. Setting up a Foreign Company Subsidiary as an LLC Following are the steps for setting up a foreign company subsidiary as a Limited Liability Company in Dubai. Get the Parent Company Documents and the board resolution calling upon establishing a Subsidiary Company in UAE attested by the UAE Embassy in the home country. Get the Aforesaid attested Parent Company Documents Counter-Attested by the Ministry of Foreign Affairs Submit the Attested Company Documents and Board Resolution of the Parent Company to the Licensing Authority to start the subsidiary company’s incorporation process Reserve a company name and choose the business activities for your subsidiary company in uae Apply for the registration to the Department of Economic Development and submit the documents of the shareholders Make the required payment for obtaining the trade license Get the Memorandum of Association from the DED along with the Trade license Register the company with the Chamber of Commerce of the respective Emirate Open a Corporate Bank Account in UAE Apply for an establishment card for the company for applying visas for employees Benefits of Setting Up a Subsidiary in UAE Mainland Opening a subsidiary as a Limited Liability Company is beneficial for the parent company as they will not have to incur any liability. As a result, the subsidiary can act as an individual entity driving business in UAE. An LLC Company in UAE will have more flexibility such as hiring new employees, expanding the business by adding more office spaces, taking a warehouse, opening retail outlets, and more. Thus, being in the mainland of UAE the company can easily expand in the local market. It can as well as focus on the rest of GCC by building a robust distribution network in the region. 2. Opening a Subsidiary in the Free Zones of UAE Setting up a subsidiary company in UAE is beneficial for the investor as it is a global business center. Furthermore, UAE has a robust business networking setup for investors to easily grow their business. The Free Zones form a vital role in the business ecosystem of the UAE. Hence, most foreign investors prefer setting up their business in the Free Zones due to the ample business benefits and tax savings.

How to Open a Branch Office in Dubai?

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

How to Setup a Services Company in UAE Mainland – Things to Know

There is 100% Expatriate Ownership made available in Mainland Companies as per the Commercial Companies Law amendments. So, there is no requirement for a UAE National holding 51% shares to register a mainland company. Also, for the Services Company License in UAE there is no requirement for a Local Service Agent. UAE is a major business hub where the new company formation is seeing linear growth over the years. Despite the downturn from the pandemic and other global factors, UAE remains a top choice for a new company set up by many investors globally. The services sector makes up a significant presence in the mainland of UAE. There is a strong demand for a services company in UAE. Accordingly, UAE has a growing business opportunity and availability of a wide target audience for the companies to test their service solutions. Setup a Services Company in UAE Mainland To set up a services company in UAE the investor must follow certain steps. Setting up a services company requires a UAE Citizen or a UAE Corporate as the Local Service Agent. Presently, the foreign investor will have 100% ownership of the company. The Local Service Agent will act as liaising agent for all administrative related tasks with the Department of Economic Development (DED) for the company registration, visa processing, and any related activities. They will be having no power in the operations or share capital of the company. However, the investor must pay the Local Service Agent fee annually during the renewal of the Professional Business License. There will be a side agreement with the Local Service Agent on the payment terms and other conditions. The Service License is for the individual or a group of shareholders under a company name to legally conduct the desired business activity. The Department of Economic Development (DED) of the respective emirates is the issuing authority for service licenses for a company in the mainland of UAE. Wide Range of Business Activities Service Companies in UAE can be registered by foreign investors for a wide range of business activities that fall under the service sector. Professional Business License is one of the most sought-after business license categories in the services sector. Under the business license, investors can open consultancies and companies across a wide range of business activities ranging from engineering to information technology to architecture, and more. The mainland services company will have a virtual license valid for 1 year that must be renewed yearly. The investor can take an office space by preparing a lease agreement with any commercial space owners or business centers in the mainland of UAE to start operations from the office. For applying UAE residence visa for the investor and sponsor employees the company must apply for the establishment card. Then proceed with applying for the residence visa and bank account. Documents Required Investor passport copy and photograph (white background, dark color shirt/dress) Company incorporation form for the professional license from the DED of the respective emirate Educational Certificate and previous work experience documents for review. (AURION will assist you with the document attestation from the Embassy and Ministry of Foreign Affairs) Shareholder Agreement if there is more than one partner (AURION will assist you in preparing it) What are the deliverables after setting up the services company in the mainland of UAE? Following are the deliverable documents from the Department of Economic Development upon registering the services companies. Professional License from DED for legally operating the services company Lease contract for the office space as per requirements Memorandum of Association and Article of Association for the company from DED Returning of Educational documents, license fee receipts, and other submitted documents for review Any other special clearances or documents required (if any) Types of Local Agents in UAE for opening a Services Company There are two major types of Local Agents in UAE for opening a services company, that are: 1. UAE Citizen as Local Service Agent To set up a service company on the mainland there has to be a UAE National as the Local Service Agent. They will assist in the administrative process, visa application, and getting government clearance for the company. They will have zero ownership in the company and will have provided only for the administrative tasks. There is a yearly fee payable to the Local Service Agent to continue the service and renew the company yearly. In the case of a UAE National as a local service agent, there is always a provision to change the local service agent in case of any dispute or unexpected situations. 2. UAE National Owned Company as Local Service Agent Having a UAE National owned company as a Local Service Agent is the other option for investors owning a company under the professional license. It adds up to the security and trust of having a corporate as the local service agent. Also, there would be zero involvement in the companies working and operations by the Corporate Company. Personal disinterest or related circumstances will be avoided by getting a Corporate Local Service Agent for the investor. Hence, in a nutshell for setting up a service company in UAE, the investor has to get a local service agent for processing the services business license from the DED. There is a host of business benefits for the investor from setting up a services company in the mainland of UAE. From getting government contracts to working with other mainland companies and expanding into the local UAE market, it is a perfect option for services companies. To know more about the Services Company Setup in UAE Mainland, connect with our expert team right away! Contact Us: Aurion Business Consultants

Pros and Cons Between UAE’s Mainland and Free Zone Companies

UAE is a growing trade and economic hub with the Mainland and Free Zone companies contributing significantly to the growth of the economy. The business-friendly policies in UAE make it a prime choice for foreign investors to set up their establishments and grow business here in UAE. There are different advantages and Disadvantages for free zones and mainland companies in the UAE. An investor can choose either free zone or mainland depending on their business requirements. Advantages and Disadvantages of Free Zone and Mainland Companies in UAE It is major decision-making for every investor when it comes to moving to the UAE mainland from the Free Zone company. There are multiple factors that determine the choice: More Flexibility in doing business in UAE Local Markets Reduced Rental expenses and maintenance costs if the office is away from the city center Hire more employees, open new branches, and more. There are a few important points to consider for the free zone company before moving to the mainland, those are: 1. Scope of Business Operations For companies in the specific industry sector, it is advisable to remain in a free zone rather than on the mainland. For example, Dubai Airport Free Zone or Hamriyah Free Zone is ideal for setting up an international trading company in UAE. Thus, companies can easily facilitate trade through airports and seaports rather than being on the mainland. The Free Trade Zones have easy access to customs and upscaled logistics setup for easy transit of goods to and from the UAE. Also, free zone companies can benefit from similar businesses around and work in collaboration. 2. List of Business Activities Few business activities are only available in the Free Trade Zones and not available on the mainland. Hence, while transferring the free zone company license to the mainland, the investor must ensure whether a similar business activity is available on the Mainland. The investor must approach the new licensing authority in the mainland i.e., the Dubai Economic Development for the list of activities. Also, the process of approvals, procedure for obtaining a business license, UAE residence visa, etc., varies between the mainland and free zone. 3. 100% expatriate ownership in Mainland Companies of UAE There is a path-breaking change in UAE Commercial Law, the 100% foreign ownership in mainland companies. However, there should be due diligence in choosing the right business jurisdiction. The 100 % foreign ownership in the UAE mainland has created a buzz in the corporate landscape and is expected to give rise to a host of business opportunities. It has given a choice for those who are already operating in UAE to gain full control of their business, as well as for the free zone companies to move to the mainland. 4. Shareholder Profile In the mainland, especially for service companies, the shareholder must have professional qualifications in the field of activity and also attend a training session by the American University and qualify for an exam conducted. Also, the educational records of the shareholders stamped by the Ministry of Foreign Affairs are required to be submitted for issuing the business license. Whereas in Free Zones, there are no such pre-approvals for service licenses. Few Free Zones in UAE allow company formation remotely without the presence of the shareholder. 5. Office Space and UAE Residence Visa For registering a company in UAE, obtaining the business license for the desired business activity is mandatory irrespective of being in the Free Zone or the mainland. Free Zones offer a wide range of customized office solutions ranging from Flexi-desk to executive office spaces. On the mainland, there are mostly business centers that offer Flexi-desk solutions. Most of the other businesses choose to have a physical office location on the mainland as their office address. Mainland company setup cost varies depending on the office rent, furnishing cost, and other administrative expense. 6. UAE Residence Visa through Company Formation When it comes to UAE Residence Visa, the mainland companies offer a two-year visa for the employees. Similarly, for the Free Zones the investor and employee visa is mostly three years. On the mainland, the employee visa quota depends on the office space, whereas in Free Zone there is a visa quota for a business license that is pre-set. Free Zone office space is standard and must have to be upgraded in case of an increase in staff size, which could turn to be a costly affair when compared to the mainland. The rentals for the commercial spaces in the mainland are much more competitive with more options becoming ready across UAE. 7. Flexibility – Scope of Business Operations The Free Zone business is mostly targeted towards services, general trading, and commercial sectors. These sectors export the majority of their products and also venture into the local UAE market through distributors. Free Zone regulations and policies govern the Free Zone company operation in UAE. In the case of a mainland registered company, the company can take office anywhere in the UAE and start doing business there. The company can be registered with the chamber of commerce and participate in UAE government tenders for procuring large contracts, 8. Branch of a Free Zone Company It is not possible to transfer a Free Zone company in UAE directly to the mainland. Opening a branch of the Free Zone Company with the respective Department of economic development is an option to expand its presence in the mainland of UAE. Another option is to liquidate the Free Zone company and open a new company in the mainland of UAE. Then, the company can continue doing business within the local UAE and GCC markets. Moving from Free Zone Company to Mainland Business Jurisdiction in UAE If a company is moving from the free zone to the mainland it will be considered a new entity. However, the history of the free zone company remains. Free Zone company must cancel all residence visas, company contracts, bank accounts, VAT statements, and invoices, before moving to the mainland.

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