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.
The 100% foreign ownership of the company is a key trigger driving the foreign investors to the free zones of UAE. Meanwhile, opening a subsidiary company in the free zones of Dubai is a straightforward process for foreign investors.
However, compared to a new company registration it requires little documentation to be prepared for compliance purposes.
There is no special permission required form any government department for setting up a subsidiary company in Dubai. However, depending on the chosen business activities, there is a requirement of getting special approvals from the respective government departments.
What is the difference between branch and Subsidiary Company in Dubai?
The major difference between a branch and subsidiary company in Dubai remains in the mode of operation. A Subsidiary company can indulge in the chosen business activity and does not necessarily conduct the similar business activity as the parent company.
Whereas, a branch office will be having the same business activity as their parent company. Branch Office will be an extension of the parent company’s operations. The parent company would have a headquarters and the decision makers will all be at the director board guiding the operations of its branch offices.
Alternatively, the subsidiary company will have a director board with the parent company representative as one of the board members. The subsidiary will act as a separate legal entity in their functioning.
The capital can be provided to the subsidiary as a loan by the parent company. The finance and book of accounts for a subsidiary company can be maintained separately by the entity.
Whereas a branch company, the finance and accounts could be centralized in the headquarters or the branch can handle it as separately, however, the branch and parent company is treated as a single entity for tax purposes.
To know more, read – How to open a branch office in Dubai?
Characteristics of a Subsidiary Company in Dubai
Entrepreneurs who are based outside of the UAE can open a subsidiary company in Dubai to venture into a new market with a new business activity. Often companies operating outside of UAE wants to expand their business verticals to new geographies.
So, opening a subsidiary in dubai is a favorable choice when looking at the numerous business opportunities, cost of setting up, and ease of doing business in the region. The Subsidiary can be managed as a separate entity by appointing a team and hiring few local talents.
The parent company can act as an advisory board member to the subsidiary and operate it independently through a team. The operations, finance, management, etc., can be decentralized to the subsidiary company by appointing a leadership team.
In Dubai, there is no minimum share capital requirement for a subsidiary company, however, proof of funds in the bank and bank letter can be provided to the Free Zone or Mainland Licensing Authority for obtaining the Share Certificate.
Documents Required for Opening a Subsidiary Company in Dubai
The following documents are required for opening a subsidiary in UAE. The parent company documents must be attested in the home country by the UAE Embassy and counter-attested by the Ministry of Foreign Affairs in UAE.
Thus, there is a thorough compliance process followed in UAE to ensure the parent company is legally incorporated and has a good legal standing in the home country.
Documents Required for Subsidiary Company in UAE
- Parent company documents – Memorandum of Association, Certification of Incorporation, Good Standing Certification
- Board Resolution for opening the branch in UAE and appointing a manager
- Power of Attorney to the Manager
- Manager Passport Copy, Photograph
- Application form for registering a branch in Free Zone/Mainland
The newly incorporated subsidiary company in Dubai enables the investor to conduct business operations on its own as an in depend entity in UAE.
In addition to that, they can avail tax benefits by operating from Dubai. The Subsidiary can leverage the Double Taxation Avoidance Agreement and save taxes eventually. They can obtain the Tax Residence Certificate from UAE Federal Tax Authority as proof for tax savings in their home country.
Hence, in a nutshell, opening a subsidiary company in UAE is highly beneficial for the foreign investor for their business growth and expansion, the tax savings, 100% ownership of the company, expansion across UAE, and GCC markets.
Aurion will guide the business owner in setting up a subsidiary company in Dubai the most cost-effective and hassle-free way. Our team will handle all the documentation, administrative and operational aspects with ease.
Connect with our expert team of business consultants to know more about the process of opening a subsidiary company in Dubai.
To know more about opening a Branch Office of a Free Zone or Mainland Company in Dubai, read our blog.
