Branch refers to the growth of a foreign parent organization. The department aims to promote and market the parent company’s products/services, enter into contracts, enter into agreements on behalf of the parent company, and provide services to its customers.
It is not allowed to carry out operations that the parent company does not permit. Branches in Dubai are possible for tightly managed industries such as banking, financial services, and insurance (BFSI).
Why Should You Start a Branch Office in Dubai, UAE?
Foreign companies can get an official presence in the UAE through a branch in Dubai. Unlike a regional limited liability company, a wholly-owned branch office can be established outside of the UAE national ownership, with the same legal status as the parent company and conducting business under the parent company’s name.
Key characteristics of the business environment in Dubai:
The branch has the right to carry out the agreement or other activities specified in the license. Foreigners are allowed to set up wholly-owned units in the emirate but must have a UAE Citizen Service Agent.
UAE citizens or businesses that are 100% owned by UAE citizens, as shown in the signed agent transaction in front of a designated notary public, are local service providers.
Types of Branch Office in Dubai
You can setup up the two main types of Dubai branch offices in Dubai: mainland Dubai branch and free zone branch. Different between both branch offices are-
- Free Zone branches are subject to registration and licensing requirements imposed by the company they will operate in.
- Free zone branches are also subject to special capital requirements in the Dubai free zone.
There is no minimum share capital obligation when setting up a branch in mainland Dubai.
Another critical difference between Dubai mainland branches and Free Zone branches is that Free Zone branches can only carry out their activities in the Free Zone where they are registered.
If you have trouble determining an office location, our local consultants can help you decide. We can also help with branch registrations in mainland Dubai and all free zones here.
Important Characteristics Branch Office in Dubai Should Have
Foreign companies interested in a presence in Dubai can choose between branches, subsidiaries, and representative offices. Of these, business branches and subsidiaries are preferred by most overseas companies as they allow local entities to conduct business activities in Dubai.
The main difference between branch and subsidiary is the independence of the parent company. Our Dubai company registration specialists can explain the benefits of subsidiaries and branch offices and help you choose the proper business structure for your company.
- Consider the following things
- Dubai will not consider branch offices as a different legal entity separate from international business.
- The parent company will have complete responsibility for a branch office in Dubai
- The branch office will have to pay the tax whatever sales it makes in UAE.
- The parent company should apply to Dubai authorities for trade licenses.
- The branch office will have to perform the same business activity as the parent company.
- The parent and Dubai branch company should have the same name.
Documents for Starting a Branch in Dubai, UAE
A foreign company should collect and share the following documents for registering a branch in Dubai, UAE.
Following are the documents
- Determination from council
- Power of attorney
- Incorporation certificate
- Memorandum and organization papers.
- Financial Accounts
- Bank guarantee in favor of minister of economy and planning.
Different Types of Licenses
The branch licensing process allows the branch office to purchase the same types of licenses available for other types of local businesses. The license is:
- General marketing license, which allows various types of commercial activities;
- Industrial support, which enables the implementation of multiple activities in the industrial sector;
- Commercial licenses allow establishments to sell a variety of goods and services.
- Dubai Business consultants can provide further information on licensing requirements for foreign company branches.
- Foreign companies opening offices in the UAE are free to carry out authorized activities. On the other hand, a representative office can only conduct an advertising campaign for the parent company’s goods and services.
- International branches can obtain a license from the Ministry of Economic before working in Dubai by the Ministry of Economic Development.
- Global technical and operational companies now have the right to open their offices in Dubai without registering with the Ministry of Commerce.
Taxation of Branches in Dubai, UAE
As previously mentioned, branches in Dubai are considered foreign companies, which means they only have tax on their income. As most foreign ex-pats know, Dubai has a very flexible and inexpensive tax system that does not include corporate taxes.
However, it is essential to understand that branches are subject to specific tax rules established by foreign banks.
The main benefit of overseas companies opening offices in Dubai is that they can take advantage of the UAE double tax treaty to extend the tax breaks offered by local governments. Foreign company branches have to apply for VAT in Dubai.
Process of Opening Branch Office in Dubai
Dubai offers a seamless and straightforward way for business setup in Dubai. If you are looking to open an office in Dubai, we have listed the steps below.
- Find and appoint a Local Service Representative (LSA) who must be a UAE citizen or 100% UAE-owned company.
- The LSA’s job is to manage costs, tasks such as obtaining licenses, permits, visas, and more.
- He is not interested in office activities, management, or property. Assign trade name to a branch of the Department of Economic Growth (DED).
- Submission to the MOE for initial permit Apply for a business license with DED after KLH receives the permit.
- DED approves and is valid for one year. You have to renew it every year without fail.
- Finalization of branch areas gives business bank accounts and employee placement access to get work permits and cards.
- Register as a participant in the Dubai Chamber of Commerce and Industry.
The owners of foreign companies interested in setting up a branch in Dubai should be aware that the Companies Act in the emirate governs these businesses.
An office is available to establish a free zone. It is one of the essential structures a foreign company can invest in investing in a particular industry in Dubai.
From a tax perspective, branches offer the same benefits as local businesses, including profit repatriation without additional mark-ups when setting up in the Dubai Free Zone.
Hello, I am Amy. I am a zealous writer and I have a passion to read and write about business setup consultants, business setup in UAE, business setup services in UAE, company formation and pro services, and its implementation in our modern world. My inquisitiveness towards learning about how business has evolved in emirates is commendable. With such curiosity embedded in me, I research extensively before writing a blog to deliver a credible and detailed content piece.