With the assistance of professionals, opening a branch office in Dubai for your UAE-based company can be a simple and expedient process. One of the simplest ways for a foreign business to access the UAE market is to open a branch office there.
If you have a fully operational company in another country and want to expand into the Middle East, a branch office in Dubai is a great option. Dubai is a gateway to the Middle East, with a strategic location that helps foreign companies connect with the entire region.
Your business can conduct transactions, engage into agreements, market items, and sell goods and services with a branch office in the United Arab Emirates. However, if your parent company is not allowed to do a certain business activity, the branch office in Dubai will not be allowed to do that activity either.
What is a Branch Office in Dubai, UAE?
A branch office is an additional location that a main company opens in a different area, such as a Freezone or Dubai Mainland. Companies do this to save money, gain tax benefits, or enter new markets. If you want to branch set up in UAE, you have two options – Dubai Mainland or Freezone. The rules are different for each area.
Characteristics of a Branch Office in Dubai, UAE –
- Same Activities as Parent Company – The branch office can do the same things as the main company.
- Trade License – The branch office needs to get a trade license that allows it to carry out its business activities.
- Not a Separate Entity – The branch office is not a separate legal entity from the main company.
- Liability – The branch office’s debts and liabilities are the parent company’s responsibility.
- Taxation – The branch office will be taxed based on its income in the UAE.
- Same Name – The name of the branch office will match that of the parent corporation.
Steps to Start a Branch Office in Dubai, UAE
You can set up a branch office in Dubai, UAE, either on your own or with expert help. However, if it’s your first time starting a company in the UAE, it’s highly recommended to get professional assistance.
Mistakes during the company formation process can be costly in terms of both time and money. In the end, doing it yourself might cost more than hiring professionals to help you.
Here are the steps you need to follow to set up a branch in Dubai, UAE –
1. Appoint a Local Service Agent (LSA)
To business setup in Dubai, you need to appoint a Local Service Agent (LSA). This agent must be a UAE national (Emirati). The LSA will act as your intermediary with the government, helping you get licenses, visas, permits, and approvals. Many official documents and processes are in Arabic, so it’s essential for foreign companies to have an LSA.
The LSA might share ownership of your company if needed, but they won’t be involved in running the business or making decisions. They won’t take a share of the profits and will only charge a small annual fee for their services.
2. File Your Branch Office Formation Application
To Dubai company setup, you need to apply to the Ministry of Economy in Dubai. This application must receive preliminary approval before any further action is taken. It’s crucial to thoroughly fill out the application form with precise and error-free data.
Your local service agent can help you complete the form to make sure there are no mistakes. A service agent agreement is also required, which formally declares that the local service agent will launch the business on your behalf.
3. Get Required Approvals from the Ministry of Economy and Federal Foreign Companies Committee
To start your business in the UAE, you need approvals from both the Ministry of Economy and the Federal Foreign Companies Committee.
Here’s how you can get them –
Submit Documents to the Ministry of Economy – Gather all the necessary documents and submit them to the Ministry of Economy for their approval.
Approval from the Federal Foreign Companies Committee – The Ministry of Economy will forward your application to the Federal Foreign Companies Committee, so you don’t need to send it separately. If everything is in order, you will receive a permit letter. This means your branch setup in Dubai, UAE, is approved.
4. Get Your Business Trade License from the DED
The Department of Economic Development (DED) in the UAE provides business licenses for new businesses in Dubai. After getting approvals from the Ministry of Economy and the Federal Foreign Companies Committee, you can apply for your business trade license from the DED.
Keep in mind, that you can only do the business activities you registered for when you applied for the trade license. Thus, while applying, be sure to thoroughly choose all the pertinent business operations. It is necessary to renew the business trade license annually.
5. Register with the Commercial Authorities
The last step is to register with the commercial authorities after obtaining your business license and registering your branch office.
For instance, you must register with the Ministry of Economy Companies Register and the Dubai Chamber of Commerce and Industry if you are opening a foreign branch in Dubai.
Required Documents to Open a Branch Office in Dubai, UAE
To open a branch office in Dubai, UAE, you will need to gather the following documents –
- Completed application forms for registering the branch office.
- A certificate showing the reserved trade name.
- The Memorandum and Articles of Association (MAA) of the parent company.
- A copy of the parent company’s Certificate of Incorporation.
- Passport copies of the company’s director.
- A no-objection letter from the parent company.
- A power of attorney for the branch office director.
- A board resolution from the parent company authorizing the opening of the branch office in Dubai, UAE.
How Much Does it Cost to Setup a Branch Office in Dubai?
Setting up a branch office in Dubai with Start Any Business can cost around AED 100,000 on average. This amount includes a refundable startup payment of AED 50,000. However, these costs can change based on current laws and regulations. To get the most accurate cost, it’s best to check the belated necessities and procedures.
Also Read: Corporate Tax Law in UAE : A Comprehensive Guide
