Opening a branch office in Dubai will ensure multifarious benefits for companies looking to expand their global presence. The key advantage is that the UAE enables 100% foreign ownership and allows all activities which are similar to the parent entity.
Branch offices that are allowed to function in the UAE
There are various kinds of branch offices which can operate in the UAE:
- Corporate Shareholder– The parent company can either function in Dubai or any other geographical location. Company branches segmented thus will enable individual shareholders to hold onto stakes along with licenses. Multiple corporate owners may also be possible.
- Branch Company– A branch company may have a parent entity functioning outside Dubai or within the Emirate. Branch companies follow regulations similar to sole proprietorship.
- Representative Office– Representative offices may have parent entities operating outside Dubai or within the Emirate. Their activities will be restricted towards promotions and sourcing work for the parent organization and they cannot make profits in the UAE. All work has to be outsourced to the parent entity.
- Subsidiary– Functioning of company subsidiaries will be considered legally separate from the parent entity and should be within Dubai itself. The management should be based in Dubai and subsidiary entities will have independent and full responsibility for their operations and activities in the UAE.
Steps for Setup a Branch Office in Dubai
Here are the steps for setting up a branch office in Dubai:
- Filing the Application– For establishing a branch office in the UAE, an application has to be filled and dispatched to the Ministry of Economic and Commerce. A service agent agreement will also be given during submission. An UAE agent should be the service agent while establishing the representative office.
- Approval from the Jurisdiction Authority/Department– The UAE Ministry of Economic and Commerce will only issue its approval after getting the approval from the Economic Department of the area. The application will be dispatched to the local government by the Ministry before giving its assent.
- Approval from the UAE Federal Foreign Companies Committee– The UAE Federal Foreign Companies Committee is required to give another approval and the application will have a permit letter from the Ministry of Economic and Commerce.
- Obtaining License from Ministry– After all the approvals, the license from the Ministry of Economic and Commerce will be given for the branch office.
- Obtaining Business License– The branch office will be registered under the Foreign Company Registration mechanism and post this, the business license will be provided.
- Commercial Registration– Post all approvals and documentation, branch officers can undertake commercial registration in the region for commencement of business. The branch office should be registered with the Chamber of Commerce and Industry and Ministry of Economic and Commerce Companies Register.
Key aspects worth knowing
There are several things that you should always be aware of. Firstly, GCC Filings is one company that will help you with VAT registration in UAE, company incorporation in the UAE, VAT returns, filings in UAE, company auditing, accounting and a lot more. It is a one-stop solution for setting up offices in the UAE and will guide you throughout the entire process.
Secondly, tax benefits, namely the 0% corporate tax rate in the UAE, are major incentives for businesses to establish branch offices in Dubai and Abu Dhabi among other Emirates. Free zone branch offices of companies will be subjected to licensing and registration requirements of the authority where they will be functioning and they will also be subject to particular requirements of share capital in free zones in Dubai. For free zones, branch offices have to stock to activities within the same itself.