The United Arab Emirates is one of the wealthiest places globally and currently has one of the fastest-growing economies. The number of foreign investors in the UAE keeps growing and consequently every year the established businesses outside the country want to expand and set up a branch office in the Emirates. A branch office is just an extension of a present company. Other than the instance of a subsidiary, which is said to be a wholly separate, a branch office doesn’t have a distinct legal identity from its parent company. In the same manner, while most branch offices are allowable to operate in the regional UAE market, they can only perform similar business activities to the parent company.
Types of Branch Office in the UAE
There are four main types of branch offices to consider. The one that best suits your business needs will ultimately depend on the business activity that you are going to conduct and a few other essential factors.
Under this, the parent company can be based either in the UAE or abroad. Corporate shareholder offices allow for an individual shareholder to hold a stake in the business along with the license. For example – a company can be owned 50% by a UK firm, 25% by an individual, and 25% by another individual.
The branch office is the most common business formation in the Emirates. As with the corporate stockholder option, the branch company’s parent can be settled either in the Emirates or overseas. However, branch companies differ from corporate shareholder offices in that the parent company remains the sole owner.
These are usually the most cost-effective of all the branch types. The parent company under this can be based either in the UAE or abroad. The significant difference between representative offices is that their business activities are limited to promoting and sourcing work for the parent company. The representative offices cannot make profits in the UAE and must outsource all work back to the parent company.
Subsidiaries are the most exclusive of the branch types in that they are considered a distinct legal identity to the parent company and should be managed from within the Emirates. This means that the subsidiary assumes total liability for its actions and business activities.
How to Establish a Branch Office in the UAE?
The steps to register your branch office in the UAE is simple and hassle-free. It includes –
- The initial task is to identify local agents. The local agent must be a UAE national or a company fully-owned by the UAE nationals.
- The next step is to register a trading name. It has to be unique and must not be similar to any established company in the UAE.
- Apply to the Ministry of Economy with an application that includes the details regarding share capital, head office, the name of the general manager in the UAE etc. along with the documents.
- Once you apply, the next step includes obtaining a license from the Department of Economic Development. Under this, you need to submit the documents, and once the Ministry reviews them, you will get the commercial license.
- Once the license has been obtained, further tasks of company registration can be looked into like the opening of bank accounts, office space, acquire visa and labour cards for employees.
Once all the steps are completed, you are good to start your operating your branch office.
Advantages of Starting a Branch Office in the UAE
There is a massive benefit of being able to trade more in the local market in the UAE by forming a new business branch or company. Here are a few perks of a branch office in the UAE –
- 0% corporate tax
- Less administrative work
- Enjoy the added benefit of legal tracking of every financial transaction that happens between the parent company and the branch office
- 100% of foreign ownership
We at Commitbiz can help you with the detailed and often confusing processes of business formation in the UAE. Our expert solution will assist in registering a business in a hassle-free manner. Contact us today to know more.
What are the types of companies in UAE?
What are the benefits of subsidiary companies in UAE?
The subsidiary company’s primary benefit is that the parent company does not govern its operations. It is free to conduct its operations in UAE as per the owners' desire.
And it's a 100% local company.
What is the corporate tax rate on Subsidiary companies in UAE?
All companies outside Banking, Oil & Gas sectors are entitled to 0% tax.
What are the documents required for setting up a Subsidiary company?
Memorandum Of Association (MOA)
Approval letter issued by DED
Company Approval letter
Copies of Shareholders passport
What are the differences between the Subsidiary and Branch Office?
Incase of Subsidiary you’ll need a Legal Entity but that’s not required for a Branch company.
The obligations are tied to the parent company in case of a Branch company. In case of subsidiary company the obligations are limited to the particular subsidiaries.
Incase of a Branch company the ownership is 100% whereas for a Subsidiary company the ownership can be between 50% and 100%.