A Guide to Open a Branch Office in Dubai 2019

by commitbizadmin 09, Aug 2019

A Guide to Open a Branch Office in Dubai 2019

For any business to set its benchmark in its respective industry, it is vital to establish a global presence. While creating an impact and generating maximum leads in the domestic market is significant, but without globalization, the growth of the company would be stagnant. Opening a branch in a foreign location would increase the business opportunities by extending their operations into the markets in addition to other numerous benefits.

Dubai is said to be the business-hub for all the start-ups and established companies. And any investor wanting to have a foothold in the UAE market has numerous options to look forward. While some set up a business in the mainland or a free zone, other, open a branch or a representative office in a hope to expand their business in the Middle-East. Today, we are going to discuss on branch office set up and why it is a viable option for established businesses in and around the UAE.

Branch Office Business Setup in Dubai

Branch offices are often treated as an expansion of their foreign parent business in Dubai. They do not have their own legal status but remain accountable for their actions. The primary benefit of setting up a branch office in Dubai is the permission to carry out commercial activities in the country and be able to make gains. However, you must know that a branch office can carry out those business activities which are similar to those being done by its home company in the home country.

How to Set Up a Branch Office in Dubai?


 

Characteristics of Establishing a Branch Office in Dubai

While choosing to start a branch office in Dubai, you need to consider the following things-

  • The branch office must look into the same activities of the foreign company

  • For these activities, the parent company must appeal for the required licenses with the authorities in Dubai

  • The branch office is not deemed to be a separate legal entity from the foreign company

  • The parent company is liable for the obligations and debts of the branch office in Dubai

  • For taxation, the branch office will be taxed on the income earned in the UAE

Advantages of Opening a Branch Office in Dubain 

Here are the advantages of the branch office in Dubai, UAE.

  • Zero corporate tax
  • Low administrative burden
  • A cost-effective route into a new market
  • When executed right, establishing a branch office will give positive effects to the whole company
  • A branch office can do business activities on behalf of its parent company. It can earn profits through these activities
  • A foreign company can own 100% shares of its business through a branch office

Procedure to Open a Branch Office

Dubai provides an easy and smooth way to establish a branch office in Dubai. If you are looking to start a branch office in Dubai, we have listed down steps to follow for your ease.

  1. Appoint a Local Service Agent (LSA) - The first step is opening a branch office is to appoint a Local Service Agent as your company’s representative. Their role is limited to administrative functions such as obtaining a license, registration, visas, etc. LSA is not involved in managerial functions, nor have they any ownership in the company.
  1. Trade Name Reservation and Approval – The appointed agent will go to the Department of Economic Development (DED) to obtain trade name reservation and then apply for initial approval from the Ministry of Economy for setting up a branch office.
  1. File an Application for Your Company – After getting an initial approval, now is the time to apply for business registration. The application includes filling all the details of the home company like share capital, activities, head office, list of suggested activities to be carried out by the branch office. You must also mention the name of General Manager appointed for the company who will oversee the functioning of the branch office. The documents needed to be attached are as follows-
  1. Certificate of company name and initial approval
  1. Copy of Memorandum of Association, Articles of Association, Certificate of Incorporation, and Certificate of Good Standing
  1. Board resolution for setting up a branch office in Dubai
  1. Passport copy of a general manager
  1. Audited financial statements of a parent company for the last two years
  1. Notarized agreement with local services agent and his identification documents copy (if LSA is a company, then the company’s corporate documents)
  1. Get Approval from the Ministry of Economy and Federal Foreign Companies Committee – The concerned authority will issue their approval, and then further documents that will be required to submit are-
  1. Application form
  1. COI of the parent company
  1. MOE initial approval
  1. Local bank deposit Certificate

Ministry of Economy will forward the application to the Federal Foreign Companies Committee with a note that specific activities are granted to the branch office to carry out in Dubai.

  1. Obtain License from the DED – After the approval from Federal Foreign Companies Committee is received, the applicant will make another application from the DED requiring similar documents that are submitted to the MOE with the addition to include proposed address of branch office in Dubai. The application must include,
  1. Application form
  1. COI of the parent company
  1. MOE initial approval
  1. Local bank deposit Certificate

Ministry of Economy will forward the application to the Federal Foreign Companies Committee

with a note that specific activities are granted to the branch office to carry out in Dubai.

  1. Obtain License from the DED – After the approval from Federal Foreign Companies Committee is received, the applicant will make another application from the DED requiring similar documents that are submitted to the Ministry of Economy with the extension to include proposed address of branch office in Dubai. The application must include,
  1. Consent from MOE as well as approvals obtained from other authorities in this regard
  1. Copy of proposed lease in Dubai
  1. Copies of documents that were submitted to MOE in Step 3
  1. Undertaking of the parent company
  1. Letter from Emirates Auditor approving his appointment and with the report of parent company's fiscal statements for two years.

After successful submission, DED will issue a commercial license to branch office which will be valid for one year and annually renewable. Now there is a new law in Dubai that upon special request, four year license may also be obtained.

  1. Registering with the Commercial Authorities – The final step is to get the approval and register with the Commercial Authorities. Lastly, the branch office is registered at the Dubai Chamber of Commerce and Industry.

And that is all to it. If you want to build a presence in the Emirates marketplace, take the benefit of the country's attractive tax regime in a new market, then start the process of establishing a branch office today and you could be trading in a matter of weeks. If you want to set up a branch office in Dubai, contact us today- we’d be glad to help you.