A Branch office represents the parent company with the same activity and same trade name where one can promote or market the product and services of the parent company and conduct business activities in the local market to make a profit.
A branch office of a foreign company in Dubai can be opened for different enterprises such as trading, consulting, tourism, etc. However, it cannot carry out any activities, its parent company is not permitted to. A branch office in Dubai is ideal for tightly regulated industries like Banking, Financial Services and Insurance.
Details on Opening a Branch Office in Dubai
Foreign companies can procure a formal presence in the UAE by opening a branch office in Dubai. Well, unlike the case with a local limited liability company, a branch office can be established with 100 percent non-UAE national ownership and have the same legal identity as its parent company and conducts business under the name of its parent company.
The law allows a foreign company to exercise its main activity in the UAE by opening a branch or a representative office.
The foreign company which opens a branch in the UAE may freely exercise the activities for which it is licensed. In contrast, a representative office may practice only promotional activities for the products and services the parent company provides.
The salient features of opening a branch office are:
- Branch offices are regarded as fully-fledged businesses.
- Branch offices are permitted to perform contracts or conduct other activities as specified in their license.
Types of Setting Up a Branch Office in Dubai
The main differences between the two types of business:
- Free zone branch offices will be subject to the registration and licensing requirements imposed by the authority in which it will operate
- Free zone branch offices will be subject to specific share capital requirements in Dubai free zones, whereas there are no minimum share capital requirements for setting up a branch office in Dubai mainland.
To engage a foreign branch to conduct its operation in Dubai, it should obtain a license from the Department of Economic Development.
Guidelines for Setting up a Branch Office in Dubai
The potential of setting up a branch office in Dubai has already been proven, with several global companies and corporates incorporating their business in the city. Following a few guidelines shall only make the process more feasible and help you decide on a better business setup. While setting up a branch office in Dubai, one must consider the following:
- The branch office will be required to complete the same activities as the foreign company;
- The parent company must apply for the necessary licenses with the Dubai authorities;
- The branch office is not considered a separate legal entity from the foreign company;
- The parent company will be liable for the obligations and debts of the Dubai branch office;
- The Dubai branch office must bear the same name as the parent company.
Cost of Opening a Branch Office in Dubai
The cost of opening a branch office in Dubai is approximately AED 11,600. However, there are other additional charges like establishment card, labor card, Visa, and office space, which sums up to 19,200 AED approx.
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Can I open a branch office in Dubai free zone?
Yes, you can.
What is the Corporate Tax for a Branch Office in Dubai?
No, there has been no corporate tax till now. However, UAE is planning to introduce corporate tax by 2023 – 2024.
Are there any restrictions in the name of a branch office?
Yes, the branch office should hold the name of the parent company.
What activities can a branch office carry out in Dubai?
It should carry the same activity as the parent company.