Branch Office Formation - Expand your Business in Dubai

by Zaara 07, Jan 2021

Branch Office Formation - Expand your Business in Dubai

The branch office represents the parent company with the same operation and trade name under which one can advertise or sell the parent company's goods and services and perform business operations in the local market.

A business may open its Dubai branch office for another activity, such as trading, consulting, tourism, etc. However, it is not allowed to carry out any operations not authorized by its parent company. A Dubai branch is best suited for strictly regulated sectors such as banking, financial services, and insurance.

Developing business activities is what makes an organization grow. When a commercial business operates very well in the home sector, the next step is expansion by multiplying the offices. The procedure of extension starts with the creation of a sub-divisional organization in the targeted area of growth. A branch office alludes to a subsidiary of a foreign-based parent company. The concept behind a branch office is to facilitate and sell the parent organization's items/administrations/services, get into deals, sign parent organization contracts, and offer its clients services. It is not authorized to do any operation that is not permitted to do by its parent organization. A Dubai branch office is ideal for undertakings such as banking, financial services, and insurance (BFSI) with firm control. The idea of establishing a branch in Dubai.

Why Open a Branch Office in Dubai?

International companies can procure a formal existence in the UAE by establishing a branch office in Dubai. Unlike a local limited liability company, a branch office with a 100 percent non-UAE national program may be formed and has the same legal status as its parent corporation and conducts business under its parent’s name.

Characteristics of Setting Up a Branch Office in Dubai

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

  • The regional office must look at the same international company's activities.
  • For these tasks, the parent company must apply to the authorities in Dubai for the requisite licenses.
  • The branch office is not classified as a distinct legal body from an international company.
  • The parent company is responsible for the branch office's commitments and liabilities in Dubai.
  • The branch office will be charged on the revenues received in the UAE for taxation.

Benefits of Opening a Branch Office in Dubai

There's a massive benefit of being able to trade more in the UAE's local market by creating a new branch or business. Here are a few of perks of a UAE branch office-

  • Corporate Tax Zero
  • Higher employee load
  • A cost-efficient process to a new market
  • The creation of a branch office would have beneficial consequences for the entire business when performed correctly
  • On account of its parent company, a branch office will do business activities. In doing so, it will gain money
  • A global company can own 100 percent of its shares in a branch office

Types of the Branch Office in Dubai

Two significant categories of branch offices can be set up in Dubai, branches formed in Dubai Mainland, and branch offices in the free zone.

The main differences between the two form of business are:

  • Free zone branches must be subject to the conditions of registration and licensing levied by the authority under which they work.
  • Free zone branches will be subject to different capital requirements in Dubai free zones. In contrast, the establishment of a branch office in Dubai mainland does not involve minimum share capital requirements.
  • Branches of the free zone are limited to completing their activities in the open region they have been registered.

Article (313) of the Companies Law requires a foreign business to conduct its principal operation in the UAE by starting a branch or a representative office.

The global company that opens a branch in the UAE can freely carry out its approved activities. In contrast, a representative office can only carry out promotional activities for the parent company's goods and services. To allow a foreign branch to conduct its business in Dubai, it should obtain a license from the Ministry of Economy before the Department of Economic Development receives a permit.

Global skilled and service companies are now permitted to open their branch in Dubai without registration by the Ministry of Economy.

Alternatively, an outside party may establish a representative (rep) office.

  • Rep offices’ role is restricted to supporting the activities of its parent company. It means that a representative office can only carry out such operations as collecting information, soliciting orders, and marketing campaigns to be carried out by the organization’s head office.
  • Each type of office is often limited in the number of staff (usually three or four) that they support. Representative offices include the appointment of a service agent who is a national of the UAE who can offer services such as obtaining permits and licenses to the parent.

How to Set-Up a Branch Office in the UAE?

The process of registering your branch office in the UAE is quick and trouble-free. It includes -

  1. The primary focus is the identification of the local agents. The local agent must be a member of the UAE or a company wholly owned by UAE nationals.
  2. The next move is to register a name for the trade. It must be distinctive and not resembling any existing UAE firm.
  3. Apply to the Ministry of Economics with a request that includes share capital, head office, general manager's name in the UAE, etc. along with the documentation.
  4. When you apply, the next step is to receive a license from the Economic Development Department. Under this, you will use the documents, and you will get the commercial license after the Ministry approves them.
  5. If the license has been issued, additional company registration activities such as opening bank accounts, office space, securing employee visas, and labor cards can be examined.

When all the measures have been completed, you're good to start your branch office functioning.

Documents to Set Up a Branch Office in UAE

As seen at every point of initial authorization, documentation is everything it relies on establishing the office. The organized reports needed to set up a branch office in the UAE have useful insights:

  • Trade name reservation and original authorization forms
  • Certificate of Incorporation
  • Memorandum of Association (MOA),
  • Article of Associations (AOA)
  • A clear board resolution approving branch opening
  • A High-Status Certification
  • Power of Attorney to the designated manager
  • Copies of all Managers' passports
  • Audited parent organization’s reports for the last two years
  • An outline that reflects the purpose, mission, and vision of the organization
  • A notarized sponsorship arrangement at court

Cost of Establishing Up a Branch Office in Dubai

            Particulars

          Cost is AED

Ministry of Economy Application ( Govt.)

                    5000

Ministry of Economy Registration ( Govt.)

                   10000

Ministry of Economy Security Deposit

                   50000

Local Government fees for Licensing and Registration

                   10000

Local Sponsor Fees

                12000-15000

What Branch Office Setup Services We Provide in Dubai

Commitbiz can help you with the following services if you want to set up a branch office in Dubai:

  • Preparing the records for the application
  • Identifying a trusted local service provider
  • Obtaining authorization and approvals from government agencies
  • Helping the branch office free its corporate bank account
  • Help find an appropriate location for the Dubai branch office

Why Us?

Our branch office setup services are a combined package extracted from years of professional practice and collaboration with government agencies, allowing end-to-end administrative solutions for international business organizations. Our pan-UAE presence helps you to instantly begin a Dubai branch office or any other emirate.

We have our team of specialists at Commitbiz Management Consultants to help companies set up their offices in Dubai and the rest of the UAE. Contact us if you are concerned about establishing a branch office in Dubai.