A branch office refers to an outgrowth of an overseas parent organization. The branch office aims to promote and market the parent company's products/services, enter into contracts, finalize agreements on behalf of the parent company, and provide its customers with services. It is not allowed to conduct any operation which is not permitted by its parent company. For tightly governed industries such as banking, financial services, and insurance (BFSI), a branch office in Dubai is feasible.
Why Start a Branch Office in Dubai?
Foreign corporations can gain a formal presence in the UAE via a branch office in Dubai. Well, unlike the case with a regional limited liability company, a branch office can be formed with 100 percent non-UAE national ownership and have the same legal status as its parent business and operates the business under the name of its parent entity.
The key features of business setup in Dubai:
- Branch offices are known to be fully-fledged corporations.
- Branch offices are allowed to perform agreements or other activities, as stated in the license.
- In the Emirate, foreign entities are permitted to establish wholly-owned branches, but they must have a UAE national 'Service Agent.'
A UAE national or a corporation wholly owned by UAE nationals as set out in an agency deal signed before a specific notary public shall be a local service agent.
Kinds of Foreign Branch Office in Dubai
The key differences between the two kinds of the company:
- Free zone branch offices will be contrary to the terms of registration and licensing provisions levied by the jurisdiction under which they work.
- Free zone branch offices in Dubai free zones will be subject to strict share capital criteria. Simultaneously, there are no minimum share capital requirements when establishing a Dubai mainland branch office.
- Branches of the free zone are limited to achieving their activities in the open location where they have been licensed.
A foreign business establishing an office in the UAE may freely carry out the activities for which it is approved. In contrast, a representative office may only carry out promotional activities for the parent company's goods and services.
The international branch could obtain a license from the Ministry of Economy before acquiring a permit from the Department of Economic Development to conduct its operations in Dubai.
Global technical and operational companies are now authorized to open their Dubai branch without the Ministry of Economy registration.
Alternatively, a representative (rep) company may be formed by a foreign partner.
- The role of rep offices is restricted to promoting the activities of their parent company. It means that a representative office can only carry out operations to be carried out by the organization's head office, such as collecting information, soliciting orders, and marketing projects.
- The number of workers they sponsor (usually three to four) is also restricted to this office form. The representative offices include hiring a sales rep who is a citizen of the UAE and who will provide services, such as acquiring permits and licenses, to the parent.
Guidelines for Choosing Dubai Branch Offices
The opportunity has already been evaluated, with many multinational businesses and corporations setting up a branch office in Dubai. Following a few guidelines would make the approach more practical and help you set up a better company. When deciding to set up a Dubai branch office, one must consider:
- The office of the division would be forced to carry out the same activities as a foreign company;
- The parent company must apply to the Dubai authorities for the requisite licenses.
- The branch office shall not be considered a legal entity separate from the international company;
- The parent company will be responsible for the Dubai branch office's commitments and debts;
- The branch office will be required to pay on the UAE's sales from a tax perspective.
- The office of the Dubai branch must have the same name as the parent company.
Documents Required for Registration a Foreign Company Branch
A foreign company must send to the relevant authority(s) the following documents (standard) and acquire the requisite approvals for registering a branch in Dubai.
The documents below are necessary by the parent company.
- Incorporation Certificate.
- Memorandum and Organization Papers.
- Determination from the Council.
- Financial Accounts reviewed.
- Power of Attorney (provided on behalf of the General Manager named by the company).
- Bank guarantee is provided in favor of the Minister of Economic and Planning; the bank guarantee must be updated every year, contributing to AED 50,000.
- A 'Business Agent' arrangement with a national of the UAE
It is necessary to approve the place proposed to be used by the branch office. Some fees even need to be charged before the issuance of a license.
Procedure to Register a Branch Office in Dubai
Dubai offers a seamless and straightforward way to set up a Dubai branch office. If you are looking to start a Dubai branch, we have listed steps to follow for your convenience.
- Locate and assign a local service agent (LSA) who must be a national of the UAE or a company wholly owned by the UAE's citizens. The LSA's job is to manage fees, tasks such as obtaining licenses, permits, visas, etc. He/she is not interested in any of the office's activities, management, or ownership.
- Allocate a trading name for the Department of Economic Growth (DED) branch office
- Submit to the Ministry of Economy for initial approval (MOE)
- Apply for a commercial license at the DED after the MOE has accepted the permit. The permit is issued by the DED and is valid for one year and is renewable annually.
- Finalize a region for the branch office
- Access a Bank Corporate Account
- Arrange the workers for permits and labor cards
- Register as a participant of the Chamber of Trade and Industry of Dubai
What Branch Office Setup Services We Offer in Dubai
If you want to establish a Dubai branch office, Commitbiz will assist you with the following services:
- Preparation of the application documents
- Identifying a reputable local agent for services
- Obtaining licenses and permits from branches of government
- Helping the branch office open a corporate bank account
- Assisting in seeking an acceptable venue for the Dubai branch office
Our Dubai branch office setup services provide a wholesome package for foreign business organizations based on years of professional experience and liaison with public agencies, making end-to-end procedural solutions. Our pan-UAE presence enables you to quickly start a branch office in Dubai or any other emirate.
We at Commitbiz Management Consultants have our consultants’ team to help companies set up their offices in Dubai and the UAE. Should you decide to start a company here, do contact us, even if it’s just for a piece of friendly advice.