The branch office serves 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 on the local market to profit.
A company can open its Dubai branch office for another sector, such as trading, consulting, tourism, etc. However, it is not allowed to carry out any operations not allowed by its parent company. A Dubai branch is best suited to highly regulated sectors such as banking, financial services, and insurance.
Business establishments in the Emirates of Dubai have expanded at a rapid pace. The ground served as a shelter for both the existing company and the newbies coming on the market. When it comes to an existing company looking to grow a forum, Dubai serves as one of the preferred locations. Now, when it comes to implementing, a branch office becomes the most comfortable and most suitable choice. This corporate unit serves as the parent company's extension and does not manage the operating activities. Now, you have to ask yourself what the outcome will be if you end up doing so. This guide explains why business owners go forward and start a branch office in Dubai.
You Get to Know About the Target Market
A branch office deals with transaction-based business operations close to the parent company. The activities falling under a branch list include company acquisitions, research, and growth, market analysis, promotion, and advertisement, etc. The branch office gets to understand the target market and potential clients by conducting those tasks. The compilation of these data is a required step in the process of expansion and offers better clarification as to whether or not one can enter the specified sector.
Various Location Options
The UAE government has leveraged the versatility of location for business owners to come forward and create a branch office. A branch office can be established in Dubai's Mainland, Free Zone, or Offshore. You need to have a clear understanding of all possible choices and select the best according to your business needs before you go and go for one. It should be kept in mind that, as you will know, location matters a lot in contributing to a company's performance, the target market, and their presence accordingly. You needn't be tensed when it comes to execution. To start a Dubai branch office, you can quickly look for office space solutions in a dedicated area commercial complex, and carry out your business operations.
Another reason business owners want to set up a branch in Dubai is to retain their full ownership. A branch corporation does not get a separate identity from its founders but turns out to be an extension. The framework of a branch office does not require a local sponsor but requires a local service agent to provide government-related business services and doesn't possess any ownership.
Build a Relation with Other Business
Since the branch office serves as an extension, it lets the parent company establish a corporate partnership with other dominant relevant companies in the area. It helps the parent company define the appropriate business stakeholders and collaborators without losing emphasis on the core business activities accordingly.
Therefore you can see that a branch company serves as a profit to the parent company and therefore helps to gain further revenue. You can target various areas by starting a branch company. Each of these can help you concentrate on a new group of customers, potentially paving out more avenues for growth opportunities. Now, if conducted without any direction, the implementation phase of integrating a branch office could prove complex. One of the smart options business investors are moving forward is approaching and joining hands with business clients who can lead them at every move.
Why Open a Branch Office in Dubai?
International companies may obtain a formal presence in the UAE through the establishment of a Dubai branch office. Unlike a local limited liability company, it is possible to create a branch office with 100 % non-UAE national ownership and have the same lawful recognition as its parent company and conduct business under the name of its parent company.
The salient features of setting up UAE businesses:
- Branch offices are considered full-blown enterprises.
- Branch offices may conduct contracts or other activities as defined in their license.
- Foreign entities set up wholly-owned branches in the Emirates, but they must have a UAE national who is a 'service agent.'
The local service provider must be a national of the UAE or a business wholly owned by the UAE's nationals set out in an agency agreement signed before a local notary.
Policy For the Selection of Branch Offices in Dubai
The scope has already been checked with many multinational corporations and corporates setting up a branch office in Dubai. Following a few guidelines, the process will only become more realistic and help you settle on a better business set up. When deciding to build a branch in Dubai, consider:
- The branch office would be obliged to conduct out certain international company activities.
- The parent company must apply with the authorities in Dubai for the requisite licenses.
- The branch office is not treated as a separate legal body from the international firm.
- The parent firm will be responsible for the Dubai branch office 's commitments and debts.
- From a tax viewpoint, the branch office will be taxed on revenues received in the UAE.
- The branch office in Dubai has to bear the same name as the parent company.
How to Set-up a Branch Office in Dubai?
These following steps can be followed to obtain a license for establishing a branch office in Dubai -
- The foreign company must send an application with the Ministry of Economy and Commerce to obtain a permit. The organization must apply, along with the application, a Service Agent Agreement with a UAE-owned company of 100 percent or a UAE citizen.
- The Ministry of Economy and Commerce would then forward the application to the Department of Economics to obtain approval from the local government.
- The request will be sent to the Federal Committee of International Companies for approval from the Economic Department. The application will carry a note from the Ministry of Economics and Commerce at this point, indicating the activities the branch office would be permitted to conduct in the Emirate.
- Once Federal Foreign Companies Committee approval is obtained, the Ministry of Economy and Commerce will issue the necessary Ministerial license. Activities to be performed by the foreign branch office are stated in the permit mentioned above.
- The branch office is then registered in the Department of Economic Affairs' Commercial Registry. The correct license is issued here.
- The branch office is entered in the Ministry of Economics and Commerce Foreign Companies Registry after issuing the necessary license from the Economic Department.
- The ultimate destination is at the Chamber of Commerce and Industry in Dubai, where the branch office is registered.
Our Dubai branch setup services come with a structured package derived from years of professional practice and collaboration with public authorities, allowing end-to-end administrative solutions for international businesses. Our pan-UAE presence helps you to open a Dubai branch office or any other emirate quickly.
We have our team of experts at Commitbiz Management Consultants to help company’s set up their office in Dubai and the remaining UAE. Contact us if you have any minor or significant questions about setting up a Dubai branch.
Which are the Top 7 Branch Office companies in Dubai?
- State Bank Of India
- Emirates NBD
- Emirates Insurance Company PSC
- DBS Branch
- Commercial Bank Of Dubai
- Tamleek Real Estate Registration Trustee
- Citigroup Global Markets
What are the UAE Double Taxation Treaties?
When a similar tax gets imposed on someone in 2 different countries on the same tax base, such that it will adversely affect the exchange of services, capital, technology, etc transfer & trade across the border.
What is the Corporate Tax imposed on Branch companies?
If the branch company is set up by a foreign bank then the branch company will be entitled to a corporate tax of 20%.
What is the approximate time required for setting up a Branch office in Dubai?
Approximately 2 months.
What is the difference between Freezone and the Mainland branch office in Dubai?
Freezone branch offices come with certain share capital requirements for setup, whereas for Mainland branch offices there are no requirements for any share capital.
Freezone branch offices are restricted from doing business outside the free zone they’re formed in. In order to do business outside the free zone, they’ll have to appoint a local agent. Whereas there are no such restrictions on Mainland companies.