One of the ways through which an investor or a business person can enter the markets of the UAE is by opening a representative or a branch office in one of its Emirates. A company that wants to extend its operations in different parts of the world, prefers opening a branch office.
But first, let us understand in-detail about the Branch Office of a Foreign Company.
Under the Commercial Companies Act, No 8 of 1984 and Ministerial Decision Number 69 of 1989, a branch office of a foreign company does not have a separate entity. It represents the parent company and carries business under its name. The purpose of opening a branch office is to promote the and market products and services of the parent company, enter into transactions and settle the agreement in the name of the parent company, and offer services to its clients. It is important to note that a branch office is not allowed to do any activities which the parent company does not perform.
Advantages of Opening a Branch Office in Abu Dhabi
While the United Arab Emirates provide many benefits of setting up a company in UAE, there also are several perks of branches of foreign companies.
- UAE has 0% corporate tax on the branch office
- Less administrative work
- A branch company is just a part of a parent company, and that is why business owners will have to make fewer finances. That is why opening up a new branch office in UAE is a cost-effective opportunity, and business owners should avail it whenever they can to grow their business in more regions.
- No personal income and capital tax
- 100% repatriation of capital and profits
- No currency restrictions
- Competitive import duties
- Competitive freight charges
Also note that the Commercial Companies Law regulates foreign company branches in the UAE and stipulates they may be 100% foreign-owned, provided a local agent or sponsor is appointed to them.
Procedure to Establish a Branch Office in Abu Dhabi
A foreign company may open an Abu Dhabi branch provided it has been approved by the Executive Council and Federal Ministry of Economy and Commerce, is granted a suitable license from the Abu Dhabi Municipality and has been accepted as a member of Abu Dhabi Chamber of Commerce.
Here’s how you can start a branch of a foreign company in Abu Dhabi.
1.File an Application
To open a branch office in Abu Dhabi, the parent company must file an application form with the Ministry of Economy and Commerce. It is also important that during the submission, a service agent agreement is also provided. The condition of having a UAE national as your service agent during the registration procedure is a must.
2.Approval from Jurisdiction Authority or DED
The UAE Ministry of Economy and Commerce will provide an agreement only after the Economic Department of the locale approves. Thus, the Ministry of Economic and Commerce will send the application to the local government for consent.
3.Approval from UAE Federal Foreign Companies Committee
The next step in the process of starting a branch office in Abu Dhabi is to get permission from the Federal Foreign Companies Committee. The application is subsequently forwarded by the economics department to the committee, with a permit letter from the Ministry of Economic and Commerce for the business activity dealt with by the company.
4.Get License from DED Abu Dhabi
After the above-said authorities approve of the branch office, the ministerial license will be provided to the company. The consent that will be given by the DED Abu Dhabi will also specify the business activity undertaken by the company.
5.Register with the Commercial Authorities
Once you have all the required documents and the licenses at hand, the branch office can register with the commercial authorities in the region and start the business. The branch office in Abu Dhabi is required to be registered with the Abu Dhabi Chamber of Commerce and Industry.
Documents Required to Setup a Branch Office in Abu Dhabi
Here are the documents required to open a branch office.
- Company license copy
- Certificate of Incorporation
- Board Of Resolution
- Power Of Attorney for appointed Manager
- Passport copy of Manager
- Letter from local Auditor to undertake branch auditing
One can open a branch office in Abu Dhabi in a few working days.
So, if one has a company in the UAE or outside the UAE, and wants to expand its business within or in the UAE, then Abu Dhabi is the great place to make the venture a success.
How can Commitbiz help?
At Commitbiz, we can recommend the best possible options on setting up a branch office of your company and make sure that your business is up and running with minimal hassles and effort. We undertake the entire task on your behalf, so you’re free to concentrate on the bigger picture – your business. Contact us today for more information.