Branch of Foreign Company in Dubai, UAE
Probably you can’t tour the world, but your business definitely can! And what better way to enhance the presence of your brand than opening a branch office in foreign countries?
Businesses looking to establish a branch of their company in Dubai have two choices before them – a mainland company formation and a free zone company formation. Setting up a branch office in Dubai is quicker, easier, and more transparent than you think. Thanks to the business-friendly policies laid out by the UAE. Ahead we have explained the procedure for starting a branch of your company in Dubai or any other emirate of the UAE.
Understand the Concept of A Foreign Branch Office
Registering a branch office in the UAE is nothing but an extension of the foreign parent company. This clearly means that the new branch company will not be seen as a separate legal entity from the foreign parent company. Therefore, the commercial activities which will be conducted by it will have to be the same as those of the parent establishment. The fundamental requirements of company formation in Dubai will remain the same such as obtaining a relevant trade license and leasing an office. However, this must be noted that the requested trade license for the branch company must have the same name and for the same activities as of its parent company, as the purpose behind opening a branch office in another country is to promote and sell the parent company’s products/services to customers in that country.
Benefits of opening a foreign company branch in Dubai, UAE
With a foreign branch set up in Dubai, you’ve got the inside track already! No wonder a swarm of companies are choosing Dubai to set up a branch office of their companies. Some of the advantages of incorporating a branch of foreign company in Dubai are listed below:
- 100% foreign ownership
- 100% income repatriation is possible
- The UAE’s favorable tax system
- Easy and quick company formation
- Rapidly-growing economy in the MENA region, with their young demographics
- Strategic global location of the UAE
- Easy administrative processes
- No mandatory audit required
- Cost-effective entry into a new market
- Expat and tourist-friendliness of the country
- Access to the gigantic pool of global talents
- Availability of ultra-modern offices
- More than 45 free zones across the emirates
- Advanced digital facilities
- Top-Notch logistics system and world-class infrastructure
- The nation is home to diverse cultures, religions, and communities
- One of the safest countries in the world
- Straight-forward visa application process
- Easy-to-follow, fixed set of rules and regulations for businesses
- Exceptional Government Support
- Affordable business set-up options and services
- Comfortable and high-quality lifestyle
- Various types of branch options to set up, such as Subsidiary, Representative office, and Corporate Shareholder
Licence options for mainland company formation in Dubai
One can establish a mainland business in Dubai by obtaining any of the three licence types mentioned below.
Professional Licence
Issued to provide professional services. For example, various kinds of consultancy services including financial advisory, education consultancy, tax consultancy, etc.
Commercial Licence
Granted to conduct trading activities such as sourcing and selling of different types of commodities including food & beverage items, precious metals & stones, etc.
Industrial Licence
Dispensed to engage in manufacturing or other types of industrial activities. For instance, manufacturing, packaging, assembling and recycling of products.
The process of setting up a Branch of Foreign Company Formation in Dubai
A branch of Foreign company in Dubai can be opened only after obtaining the relevant trade license, and the process of filing the license application in Dubai makes you jump through several hoops to prepare the necessary supporting documents. We are sure that the below-given rundown on the steps involved in completing the licensing process will prepare you for your business set-up journey in Dubai, UAE.
Step#1: The journey starts with the parent company Shareholders or Directors must pass a board resolution mentioning their intention to set up a branch of foreign company in Dubai, United Arab Emirates. Also, appoint a manager or legal representative who will act on behalf of the company to sign the company incorporation documents.
Step#2: Finding a genuine Local Service Agent. It is mandatory for a foreign company to make a contract with a Local Service Agent (LSA) that can be either a UAE national or a company owned 100% by UAE nationals. The appointed LSA will then complete the trade name registration procedure with the local Department of Economic Development (DED).
Step#3: Receive approval from the Ministry of Economy (MOE). The application includes company information such as details about the head office, the nature of the business, share capital, the name of the general manager in UAE, and so on. The supporting documents that much go to MOE along with the application are listed below:
- Memorandum & Articles of Association (MOA)
- Incorporation Certificate/ Trade License
- Parent Company’s Good Standing Certificate
- Parent Company’s extract of commercial register/ Incumbency Certificate
- Shareholder Resolution or Board Resolution stating the formation of a Branch Office
- Power of Attorney in favor of the General Manager, allowing her/ him to open, operate and manage bank accounts on behalf of the parent company.
The above documents must then be notarized and attested by the UAE Consulate/ Embassy in the country of origin and the Ministry of Foreign Affairs (MOFA) in Dubai, United Arab Emirates.
Depending on the jurisdiction, the attested documents must be translated to English/ Arabic by a sworn translator to be submitted to the relevant Authority.
Step#4: Ready the following documents and submit them to Dubai DED to acquire the trade license
- MOE initial approval
- Copies of documents submitted to MOE
- EjARI of the commercial unit
- Engagement letter from a locally registered UAE auditor confirming the company’s existence
- Financial statements of the parent company for the last two years
Step#5: Make the application payment and collect your branch office license
Step#6: Apply for all the required visas and complete other tasks to become a full-fledged branch company in Dubai, such as hiring staff, applying for employee labor cards, and opening a bank account. The banks will require complete UBO information of the Parent company and additional corporate and shareholder structures of the Parent company. Be informed that all foreign documents must be attested, legalized, and translated into Arabic for use in the UAE.
Step#7: Obtain MOE License (within one month) by doing Ministry of Economy (MOE) registration online. For this, you have to pay a certain fee. If not for MOE registration Within the specified time, you will be subject to paying a penalty of AED 1,000 monthly with a maximum limit of AED 10,000 annually. After the MOE registration, the branch company will receive a username and password to upload the requested documents via the portal. One of them is Bank Guarantee. Each Foreign Branch in Dubai, UAE, has to pay a refundable security deposit of AED 50,000 to the MOE (until the license is valid) through a local UAE bank which cannot be withdrawn or used as working capital.
Note: A branch office in Dubai is liable to appoint a UAE-based certified accountant to prepare a balance sheet and present its annual final accounts to the Ministry of Economy while renewing entry. Further, a combined balance sheet must be submitted in case the foreign company has several branches.
Need Professional Assistance in Setting up a Branch of Foreign Company in Dubai?
No matter how often you read or hear that setting up a business in Dubai is easy, you must acknowledge the fact that you are new to the country and not fully aware of the ever-changing laws of the UAE. Plus, it’s not as easy as it seems to figure out what’s best for you when it comes to making big small decisions. (Not to mention the paperwork involved!) That’s where you need expert advice. Thankfully, Dubai has no dearth of business set-up advisors, one better than the next!
If not for a professional business set-up advisor by your side, you might land into trouble later in the near future, if not today. This is one of the reasons why many businesses today prefer hiring an experienced, dependable business set-up consultant in Dubai for setting up a company in Dubai, whether new or simply a branch of the existing one. By outsourcing, they not only save themselves from the hassles of the spadework involved but also save their precious time, money, and energy. Now comes the million-dollar question: Whom to trust for your Duba branch company set-up project? Get your answer right away from the comfort of your home. How? You may ask. Easy breezy! Just click here for a quick zoom meeting with the business set-up consultant in Dubai at Ingenious Corporate Service.
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