How to Start a branch office in Dubai?
How to Start a branch office in Dubai?
Opening a Branch office in Dubai can help foreign investors expand their business in the Middle Eastern Market. It allows foreign companies to perform business activities such as marketing products, selling goods and products, and carrying out transactions. However, if the parent company cannot perform some activities in its country, it is also allowed in Dubai. Starting a branch office in Dubai involves appointing an LSA, filing an application, getting required approvals, etc. This article gives you a better understanding of the branch office, its benefits, and how to open it in Dubai.
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A Dubai branch office registration serves as an extension of your existing foreign company operating within the emirate. Unlike a separate legal entity, it functions under the parent company’s name, regulations, and ultimate responsibility. This setup allows you to establish a physical presence in Dubai and conduct business activities permitted by your trade license. Here are some key characteristics of a Dubai branch office:
- Extension of the Parent Company: The branch office operates as a part of your existing business, inheriting the parent company’s name and overall liability for its debts and obligations.
- Licensed Business Activities: To operate legally, the branch office must obtain a trade license that specifies the authorized business activities it can undertake in Dubai.
- Taxation Based on UAE Income: Branch offices are subject to UAE taxation on the profits generated within the emirate.
- Strategic Market Entry: Establishing a branch office provides a streamlined and cost-effective way to enter the Dubai and wider UAE market, leveraging its strategic location and business-friendly environment.
Understanding these key characteristics can help you determine whether a Dubai branch office is appropriate for your business expansion goals.
Learn more: Company registration in Dubai
Why does a Branch Office need to be established in Dubai?
Below, we have given several reasons and advantages in establishing a branch office in Dubai.
- Streamlined Market Entry: A branch office grants a legal presence in the UAE, allowing you to take advantage of the opportunities in the Middle Eastern market.
- 100% Foreign Ownership: Unlike a local limited liability company (LLC) requiring a local partner, branch offices offer complete ownership by your foreign company. This ensures full control over operations.
- Simplified Setup Process: Establishing a branch office typically involves a faster and more streamlined setup process than forming a new company. This allows you to be operational quicker and capitalize on market opportunities swiftly.
- Leveraging Brand Recognition: Branch offices operate under the parent company’s name and legal status. This enables you to leverage your brand reputation and customer trust in the new market.
- Operational Flexibility: Branch offices can conduct business activities as their license outlines. This flexibility allows you to tailor your operations to suit your market entry strategy best.
- Tax Advantages: While subject to change, branch offices generally benefit from no corporate income tax (subject to certain criteria). Dubai’s Free Zones also offer further tax exemptions, making it an attractive location for cost-conscious businesses.
- Strategic Location: Dubai is strategically located at the crossroads of continents. This facilitates efficient trade with neighbouring countries and positions you for global expansion in the future.
- Pro-Business Environment: The UAE government actively encourages foreign investment through streamlined regulations, efficient infrastructure, and a business-friendly approach.
Documents required for Branch office in Dubai
Here are the documents you need to start a branch office in Dubai, UAE.
- Application Forms: The MoE provides specific application forms for branch office establishment. Ensure you obtain and complete the latest versions.
- Parent Company Documents:
- Certificate of Incorporation (or equivalent document establishing your company’s legal existence).
- Memorandum and Articles of Association (MOA & AOA) outlining your company’s structure and governance.
- Board Resolution formally approving the establishment of a branch office in Dubai.
- A No-Objection Certificate (NOC) issued by the parent company’s home country government (may be required in some cases).
- Local Service Agent (LSA) Documents:
- A copy of the LSA’s passport and valid Emirates ID.
- A copy of the LSA’s trade license (if applicable).
- A Power of Attorney authorizing the LSA to act on behalf of your company during the setup process.
How to Open a Branch Office in Dubai?
The following steps briefly capture the process of opening a branch office in Dubai.
1. Understand the Legal Requirements
The first step in setting up a branch office in Dubai is to understand the legal requirements. According to the Commercial Companies Law, a branch office requires a local service agent (LSA) who must be a UAE national or a company wholly owned by UAE nationals. The LSA obtains visas, work permits, and other government approvals. Additionally, you must register your branch office with the Dubai Department of Economic Development (DED) and obtain a trade license.
2. Choose a Suitable Location
Dubai offers several options for establishing a branch office, including mainland Dubai and free zones. Mainland Dubai provides access to the local market and allows you to operate across the UAE, while free zones offer tax exemptions, 100% foreign ownership, and streamlined registration processes. Consider your business needs and objectives when choosing a location.
3. Find a Local Service Agent
As mentioned earlier, a local service agent (LSA) must set up a branch office in Dubai. You can find an LSA through a professional firm or hire one directly. It is essential to choose a reliable and experienced LSA who can help you navigate the legal and regulatory landscape.
4. Obtain Initial Approval
Before registering your branch office with the DED, you must obtain initial approval from the Ministry of Economy in Dubai and the Federal Foreign Companies Committee. You must submit the required documents, including a copy of your parent company’s certificate of incorporation, a notarized board resolution authorizing the establishment of the branch office, and the LSA agreement. Once you receive initial approval, you can proceed with the registration process.
5. Get the Business Trade License from DED
To register your branch office with the DED, you must submit the required documents, including the initial approval certificate, the LSA agreement, the trade license application, and other supporting documents. Once all requirements are met, the DED will review your application and issue your trade license.
6. Obtain Visas and Work Permits
Once your branch office is registered, you can apply for visas and work permits for your employees. The LSA will assist you in obtaining the necessary approvals from the relevant authorities, including the General Directorate of Residency and Foreigners Affairs.
Also read: Dubai Company Registration Cost
Cost of Setting up a Branch Office in Dubai
Several factors can influence the cost of setting up a branch office in Dubai. While the average initial cost is around AED 100,000, this includes a refundable startup deposit of AED 50,000. It’s important to remember that these figures are subject to change based on UAE regulations.
Conclusion
Opening a Dubai branch office offers a streamlined and advantageous way for foreign companies to enter the Middle Eastern market. It grants legal presence, simplifies setup, and leverages Dubai’s strategic location and business-friendly environment. By understanding the process, requirements, and costs involved, you can decide whether a Dubai branch office aligns with your business expansion goals.
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