A Dubai Mainland Company is a popular choice for business setup in Dubai due to its benefits. However, foreign owners only get 49% ownership, with a local sponsor holding the remaining 51%. To avoid this, foreign companies can open a branch office in Dubai, allowing for full ownership.
Branch offices offer benefits like low taxes and market access, with various types available based on business needs.
Benefits of Setting up Branch Office in UAE
Steps to Open a Branch Office in Dubai
Appoint a Local Service Agent (LSA)
To set up a branch office in Dubai, foreign companies must appoint a Local Service Agent, who is either a UAE national or a wholly UAE-owned company. The LSA handles administrative tasks and ensures compliance with UAE regulations.
Obtain Initial Approval from the Ministry of Economy (MOE)
Submit an application to the Ministry of Economy in Dubai for initial approval, including details about the parent company and the intended business activities. Key documents required include the certificate of incorporation, memorandum of association (MOA), and power of attorney.
Register Your Trade Name
Choose a trade name that aligns with your parent company’s brand and complies with UAE regulations. The name must be unique and meet specific criteria set by the Dubai Department of Economic Development (DED).
Apply for a Commercial License from the DED
Once initial approval is granted, apply for a commercial license from the DED. This license authorizes the branch office to engage in full commercial operations within Dubai.
Finalize Documentation and Setup
Submit all required documents, including the notarized Local Agent Agreement, attested board resolution, and passport copies of the company’s investors. Ensure all paperwork is accurate to avoid delays. Lastly, complete the registration of the branch office at the Dubai Chamber of Commerce and Industry, which finalizes your branch office setup in Dubai.
Open a Corporate Bank Account
After obtaining the commercial license, open a corporate bank account in Dubai to manage financial transactions related to your business operations.
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Factors to Consider When Establishing a Branch Office
When choosing to set up a branch office in Dubai, one must consider:
- The branch office mirrors the foreign company’s activities
- Necessary licenses must be obtained from Dubai authorities
- The branch office is not a separate legal entity
- The parent company is liable for the branch’s obligations
- UAE income is subject to tax for the branch office
Requirements for Opening a Branch Office
Types of Branch Offices in Dubai, UAE
Mainland Branch Office
- Operates within Dubai’s local market.
- Engages in all business activities of the parent company.
- Requires a local service agent.
Free Zone Branch Office
- Operates within Dubai’s free zones.
- Enjoys tax exemptions and 100% foreign ownership.
- Limited to free zone and international activities.
Difference between Branch and Representative Offices
| Aspect | Branch Office | Representative Office |
|---|---|---|
| Activities | Commercial activities like sales and revenue generation. | Non-commercial activities like promotion and research. |
| Legal Structure | Extension of parent company; no separate legal identity. | No legal identity; acts as a promotional entity. |
| License | Requires a commercial license. | Needs a non-commercial license from DED. |
| Financial Operations | Handles transactions and repatriates profits. | Cannot handle payments; funded by the parent company. |
Branch Office Setup Consultants in Dubai
How Riz & Mona Consultancy Can Help?
Riz & Mona Consultancy is renowned as one of the top business setup consultants in Dubai, with over 15 years of experience facilitating a wide range of businesses throughout the UAE. Our deep connections with government officials and key authorities, combined with our extensive expertise in consultancy, streamline the process of establishing your business in Dubai. Additionally, we offer comprehensive financial, legal, and corporate services to support our clients throughout their business endeavors.
We are here to provide comprehensive support in setting up a Branch Office in Dubai, from preparing your documents to completing the process. Connect with us now to begin your journey with a FREE consultation!
FAQS (Frequently Asked Questions)
How do Dubai's branch office rules differ from other global markets?
Dubai’s regulatory requirements are business-friendly, with fewer bureaucratic hurdles compared to cities like London or New York, making it quicker to establish a branch.
What challenges do foreign companies face when opening a branch in Dubai?
Challenges include complying with local regulations and cultural differences; these can be mitigated by working with experienced local service agents and legal advisors. to transfer profits back to their home country with no withholding taxes or restrictions on the amount.
How is profit repatriation taxed for Dubai branch offices?
Profits can be repatriated without restrictions, and Dubai offers a tax-free environment, ensuring full financial flexibility for foreign companies.
What are the best practices for choosing a Local Service Agent (LSA) in Dubai?
Choose an LSA with a strong local network, a solid reputation, and a clear understanding of your industry to ensure smooth operations.
What role does the Dubai Chamber play for foreign branch offices?
The Chamber provides resources, networking opportunities, and advocacy, helping foreign companies comply with regulations and connect with local businesses.