How to set up a branch office in Dubai
When considering business expansion into Dubai, opening a branch office is one of the most efficient and strategic ways in which to do it. Rather than incorporate an entirely new business entity, setting up a branch provides a more streamlined and resource-efficient entry into the market, while at the same time benefiting from the established reputation and expertise of the parent company.
Before taking this step, it’s important to recognise both the benefits and limitations of a branch office and how it compares to other forms of market entry, such as establishing a subsidiary, representative office or establishing a new business entity.
This article looks at the process of setting up a branch office as well as other key operational and legal considerations.
Branch office key features
A branch office is a useful tool for any company that wants to expand its business presence into Dubai and the wider UAE without the commitment of incorporating a new business entity. It serves as a direct and unincorporated extension of its parent company, authorised to carry out the same business activities in a foreign jurisdiction. Unlike entities with separate legal personalities, a branch office is legally considered to be the same as its parent. Consequently, it cannot independently enter into contracts or agreements and the parent company assumes all contractual obligations and liabilities.
A branch office can conduct business in the UAE and generate profits. However, its scope of activities must be similar to those carried out by the parent company in its home jurisdiction.
What are the advantages of setting up a branch office in Dubai?
- Strategic location – gateway between the East and the West, providing easy access to emerging markets in Asia, Africa and the Middle East.
- Business friendly environment – 100% foreign ownership allowance, low rate of corporate tax and simplified business setup procedures.
- Cost effective – Zero paid up capital requirements, only application and related fees.
- Location flexibility – No restrictions on where the company can rent/buy office premises.
What are the disadvantages of setting up a branch office in Dubai?
- Less autonomy – Not a separate legal entity
- Lengthier procedural requirements than with an LLC
- Strict experience requirements imposed on parent company – The parent company must have at least 2 years of operational history before a branch can be opened.
- Taxation – Parent company taxed on branch profits and fully responsible for its liabilities.
What is the process for setting up a branch office?
- Background check – Prior to the commencement of the application process, Know Your Customer (KYC) checks must be completed for all the branch shareholders/signatories. This can usually be completed within 24 hours and you’ll need the following documents:
- Passport copy of prospective General Manager
- Licence copy of foreign shareholder
- Completed KYC form
- Board resolution and POA from parent company – For these to be drafted, you’ll require soft copies of the parent company’s certificate of incorporation, constitutional documents and certificate of incumbency/extract.
- Authentication and translation of parent company documents – This will include:
- Certificate of incorporation
- Memorandum and Articles of Association
- Certificate of incumbency/company extract
- Board resolution authorising opening of branch office
These will all need to be notarised in the parent company, then apostilled and attested at the UAE Embassy in the parent country and Ministry of Foreign Affairs in the UAE. They must then be translated into Arabic by a certified legal translator.
- Department of Economic Development (DED) initial approval – At this step, you’ll reserve your trade name which must be identical to the parent company’s and submit the application form and supporting documents to the DED. If all is in order, the DED will issue pre-approval.
- Lease office space – Once initial approval has been given, you can proceed with leasing appropriate office space.
- Obtain commercial licence – The commercial licence can then be obtained from the DED by submitting the following documents and specifying the branch’s activities:
- DED initial approval
- MoE initial approval
- Original certificate of incorporation
- Original board resolution
- Copy of registration and lease agreement
- Open a bank account – With the commercial licence, you’re now able to open a corporate bank account with any of the UAE’s local or international corporate banks.
- Final registration with the Ministry of Economy (MoE) and Federal Tax Authority (FTA) – You’ll then be able to finalise the setup with registration at the MoE and FTA. The latter of which can be done through the FTA’s online portal.
How can Global Link help?
Global Link has over 16 years’ experience working with local and global businesses, providing bespoke consultancy services for company incorporation and financial services in Dubai and the wider UAE.
Registering a foreign branch office in the UAE can be challenging without knowledge of local laws and regulations and connections with the relevant government authorities. We can assist you with the process, helping you navigate complexities, liasing with government department on your behalf and ensuring seamless adherence to legal requirements. From documentation preparation to final approvals, our support streamlines the registration process, allowing you to focus on your core operations with confidence and compliance.
If you need advice on this or any other company incorporation, visa or PRO service, please get in touch with us on +971 4 553 9901 or email us at [email protected] and we will be happy to assist you.