If you came across this article while searching for business setup services in Dubai or UAE, you’ve arrived at the right place.
As an experienced business setup consultant in Dubai, Elevate can guide companies from around the world in establishing their operations in Dubai or other parts of the UAE, whether in the mainland or a free zone. We offer a tailored plan of action that can help your parent company take full advantage of the benefits provided by the UAE government for your branch office in Dubai.
In this article, we’ll share our expertise in a simplified manner to assist you in making an informed decision about setting up your company’s branch office in Dubai. It’s essential to understand why your business should leverage this opportunity, so let’s explore the subject further.
A Complete guide to setting up a branch in Dubai, UAE
Article 313 of the Companies Law permits foreign companies to operate their primary business in the UAE by establishing a branch or representative office. The distinction between the two is that a foreign company establishing a branch in the UAE has the freedom to carry out all activities for which it is licensed, while a representative office is limited to conducting promotional activities for the parent company’s products and services. A representative office is not allowed to engage in business operations or promote its products, unlike a foreign branch. To have a foreign branch carry out operations in Dubai, it must first obtain a license from the Ministry of Economy before obtaining a license from the Department of Economic Development.
What are the reasons to establish a branch office for a foreign company in Dubai?
There are several reasons why a foreign company might choose to establish a branch office in Dubai.
I) Firstly, Dubai’s strategic location in the Middle East makes it a hub for trade and commerce, making it an attractive option for foreign companies looking to expand their operations.
II) Additionally, Dubai has a business-friendly environment, with a low tax rate and a variety of government incentives that make it easier to do business. The city’s modern infrastructure, world-class facilities, and skilled workforce also make it an appealing destination for foreign companies.
III) Finally, Dubai’s stable political and economic climate, combined with its ease of doing business, make it a low-risk option for foreign companies seeking to enter new markets.
What a branch office is, and how it is distinct from a representative office?
A branch office established by a foreign company in the UAE can be viewed as an expansion of the company, operating within the country while maintaining the same legal identity as its parent company. Such branch offices are authorized to engage in local trading activities and can obtain visas based on the size of their office or factory, and the nature of their operations.
In contrast, representative offices share many characteristics with branch offices but have a significant difference. They are only permitted to engage in marketing and business sourcing activities for their parent company in the UAE, without the ability to earn profits in the local market. Representative offices are only allowed a limited number of visas. Banks, real estate companies, and government entities often establish representative offices in the UAE.
Documents Required for Setting up a Branch Office in Dubai
- Passport copies of existing shareholders/business partners
- Passport copy and CV of manager
- Personal information of the shareholders/business partners and the manager
- Verification for trade name registration for the new branch
- Verification for initial activities for the new office branch
- Power of Attorney of the legal representative in order for them to give their services
- A Chamber of Commerce Certificate of the existing main/parent branch
- Profile of main /parent branch company
- An Article of Association of the existing main/parent branch
- A Certificate of Registration of the existing main/parent branch
- Lease Agreement Documents with the physical address of the new office branch
- Memorandum of Association of your existing main/parent branch
A Complete Guide for setting up a Branch of a Foreign company in Dubai Mainland, UAE
To establish a foreign company branch office in Dubai, which would essentially involve setting up a new business in Dubai, the following steps must be followed:
Step 1: Appoint a Local Service Agent
- i) To establish a foreign company branch office in the UAE, the appointment of a local service agent is mandatory, and they must either be a UAE national or a company entirely owned by UAE nationals.
- ii) Afterward, the local service agent will handle the registration of the trade name with the Department of Economic Development (DED).
Step 2: Obtain Approval from the MOE
Obtaining approval from the UAE Ministry of Economy (MOE) is a crucial aspect of the entire application process. To obtain MOE approval, various documents must be submitted, including the following:
- Certificate of Trade Name Reservation
- Certificate of Initial Approval from DED
- Official Certificate from the country of origin of the parent company
- Resolution by the foreign parent company to open a branch office
- Authorization for representatives
- Copy of agency contract between parent company & LSA
- Tenancy contract with Ejari
Step 3: Obtain a commercial license from the DED
Upon review, the MOE will issue an initial approval letter to either the Abu Dhabi Department of Economic Development (ADED) or Dubai Department of Economic Development (DDED). The necessary documents for this stage include:
- MOE initial approval
- Copies of documents submitted to MOE
- Copy of proposed lease in UAE (known as “Tawtheeq” in Abu Dhabi and “Ejari” in Dubai)
- Engagement letter from a locally registered UAE auditor confirming company existence and two-year financial statements of the parent company.
Step 4: Acquire Office Space, Visas, and Bank Accounts
i) After acquiring the commercial license from the DED, the company can proceed to invest in office space and obtain visas and labor cards for their employees.
ii) Opening bank accounts is also a necessary step, and the banks will request comprehensive information on the Ultimate Beneficial Owner (UBO) of the parent company, as well as any other corporate or shareholder structures within the parent company.
iii) For foreign documents to be accepted in the UAE, they must be attested, legalized, and translated into Arabic.
Step 5: Ministry of Economy (MOE) Registration
i) Completing the MOE registration is essential to establish a foreign branch office in the UAE. Once the Foreign Branch Trade License is obtained from the DED, the complete registration process, along with payment of associated registration fees, must be finalized within one month to acquire the MOE license.
ii) To register with the MOE, the company must complete an online process by registering and receiving a unique username and password. The process also involves uploading the necessary documents via the online portal.
Steps for setting up a Branch of a Foreign company in Dubai Freezone
- Choose a freezone: Select the freezone that best suits the needs of your company. Each freezone may have different requirements, regulations, and costs.
- Apply for initial approval: Submit an application to the relevant freezone authority to obtain initial approval for your company’s setup. This will require the submission of documents such as a business plan, proof of financial stability, and a copy of the parent company’s documents.
- Prepare Legal documents: Once initial approval is granted, prepare the legal documents required for company formation, such as the Memorandum and Articles of Association, a Power of Attorney, and other legal agreements.
- Obtain Trade License: Apply for a trade license with the freezone authority. This will allow your company to conduct business activities in the freezone.
- Register for visas and other permits: Register for visas for your company’s representatives and employees with the Dubai immigration authorities. Depending on the activities of your company, you may also need to obtain additional permits or approvals from other government authorities.
Advantages of Setting up the Branch of a Foreign Company in Dubai
Establishing a branch office in Dubai offers significant benefits to foreign businesses, as it provides a comprehensive understanding of the local market. This understanding is crucial in building a successful and sustainable business in Dubai. Additionally, setting up a branch office in Dubai provides the following key advantages:
- The branch office of a foreign company in Dubai can enjoy 100% ownership on the mainland with the help of a local service agent who is a UAE national.
- Setting up a branch office in Dubai is a cost-effective way to enter the UAE market and establish a foothold in new markets.
- The branch office facilitates efficient tracking of all transactions between the branch and parent firm, ensuring an efficient audit trail.
Ease Your Business Setup in Dubai with Elevate – The Best Business Setup Consultants in UAE!
Setting up a foreign company branch office in Dubai can be a complex process, and it’s important to comply with all legal requirements and regulations. Failure to comply with legal requirements and regulations when setting up a foreign company branch office in Dubai can result in fines, legality issues and delays in the process. As the best business setup consultants in Dubai, UAE, Elevate can provide professional advice and assistance to help you navigate the process. Our business setup services in Dubai include company setup in Dubai, and we can ensure cost-effective entry into the UAE market while providing 100% ownership on the mainland through our local service agent. Trust us to be your partner in business setup in Dubai, UAE and let us handle the details while you focus on taking your business to new markets.
Contact Elevate, one of the best business setup consultants in Dubai today for a hassle-free experience in setting up your branch office in Dubai.