Dubai is a magnet for entrepreneurs looking to expand their global footprint. Dubai is the UAE's major commerce network, with a large number of businesses in a variety of industries. Dubai's legislation encourages free commerce, making it one of the UAE's most appealing cities for foreign investors. Onshore firms can be established within the Emirate or in one of its Freezones. Many overseas corporations open branch offices or subsidiaries in Dubai to establish a presence. The latter's independence is the critical distinction between a branch office and a Dubai subsidiary. While the subsidiary will be linked to the parent firm, it can run its activities in Dubai. Our experts can assist individuals who want to establish a subsidiary in the UAE due to their extensive understanding of company creation in Dubai. In this guide, we'll walk you through setting up a subsidiary company in Dubai, covering key aspects and processes involved in the establishment.
Understanding a Subsidiary Company
A subsidiary company is an independent legal entity partially or wholly owned and controlled by another company, referred to as the parent company. In Dubai, establishing a subsidiary allows foreign investors to conduct business while retaining the parent company's identity and control.
Characteristics of Dubai Subsidiary Companies
Foreign corporations seeking a presence in Dubai will choose a subsidiary since it is a legally autonomous company that operates under the rules of the UAE and the Emirate in which it is based. In contrast to a branch office, which is not recognised as a legally autonomous structure, the parent firm of a subsidiary might elect to complete other activities through a Dubai subsidiary, which can significantly improve revenues.
Even though the subsidiary is treated as a separate entity, the foreign corporation will operate as a shareholder and have decision-making authority.
Those looking to establish subsidiaries in the UAE should keep the following in mind:
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The subsidiary will operate independently under one of the company structures covered by UAE and Dubai legislation.
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Private and public businesses are the most common types of structures for subsidiaries in Dubai.
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A foreign firm can establish a subsidiary in a Dubai-free zone by forming a free zone company.
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The subsidiary will be subject to Dubai's tax laws, which will benefit both the local and parent companies.
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The subsidiary may benefit from additional protection due to the UAE's double tax treaties.
The same rules apply to foreign firms as they do to foreign citizens when registering a subsidiary company in Dubai.
What Types of UAE Subsidiaries Are There?
After deciding to launch a subsidiary company in the United Arab Emirates, you must choose the business type to register and incorporate. The subsidiaries that can be included in the United Arab Emirates are as follows.
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Company with Limited Liability (LLC)
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PJSC, or public joint stock company
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Company with Private Joint Stock (PRJSC)
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Civil Enterprise
Your choice of subsidiary structure in the United Arab Emirates will rely on several variables. Among many other things, it covers the minimum amount of shared capital you are willing to deposit, the firm's location (free zone or onshore), and the intricacy of the incorporation process.
Why Choose Dubai for Your Subsidiary Company Setup?
Dubai offers numerous advantages, making it an attractive destination for foreign investors:
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Strategic Location: At the crossroads of Europe, Asia, and Africa, Dubai is a gateway to these markets.
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Business-Friendly Environment: The government of Dubai has created a pro-business environment, with policies encouraging foreign investment.
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Tax Benefits: Dubai offers tax exemptions and incentives, making it a tax-efficient jurisdiction.
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Infrastructure: World-class infrastructure and connectivity make conducting business seamless.
What are the benefits of establishing a subsidiary in Dubai/UAE?
We remind you of the following reasons for establishing a business in Dubai through a subsidiary:
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It is simple to set up and allows for complete independence, including providing services separate from those offered by the parent firm.
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Regarding taxation, the repatriation of profits to foreign shareholders is tax-free in Dubai.
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Companies from various industries can establish a subsidiary because there are no restrictions.
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Visas for agents no longer employed by the parent company are now easier to get.
Share Capital Requirements for a Subsidiary in Dubai, United Arab Emirates.
One of the most significant advantages of establishing a Dubai subsidiary is the difference in share capital requirements between mainland firms and free zone entities. From this perspective, it's vital to note that free zone authorities will frequently impose differing share capital limits. Studying the free zone where you'll establish a subsidiary in the UAE is a good idea. It's also crucial to realise that each free zone focuses on one or more industries.
If you are considering establishing a subsidiary of your international firm in Dubai, our experts can provide all the necessary assistance.
Which UAE Laws Apply to Subsidiary Businesses?
There are distinct legal requirements in the United Arab Emirates for various kinds of subsidiary businesses. A minimum of two parents and a maximum of 50 partners are allowed for Limited Liability Companies. Furthermore, because the business has limited liability, each partner's obligation is calculated based on their contributed capital. In the United Arab Emirates, the applicable Department of Economic Development (DED) determines the minimum money needed for a Limited Liability Company.
The region where you establish a subsidiary company is crucial to the United Arab Emirates subsidiary legislation. You will be subject to less stringent regulations if you register your subsidiary company's registered office in a free zone within the United Arab Emirates. Conversely, you must abide by a more strict set of restrictions if you establish a subsidiary firm on the UAE's mainland.
A subsidiary firm must have the Department of Economic Development's (DED) clearance before establishing it in the UAE mainland. Once your subsidiary company's intended location in the UAE has been determined, you must choose a trade name and register it with the relevant Emirate's DED. Additionally, the price of incorporating a business differs throughout the emirates.
Steps to Establish a Subsidiary Company in Dubai
The procedure to Establish a Subsidiary Company in Dubai is mentioned below:
Market Research and Planning
Before diving in, conduct thorough market research to understand the industry landscape, target audience, and competition. Develop a comprehensive business plan outlining your objectives, strategies, and financial projections.
Choose a Business Structure
Select the appropriate legal structure for your subsidiary company, such as a Limited Liability Company (LLC), Free Zone Company, or Branch Office. The choice depends on factors like ownership, activities, and location preferences.
Register Your Company
Register your subsidiary company with Dubai's Department of Economic Development (DED) or the relevant free zone authority. This involves submitting necessary documents, obtaining approvals, and paying registration fees.
Obtain Necessary Licenses and Permits
Depending on your business activities, acquire the required licenses and permits from the concerned authorities. These may include trade licenses, professional licenses, and specific industry-related permits.
Open a Corporate Bank Account
Set up a corporate bank account in a reputable bank in Dubai. Ensure compliance with banking regulations and provide necessary documentation for account opening.
Obtain a Dubai subsidiary's trade license
The following documents must be submitted to the Dubai Chamber of Commerce and Industry to receive a Trading License:
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Shareholder's Passport Copy
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DED issued a permission letter to the corporation
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DED provides a name approval letter
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Application Type
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Original and copy of Dubai subsidiary's memorandum and Article of association
Creating a Subsidiary Company in a free zone in Dubai
The registration of the chosen business form with the Dubai Free Zone authority in which the business will operate is required when forming a subsidiary company in a Dubai Free Zone. The fundamental benefit of establishing a subsidiary in a Dubai-free zone is that there is no need for a local sponsor or partner because entire independence is permitted.
The company registration criteria for a subsidiary in a Dubai-free zone are the same as for an onshore company. Still, the company's registered office must be in that free zone. In this regard, all of Dubai's free zones have outstanding infrastructure for meeting the demands of small, medium, and enormous businesses.
Contact Dhanguard
Establishing a subsidiary company in Dubai can be rewarding, offering access to a dynamic market and unparalleled growth opportunities. The Dubai subsidiary is a legally distinct legal entity from the parent corporation. This means that, unlike the branch, the foreign corporation will no longer be accountable for the subsidiary's activities. The subsidiary's headquarters will be in Dubai, and all managerial functions will be carried out there. Connect with Dhanguard to know more. For expert guidance and support in setting up your subsidiary company in Dubai, contact Dhanguard today!