How to Setup a Foreign Company Branch / Subsidiary in UAE?
A foreign organization can build a branch or subsidiary in the UAE and coordinate business operations with the parent company in its home country. A number of questions arise when establishing a branch office in the UAE. This is primarily due to the specifics of UAE corporate law, which stipulates the possibility of registering different types of companies in different Emirates, often with distinct statuses and permitted commercial activity. A foreign company branch / subsidiary in UAE must be registered with the relevant government authorities in the UAE.
Registration in Dubai of a Foreign Company Branch / Subsidiary in UAE
Under the Commercial Company Law in the UAE, incorporating a Branch or Representative Office (RO), which allows 100 percent ownership by the parent company, is a common way for foreign companies to retain foreign ownership. So these forms lack a separate legal identity, they are treated as an extension of the foreign company, which is still liable for their activities.
A Branch is permitted to engage in commercial activity and earn profits in the UAE. It is only authorized to carry out activities that are similar to those carried out by the foreign company in its home jurisdiction, as specified in its commercial licence.
An RO is not permitted to make profits in the UAE, and its activities in the UAE are limited to marketing and promoting the products and services of its foreign parent company.
Subsidiary vs. Branch Office
A branch office is an extension of an existing business and is not a separate legal entity from the parent company. Furthermore, the Branch Offices are permitted to carry out the same business activities as their parent company in the UAE. It is not a separate company, but rather performs the same functions as the headquarters. A regional manager is a director in this structure who is in charge of the work of a branch office and he reports to and is instructed by the head office.
A Subsidiary Company, on the other hand, is considered to be a legal entity distinct from the Parent Company. According to their trade licence in the UAE, the subsidiary company is permitted to engage in any desired activities.
Steps to Establish a Foreign Company Branch / Subsidiary in UAE
Here are the Steps to Establish a Foreign Company Branch / Subsidiary in UAE:
Pick the Appropriate Business Jurisdiction
A subsidiary's business operations must be carried out from the UAE, and it is fully liable for its actions, business activities, and management. A Branch Office/Subsidiary can be established in two of the UAE's business jurisdictions: the Freezones and the Mainland.
Discover the Local Service Agent
The Local Service Agent is appointed for a one-year term and is paid a yearly fee. The contract is renewable every year, with the option to switch agents if there is a disagreement. There is no need to appoint a Local Sponsor for Free Zones or Offshore, and the Manager/Director will be the authorised person to conduct the Branch Office's business activities. Dhanguard group will help you with documentation approvals, visa processing, bank account opening assistance, and more.
Reserve a Trade Name
The Branch Office must have the same name as the Parent Company in the Home Country. In the case of Mainland Company, the application must be submitted to the Department of Economic Development (DED). If the investor chooses these jurisdictions for the setup, the application must be submitted to the respective Free Zone/Offshore authority.
Attestation of Documents from UAE Government Authorities
The documents for the company must be attested by the UAE embassy in the home country and counter-attested by the UAE Ministry of Foreign Affairs. The following documents must be attested by UAE authorities in their home country and counter-attested in the UAE.
- Certificate of Incorporation/Memorandum of Association (MOA), Articles of Association (AOA).
- Board Resolution stating the formation of a Branch Office/Subsidiary.
- Parent Company Good Standing Certificate.
- Power of Attorney in favour of the General Manager, granting him the authority to open/operate/manage bank accounts on behalf of the Parent Company.
Obtain a licence from the appropriate government authority
Submit the attested documents, along with the supporting documents, to the appropriate Government Authority in order to obtain the Branch Office License.
Along with the submission of the documents, the authorities require a fee to be paid. Based on review of documents, the investor will be issued a Branch Office License.
Comply with Administrative Requirements
The investor can now apply for a UAE residence Visa, open a Business Bank Account, appoint a Director/General Manager, hire employees, process immigration cards, labour contracts, expand Office Space, and conduct business in the UAE.
Benefits of Establishing a Foreign Company Branch / Subsidiary in UAE
Following are the Benefits of Establishing a Foreign Company Office in Dubai:
- In the UAE, foreign companies can retain 100 percent foreign ownership.
- It is not necessary for a foreign company to have more than two years of incorporation and business experience in its home country (some Free Zones require longer).
- The company may legally carry out the approved activity under its licence anywhere in the UAE, including Free Zones.
- There are no restrictions on where the company can rent or buy Office Space.
- Any paid-up capital requirements have been permanently waived by the government.
- Sovereign, like the NSA, has multiple signatories who are available all year, as opposed to individual local partners who frequently travel during the summer months.
The Advantages of Having a Foreign Company Branch / Subsidiary in UAE
The Following are the advantages of having a Foreign Company Branch / Subsidiary in UAE:
- Foreign investors own the entire company.
- Tax savings because the UAE has no corporate or income tax.
- Visa for UAE residents and corporate/personal bank accounts.
- Business confidentiality.
- The mainland of the UAE has a very low import duty of 5%.
- Reduce the administrative burden of running a large multinational corporation.
- Auditing and bookkeeping should be separated, and global offices should be decentralised for better management.
- Enter new market territories at a low cost. A Branch Company in the UAE is not required to have any share capital. As a result, investors can expand their businesses with a low initial investment.
Unlike local companies, which may only be partially owned by a foreign citizen in some cases, a branch office will be entirely owned by you, and the opportunities that you will receive from such a structure may be absolutely astonishing for your enterprise, including the use of the advantages of UAE corporate taxation and presence in this region.
If you have any questions about establishing a Foreign Company Branch / Subsidiary in UAE, please contact our Dhanguard Team and we will assist you in establishing your office in this country.