Branch of Foreign Office
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Branch of Foreign Office
A foreign company in Dubai means establishing your branch within mainland Dubai, outside the free zone areas. Similar to Free Zone branches, Mainland branches allow for 100% foreign ownership, eliminating the need for a UAE national sponsor, although a local service agent can be designated for government liaison and administrative purposes.
A significant advantage of a Mainland branch is its ability to conduct business without restrictions, not only in Dubai but also throughout the wider UAE. However, it operates under the purview of UAE commercial law, including the Commercial Companies Law, which governs various aspects of UAE company establishment and management.
The process includes obtaining a commercial license from the Dubai Department of Economic Development (DED) and adhering to regulatory requirements, such as employee visa issuance and labor law compliance.
Opening a Foreign Branch Company in Dubai: An Overview
Launching foreign company branch in UAE’s economic capital allows the foreign entity to establish a physical presence in Dubai, expand its operations in the UAE and the broader Middle East region, and ensure compliance with local UAE regulations.
The process typically includes registering the branch with the relevant jurisdiction and obtaining a commercial license from the appropriate authority.
Expanding into the UAE market via a branch in Dubai is cost-effective and straightforward, as there is no share capital requirement. This means you can grow your operations without the need for significant upfront capital investment.
Benefits of starting a Foreign Branch in Dubai
- Opportunities for expanding the business
- Full ownership of your enterprise
- Permission to engage in the same business activities as your parent company
- Freedom to conduct business with UAE clients (unlike free zone entities)
- No paid-up capital required for incorporation (though a refundable bank guarantee is necessary)
- No requirement to appoint a UAE-accredited auditor, unlike LLCs
- Authorization to sign local contracts, issue invoices, and hire staff
- Assistance from a UAE national agent
- A cost-effective and secure market entry strategy
Important things to know when setting a foreign company branch in UAE
Understanding some crucial features is crucial for businesses looking to expand internationally by establishing foreign branches in Dubai. Activities that foreign branches in Dubai can engage in: Sales, marketing and operations, including manufacturing and distribution. Some also serve as regional headquarters, overseeing neighboring countries.
These branches are wholly owned by their foreign parent companies, functioning as extensions rather than separate legal entities in Dubai.
Mandatory registration with the Dubai Department of Economic Development (DED) and obtaining a trade license is essential for their operation.
Foreign branches must use the same name as their parent companies, incorporating “branch in Dubai” into their names. They can perform the same activities as their parent companies, adhering to UAE legal restrictions.
Foreign parent companies are responsible for the debts and obligations of their branches in Dubai. Each branch must provide a refundable bank guarantee deposit of AED 50,000 to the Ministry of Economy through a UAE-based bank, which remains locked for the license’s duration.
A qualified UAE resident accountant is required to prepare balance sheets and annual accounts for branch renewals at the Ministry of Economy. Foreign branches must submit annual financial statements to the DED in Dubai, complying with other UAE reporting obligations.
UAE corporate income tax applies at a rate of 15% to foreign branches, although exemptions and tax treaties may apply.The appointment of a branch manager to oversee daily operations in Dubai is mandatory.
These branches must maintain a physical presence in Dubai, either through a branch office or a representative office. They can hire staff in Dubai, following UAE labor laws, obtaining work permits and visas, and complying with other employment-related requirements.
Documentations required for business setup in Dubai
- Shareholder’s passport copies.
- Company profile for the parent branch.
- Manager’s resume and passport copy.
- Individual biographies of each shareholder and manager.
- Evidence of trade name reservation for the new branch.
- Lease agreement specifying the address of the new branch.
- Notarized Memorandum of Association (MoA) for an existing business by a UAE notary public.
- Trade authorization issued by the Chamber of Commerce for the parent branch.
- Notarization by a notary public of the articles of association for the established business.
- Board resolution indicating the decision to open a new branch.
- Authorization confirming shareholders’ rights.
LINKS CORPORATE CONSULTANTS is your strategic ally when it comes to establishing a foreign branch company in Dubai. Our in-depth knowledge of the UAE’s regulatory landscape, coupled with our tailored services, ensures a smooth and efficient setup process. To know how we can help you with foreign branch formation in Dubai, request a free consultation today!