Foreign companies wanting to retain 100% ownership over their business in Dubai can register a branch or a representative office. Dubai branch offices are more convenient because they can engage in commercial activities and make profits compared to liaison offices. The branch office is basically an extension of the foreign parent company in Dubai. The branch office must also obtain a trade license for the same activities its parent company carries out.
Our company formation agents in Dubai can help you open branches in UAE, as well as other types of companies. You can rely on us for complete business registration services in Dubai and its free zones.
Types of branch offices in Dubai, UAE
There are two main types of branch offices which can be established in Dubai: branches set up in mainland Dubai, and free zone branch offices. The main difference between the two types of business is that free zone branch offices will be subject to the registration and licensing requirements imposed by the authority in which it will operate. Also, free zone branch offices will be subject to specific share capital requirements in Dubai free zones.
When creating a branch office in Dubai mainland, there are no minimum share capital requirements.
Another important difference between branches in Dubai mainland and free zone branches is that the latter ones are restricted to completing their activities in the free zone they were registered.
If you have any difficulties in choosing where to establish a branch office, our local consultants can help you decide, no matter which emirate you choose to open a branch in UAE. We can also help with the registration of branches in Dubai mainland and any of the free zones. Here is a video presentation with details on this topic:
Characteristics of branch offices in Dubai
Foreign companies interested in having a presence in Dubai can choose between the branch office, the subsidiary, and the representative office. Out of these, branches and subsidiaries are preferred by most foreign companies because they allow the local structure to undertake commercial activities in Dubai.
The main difference between the branch office and the subsidiary resides in the degree of independence from the parent company. Our company incorporation specialists in Dubai can explain the advantages of subsidiaries and branch offices and can help you select the right business structure for your company.
When choosing to set up a branch office in Dubai, UAE, one must consider:
- the branch office will be required to complete the same activities of the foreign company;
- for these activities, the parent company must apply for the necessary licenses with the Dubai authorities;
- the branch office is not considered a separate legal entity from the foreign company;
- the parent company will be liable for the obligations and debts of the Dubai branch office;
- from a taxation point of view, the branch office will be taxed on the income earned in the UAE.
Also, the Dubai branch office must bear the same name as the parent company.
We have also created a scheme with the main steps for setting up a Dubai branch:
Licenses available for branch offices in Dubai
When it comes to the licensing procedure of a branch office, the same type of licenses available for other types of local companies can also be obtained for a branch office. These licenses are:
- the general trading license which allows for various types of trading activities;
- the industrial license which allows for completing various activities in the industrial field;
- the commercial license which enables the branch to sell various goods and services;
- other licenses issued by free zone authorities based on their specific areas of interest.
Our Dubai company formation advisors can offer more information on the licensing requirements applicable to branch offices established by foreign companies. We can also help you with registering a branch in UAE.
Taxation of branches in Dubai
As mentioned earlier, branches in Dubai are considered non-resident companies, meaning they will be taxed only on the incomes generated in the UAE. As most investors know, Dubai has a very flexible and advantageous taxation system which implies no taxes on the income of companies. However, it is important to know that a specific tax regime applies to branch offices if they are established by foreign banks. They will be applied a 20% corporate tax.
An important advantage of foreign companies opening branches in Dubai is that they can benefit from the UAE’s double tax treaties and thus expand the tax rebates offered by the local government. Branches of foreign companies are required to register for VAT in Dubai.
Why open a branch office in Dubai?
The representatives of foreign companies interested in setting up branch offices in Dubai should know that this type of entity is governed by the Company Law of this Emirate and is suitable to foreign businesses seeking to do business in any industry developed here.
Being available for creation in free zones, the branch office is one of the most important structures which can be established by a foreign company interested in making investments in specific industries in Dubai.
From a taxation point of view, the branch office offers the same advantages as local companies, including the repatriation of profits without additional surcharges when set up in Dubai free zones.
We offer assistance in setting up all types of companies in Dubai, so please contact us.