Foreign companies wanting to retain 100% ownership over their business can open a branch in Dubai or a representative office in 2023. Dubai branch offices are more convenient because they can engage in commercial activities and make profits compared to liaison offices. The branch in Dubai is basically an extension of the foreign parent company. The branch office must also obtain a trade license for the same activities its parent company carries out.
| Quick Facts | |
|---|---|
| Applicable legislation |
For foreign countries |
|
Best used for |
– banking, – insurance, – financial operations |
|
Minimum share capital |
No |
| Time frame for the incorporation (approx.) |
Around 2 months |
| Management |
Local |
| Legal representative required |
Yes |
| Local bank account |
Yes |
| Independence from the parent company | Dependent on the parent company |
| Liability of the parent company | Full liability on the branch office’s debt and obligations |
| Corporate tax rate | 0% – 55% (max. value for production of oil and gas or extraction of other natural resources) |
| Possibility of hiring local staff | Yes |
Our company formation agents in Dubai can help you open a branch 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.
Table of Contents
Types of branch offices in Dubai, UAE
Two main types of branch offices 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 they will operate. Also, free zone branch offices will be subject to specific share capital requirements in Dubai free zones.
When setting up a branch office in Dubai mainland, there are no minimum share capital requirements.
Opening a branch in Dubai requires a local representative, or local service agent, as it is known. Such a person will intermediate the collaboration and communication between the company owners and the relevant authorities, a matter where our agents can provide support.
Another important difference between branches in Dubai mainland and free zone branches is that the latter are restricted from completing their activities in the free zone they were registered for.
If you have any difficulties in choosing where to set up a branch in Dubai in 2023, 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 the branch 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. With our help, you can set up a branch in Dubai as soon as possible.
When you choose to open a branch in Dubai, UAE, you must consider:
- the branch office will be required to complete the same activities as the foreign company;
- for these activities, the parent company must apply for the necessary licenses with the Dubai authorities;
- the branch in Dubai 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.
Regarding the estimated costs for incorporating a branch in Dubai, one should note that around AED 5,000 is the fee for application to the Dubai Ministry of Economy. Moreover, the registration and license with the local government might cost around AED 50,000.
We have also created a scheme with the main steps for setting up a Dubai branch:
Licenses available for branches 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 after opening a branch in Dubai. 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.
Interested in immigration to Dubai? The relocation process begins with the application for the necessary visa, followed by obtaining a work and residence permit. A Dubai residence visa for employment is a necessary document for those who want to work and live in this city. Our specialists with experience in immigration issues can guide you regarding the relocation formalities and help with the necessary documents. Contact us for more information.
Short guide to opening a branch in Dubai
If the branch is the right structure for future business in Dubai, it is recommended to consider the formalities required for its registration. Therefore, you can review the following guide, with the help of which you can get an idea about this type of business:
- Choosing the right location – A branch office can be established in mainland Dubai or dedicated free zones. The difference is made by the taxation system, as well as other facilities.
- File an application – Ministry of Economy is the institution that issues the necessary approvals for opening a business in Dubai. It is also the case of branches for which you must have a local representative agent to take care of the formalities and documents.
- Drafting of documents – Articles of Association and Memorandum of Association are the basis for the formation of a company. This is also the case with branches, with the mention that a document will be prepared with the decision to open a branch in Dubai, by the parent company.
- Applying for licenses – Depending on the activities you are going to carry out as a branch in Dubai, it is necessary to apply for a license. A trading license is general and allows the implementation of many activities. Our local agents in Dubai can guide you and offer support in this matter.
- Opening a bank account – Your branch requires a local bank account for daily financial activities. You can choose the bank you work with in the country of origin of the company, if it has a branch in Dubai, or if you can choose a local financial institution.
- Registration for the payment of taxes – Depending on the economic operations of the company, it is necessary to register for the payment of taxes. Dubai is a tax haven, but there are sectors where corporate tax is imposed.
Therefore, taking into account the formalities above, you can establish a branch in Dubai. You must make sure that you reserve a name for the company and that you have a representative agent. Call our team of company formation agents in Dubai to benefit from support and guidance if you want to open a branch in UAE.
If you want to open a business in Dubai, you can choose a limited liability company, limited or general partnership, or even sole proprietorship, depending on your plans. The best choice can be opening an LTD, with only a minimum share capital of 1 USD and a minimum of 2 shareholders. But you can find out everything you need to know about incorporation and registration with the relevant authorities from our company formation agents in Dubai. Contact us today to discover the advantages you can benefit from.
Registration with the Commercial Authorities
Another important step in registering a branch in Dubai involves its registration with the Commercial Authorities. This is possible only after you have obtained a trading license in Dubai. The Ministry of Economic Companies Register and the Chamber of Commerce in Dubai are the institutions you must consider for registering a branch in Dubai.
One of the advantages of branches in Dubai is that such structures are 100% owned by the parent company. Such entities must carry out the same activities, can issue sales invoices, and lease office premises.
Advantages of branches in Dubai
In addition to the aspects mentioned above, a branch in Dubai has other advantages. Established in the free zones of Dubai, foreign investors can benefit from 100% ownership of such a business. A branch in Dubai can be established in about 4 weeks and no minimum share capital is required. If you are interested in opening a branch in Dubai, we invite you to talk to one of our company formation representatives in Dubai and ask for specialized help.
Taxation of branches in Dubai in 2023
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 that implies no taxes on the income of companies. However, it is important to know that a specific tax regime applies after you open a branch in Dubai if it is established by foreign banks. There will be applied a 20% corporate tax rate.
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 in Dubai?
The representatives of foreign companies interested in setting up branches in Dubai should know that this type of entity is governed by the Company Law of this Emirate and is suitable for 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 in Dubai offers the same advantages as local companies, including the repatriation of profits without additional surcharges when set up in Dubai free zones.
Investing in Dubai
Dubai continues to be among the preferences of foreign investors attracted by optimal business conditions, technology, and rapid business development. Considered the “city of the future”, Dubai offers quality infrastructure, top technology, and a strong financial center, which aligns with international ones. Here are some statistical data about the UAE economy:
- There is an economic project through which the UAE government wants to attract around USD 150 billion from foreign investments alone.
- Over USD 171 billion was the total FDI for the UAE in 2021.
We offer assistance in setting up all types of companies in Dubai, so please contact us. Foreigners who want to open a branch in UAE can discuss this with our local team.