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Liaison Office in Dubai

Liaison Office in Dubai

Foreign companies wanting to have an established presence in Dubai without undertaking separate commercial activities can opt for branch offices or liaison offices, also known as representative offices. While the branch office is allowed to carry out the same activities as the parent company, the representative office will only act as a communication channel between the parent company and its partners or customers in Dubai.

 Quick Facts  
 The purpose of a liaison office in Dubai  Representing a company from abroad and its activities

What activities can you undertake with a liaison office in Dubai?

– marketing and promotion of business,

– gathering information on the business sector of interest in Dubai,

– acting as a contact point between the parent company and potential clients 

 How can a representative office be registered in Dubai?

After:

– deposinting a guarantee,

– obtaining preliminary approval,

– preparing a statement showing the intention of opening a liaison office in Dubai,

– having a registered address in Dubai,

– appointing a liaison officer

 

 Can a liaison office in Dubai have commercial activities? (YES/NO) NO 
 Contacting potential clients and partners (YES/NO)

YES 

 Local agent required (YES/NO)

YES 

 Attributes of a liaison officer

Constant communication with the parent company regarding business matters, promoting the company’s activities, and concluding business contracts with clients, if any.

 Bank account for a liaison office in Dubai

Recommended for depositing the minimum guarantee, and other financial operations.

 Minimum deposit

 AED 10,000

 The institution that authorizes the liaison office in Dubai   Dubai Trade Register
 The costs of opening a representative office in Dubai 

Formation and registration costs are supported by the foreign company. 

Corporate tax for a liaison office in Dubai

No corporate tax for a liaison office

 Licensing requirement

 There is no need for a business license. 

 Time frame for opening a liaison office in Dubai

Around 10 days 

  Why choose our company formation agents in Dubai?  We can manage the formalities for opening a representative office in Dubai, at affordable costs.

Below, our company formation consultants in Dubai explain the procedure related to opening a representative office. We can help you set up such a structure which can later be transformed into a subsidiary or branch office in Dubai.

Here is an infographic with details about a representative office in Dubai and its purposes:

The representative office under the Company Law in Dubai

The liaison office is recognized by the Dubai Company Act as a business form whose core activities are completed for non-commercial purposes.

The main activities of a Dubai liaison office are:

  1. to promote the parent company’s services or products on the Dubai market and to attract clients;
  2. to conduct marketing activities or surveys and to report to the parent company on the opportunities in Dubai,
  3. to carry out non-transactional activities, such as gathering information on the Dubai market;
  4. to represent the foreign company in relation to potential clients and business partners in Dubai;
  5. to act as a contact point between the foreign company’s clients and partners, if any.

The essential aspect to consider when opening a representative office in Dubai is that it cannot engage in any commercial activity which is why it is recommended for the foreign company to transform it into another type of structure if it decides to operate in the Emirate.

We can also help foreign investors who want to open a company in Dubai and thus start operating directly as a commercial entity.

Requirements for opening a liaison office in Dubai

The requirements related to establishing a Dubai liaison office are nearly the same as when opening a branch office. The first thing to consider when deciding to open a liaison office is to appoint a local agent who completes the registration procedure with the Dubai Trade Register. This is actually a mandatory requirement for company registration in Dubai, no matter the type of structure chosen. Here are other aspects:

  • Among the requirements which need to be fulfilled when opening a representative office in Dubai is depositing a guarantee of 10,000 AED with a local bank. The guarantee will be returned once the office ends its activities in Dubai.
  • It is necessary to have an address registered with the Department of Economic Development when opening a representative office.
  • There are no licensing requirements when it comes to opening a liaison office in Dubai.

Our Dubai company formation specialists can help you if you want to change the business form of your company in the Emirate.

If you are interested in opening a representative office in Dubai, this video presents the steps and requirements to do so:

How to open a liaison office in Dubai?

Once appointed the local agent, the representative office registration procedure can begin. The first step is to submit an application with the Dubai Department of Economic Development (DED), which is the equivalent of European commercial registers and obtain a business name for the liaison office. The second step is to file an application with the Ministry of Economy for the settlement of the liaison office. Once the Ministry of Economy allows the registration of the representative office, the local agent must return to the DED and submit several documents.

Documents related to opening a representative office in Dubai

The documents the local agent must file with the DED and the Ministry of Economy are related to the parent company. These are:

  •  the Certificate of Incorporation of the parent company,
  •  the parent company’s audited balance sheets from the last two years,
  • a statement issued by the parent company’s management authorizing the establishment of the Dubai liaison office and appointing a manager,
  • a copy of the manager’s identification papers,
  • a statement with the company’s objects of activity.

The notarized agreement between the foreign company and the local agent together with the agent’s identification documents must also be submitted. It must also be taken into consideration that a liaison office may have up to four employees.

Can a representative office in Dubai have commercial activities?

A representative office in Dubai cannot carry out commercial activities in order to generate income and profits. Operations for the liaison office in Dubai are strict and limited. These refer to promotion and marketing for foreign companies in Dubai. A liaison officer will take care of the main responsibilities of the representative office as well as others, depending on the respective company’s plans.

We recommend those interested in immigration to Dubai for opening a liaison office contact our specialists. We are here to offer support for all the formalities involved in the relocation process.

What attributes and responsibilities does a liaison officer have in Dubai?

A liaison officer in Dubai must know from the very beginning what are the business scopes of the company he/she represents. This will help you in the steps and responsibilities you have for foreign territory. Here is other interesting information:

  • Knowledge of international business relations and experience in the field are essential for a liaison officer.
  • A liaison officer can undertake various actions to win clients, having at his/her disposal dedicated business tools and also the necessary knowledge.
  • Mediation of conflicts in the business environment can intervene at a given moment. It is very much like a liaison officer to have the necessary knowledge and apply the right strategies.
  • Among the responsibilities of a representative officer is the reporting of the activities carried out, as well as various market analyses, requested by the parent company.
  • Negotiation skills are extremely important for a liaison officer, and experience in the field can help in his/her business plans.

We recommend those who want to find out information about company incorporation in Dubai contact one of our specialists. We can help with the formalities for opening a representative office in Dubai.

Who financially supports a liaison office in Dubai

A representative office cannot carry out commercial activities, and therefore, it cannot support itself financially for its business initiatives and strategies. In this direction, the parent company is the one that financially supports the liaison office. Practically, it can be said that there is an established budget for the marketing and promotion activities of a liaison office in Dubai, and these are reported monthly to the company in question.

Taxation of a liaison office in Dubai

Having no commercial activities, a liaison office is not subject to taxation. In addition, in Dubai, there is no corporate tax and no personal income tax. The only tax to be paid in this case is VAT in situations where various products and services are purchased for the liaison office in Dubai.

A representative office is an ideal structure for business growth on an international level, at a faster pace, and from a tax point of view, it is extremely advantageous. You can count on our specialists for setting up a business in Dubai.

The main benefits of opening a Dubai representative office

Even if it does not allow a foreign company to undertake any commercial activity in Dubai, the liaison office has various benefits. Among these, we can mention the following:

  • the opening of such an establishment does not imply any financial risks for the parent company;
  • the liaison office is not subject to any corporate or income taxes, under Dubai’s legislation;
  • the representative office can have a bank account in Dubai without any special requirements;
  • it offers full foreign ownership even if it is established in Dubai mainland (compared to companies registered here);
  • it is one of the most flexible types of structures when it comes to management and privacy.

The representative office can be set up in approximately 10 working days after all the documents are submitted with the authorities.

If you need more information on the benefits of representative offices, our local advisors are at your disposal with full information.

When to change the liaison office into another business form?

At a certain point, the representatives or managers of foreign companies opening liaison offices in Dubai will need to consider whether they will keep the office running, change it into another business form or simply close it. The non-commercial activities of a foreign company operating through a representative office can be turned into commercial ones by setting a branch office once the parent company has decided that the Dubai market suits its objectives.

When having to choose between opening a representative office and a branch office, our agents recommend you select the branch office thanks to the performant economy of Dubai which:

  • Around 492 FDI projects were registered in the UAE in the first half of 2022.
  • In 2021, around USD 171 billion were registered in terms of total FDI stock.
  • Also in 2021, the USA had over 87 foreign investment projects in the UAE.

If you need assistance in drafting the documents required to open a representative office, do not hesitate to contact our company registration agents in Dubai.