What is a foreign branch office?
A branch office is a subsidiary of a company or parent company based in another country or located abroad. The branch office is set up with the purpose to expand the business and promote the product or services of the parent company in the overseas market. A Branch office is also referred to as an extension of the parent company which is registered and based outside the UAE.
Setting up a branch office in Dubai is simple, easy, and an attractive business prospect. The branch office is allowed to carry out only those business activities which are permitted by the parent company. A branch office is a full-fledged business structure that can perform all commercial activities permitted by the law of the jurisdiction.
Under Dubai’s Commercial Companies Act and the decision of the concerned Ministry, a foreign company’s branch office carries on commercial activities under the name of its parent company and does not possess any separate legal existence as an entity.
How to Set Up a Branch Office in Dubai?
To set up a branch office in Dubai, the following steps are required to be followed:
- To find a Local Service Agent (LSA) is the first step in the process. The service agent should be a UAE national and in case of a company, it should be fully owned by a UAE national.
- The local service agent obtains licenses, permits, visas, etc. for you and charges some fee.
- Reserve a name for the branch at the Department of Economic Development (DED)
- Get initial consent from the Ministry of Economy (MOE)
- After getting approval from MOE, apply for a business license.
- The DED issues the license, valid for 1 year
- Sign the land lease agreement for office space of the branch
- Open a corporate bank account
- Apply for visas for the employees
Documents Required for Setting up a Branch Office
To get the initial approval from the Ministry of Economy, the following documents are required:
- Proof of name reservation
- Registration application form
- Parent company’s Memorandum and Articles of Association (MAA)
- Certificate of Incorporation of the parent company
- Passport and visa copies of the director/shareholder
- NOC of the parent company
- A power of attorney to the local director
- Parent company’s management board resolution for opening a branch in Dubai
Added Information about Foreign Branches
A branch office is entitled to carry out commercial activities of its parent company. The parent company is liable for all the actions of the branch office because the branch is not considered as a separate legal business entity.
The income and revenues of the branch of a foreign company are taxable under the Dubai’s Commercial Companies Act.
It is mandatory for the branch office to deposit a bank guarantee of the required amount to establish itself in Dubai. The bank guarantee is refundable and is kept as a security up till the license is valid. The branch cannot use the bank guarantee as to its working capital.
To set up a branch office of a foreign company, a local sponsor is required who cannot participate in the business and even cannot be held liable.
Services Provided by PMC Solutions DMCC to set up Branch Office in Dubai
An entrepreneur interested in setting up a branch office in Dubai can avail the services of PMC Solutions DMCC. We can assist the investor by providing the following services
- Complete documentation for the application
- Recognizing a dependable local sponsor or service agent
- Getting necessary approvals from relevant government departments
- Assisting in the opening of a corporate bank account in the name of the branch
- Help in understanding the land lease agreement and determining a worthy place for the office.
Do Contact us for setting up a branch office in Dubai.