As global markets continue to expand, setting up an international presence has become a must for companies who seek to grow and reach out to other corners of the world to continuously trade and offer their services.
While new company setup in the UAE is proven to become a rich avenue for local and foreign investors alike, setting up a branch office in the UAE is also an effective option due to its superb benefits and numerous advantages.
What Is A Branch Office?
A Branch office is an extension of a company outside of the jurisdiction where it was registered, called the Parent Company. The parent company can either be in the UAE or outside of the country.
The branch carries the same business activity as its parent company. In a way, the parent company is liable to its branch office, in matters of finance, administration, and management, though some branch setups offer otherwise.
A Branch setup in the UAE can either be the following:
- ● Branch company – The most popular branch office setup in the UAE, a branch company exhibits sole proprietorship of the parent company over the branch.
- ● Corporate shareholder – This is a type of branch that lets a foreign company and an individual shareholder both hold stakes in a business.
- ● Representative office – This is the most cost-effective option, though setting up a representative office is not permitted to conduct business in the UAE and must outsource all work to the parent company.
- ● Subsidiary – A Subsidiary has a separate entity from its parent company and must be managed in the UAE.
What Are the Benefits of Opening A Branch Company in the UAE?
- ● Start with zero capital. Most jurisdictions do not require a share capital in opening up a branch company.
- ● No corporate taxes. Your branch office does not need to pay basic taxes such as corporate tax as the UAE do not charge branches of foreign companies.
- ● Minimal auditing requirements needed. In setting up your branch office in the UAE, you need not to submit audited accounts in the UAE.
- ● Competitive company setup cost. Business formation in the UAE is a well-developed industry with well-managed and cost-effective packages that will surely establish your presence in the country.
- ● Strategic location. Being one of the fastest growing economies, the UAE is a favorable location for most companies as it has access to nearby markets such as the MENA, Asian, African, and European countries.
What Are the Steps in Setting Up A Branch Office?
- Prepare the needed documents from the parent company:
- ○ Certificate of Incorporation
- ○ Memorandum and Articles of Association
- ○ Board Resolution
- ○ Passport and Visa copy of Company Representative
- ○ Audited Financial Accounts
- ○ Special Power of Attorney (for the appointment of the Branch Manager)
- ○ Bank Guarantee from the Ministry of Economy and Planning with the amount of AED 50,000 and must be renewed every year
2. Choose your local service provider. The UAE requires foreign companies opening a branch in the UAE to acquire the services of a local agent for an easier transaction with the required government bodies.
3. Your local service provider will file your application to your selected jurisdiction.
4. Once the approval has been received from the authorities, your company will be issued a ministerial license, specifying your business activity.
5. Your branch will be registered under the Foreign Company Registration through the local Economic Department. You will then receive your business license.
6. Register your branch office to other authorities, such as the Ministry of Economic and Commerce Companies Register and the Chamber of Commerce and Industry.
7. Look for an office space and open your bank account. To get your branch up and running, check out the available facilities with your chosen jurisdiction and avail their services.
How Can IBG Consulting Help You?
Availing the services of a local service agent is a must in the UAE. Worry not, as IBG Consulting extends its help to you.
We are a team of experts dedicated to giving you the best advice on the branch setup that befits your needs and wants. We specialize in business setup in Dubai, Sharjah, Fujairah, and all other Emirates, as well as additional services in visa applications and renewal, accounting and bookkeeping, PRO services, and digital marketing.
Let us assist you in setting up your branch office. Contact IBG Consulting today.
