Setting up a branch of a foreign company in Dubai can be an effective strategic move for expanding your business. Dubai boasts a business-friendly environment and offers a lucrative local market as well as access to the GCC and broader Middle East and Africa (MENA) region. It’s at the crossroads of three continents, has strong infrastructure, and boasts a very favourable tax environment.
The business setup process in Dubai is generally straightforward, although navigating the legal and regulatory landscape for your specific company can be complex. This article will provide a comprehensive guide on the essential steps required to establish a branch of your foreign company in Dubai and how to ensure a smooth and compliant setup process.
A note before we continue: Given the intricacies involved in setting up a branch of a foreign company in Dubai, professional assistance can be invaluable. Engaging experts, such as Unity Partners, can help facilitate compliance with all legal and regulatory requirements, ensuring your branch is established efficiently and effectively.
So, let’s get started.
How to set up a branch of a foreign company in Dubai: Step-by-step
Let’s begin by looking at the key steps involved in setting up a branch of a foreign company in Dubai:
- Application filing and approval: Start by submitting an application with a service agent agreement to the Ministry of Economics and Commerce and obtain clearance from the local economic department.
- Preparation and notarisation of MOA: Draft and notarise the Memorandum of Association (MOA) detailing the branch’s activities and capital.
- Office lease and initial approval: Lease-compliant office space and submit necessary documents, including the MOA and lease agreement, to the local economic department for initial approval.
- Trade name reservation: Reserve the branch’s trade name and submit remaining documents for final approval.
- Registrations and additional approvals: Register with the Commercial Registry and Ministry of Labour, obtain any additional permits, process employee visas, and open a corporate bank account.
Specific requirements and procedures may vary based on the nature of the business and the jurisdiction within Dubai. To ensure compliance with all legal and regulatory requirements, it is advisable to seek professional assistance or consult with the relevant authorities. For expert guidance and support, contact Unity Partners.
Benefits of setting up a branch of a foreign company in Dubai
Establishing a branch office in Dubai offers numerous benefits for companies of all sizes, allowing them to maintain complete ownership while taking advantage of the city’s business-friendly environment. Here are the key benefits:
- Strategic location: Dubai’s position at the crossroads of Europe, Asia, and Africa provides access to markets in these regions, serving as a gateway to the GCC and broader MENA region.
- Favourable tax system: Dubai offers an attractive tax regime with zero personal income tax and low corporate tax rates, enhancing business profitability.
- 100% Ownership: Companies can establish a branch office in Dubai while retaining full ownership of their business, ensuring control and decision-making remain in-house.
- Simple and effective admin: The setup process is straightforward, with streamlined procedures and effective administrative and auditing processes, making it easier for businesses to establish and operate.
- World-class infrastructure: Dubai boasts top-tier infrastructure, including advanced transportation systems, telecommunications, and logistics facilities.
- Skilled workforce: Dubai has a highly educated and skilled workforce, with a diverse population that brings a variety of talents and expertise to the market.
- Market reach and diversification: Dubai’s diverse economy and industries present opportunities for businesses to enter new sectors and expand their market reach within a large and growing regional market.
Requirements for opening a branch office in Dubai
To establish a branch office in Dubai, you will need to gather the following documents as a basic requirement:
- Completed application forms for branch office registration
- Trade name reservation certificate
- MOA and AoA (Articles of Association) of the parent company
- Copy of the parent company’s certificate of incorporation
- Passport copies of the company’s director
- No-objection letter from the parent company.
- Power of attorney for the branch office director.
- Board resolution from the parent company authorising the establishment of the branch office in Dubai.
Of course, this is not an exhaustive list. For a full, tailored list of documents required to open a branch office in Dubai for your specific business, contact Unity Partners.
Tax considerations for branch office companies in Dubai
While the situation can be subject to change, branch offices generally benefit from no corporate income tax, although this is subject to certain criteria. Although a new 9% corporate tax regulation took effect last year, companies operating within free zones will continue to enjoy tax exemptions.
In general, Dubai’s free zones are renowned for their extensive tax exemptions, making them a strong choice for foreign companies seeking to establish a presence in Dubai. The exemption from corporate taxes also extends to customs duties on goods imported, manufactured, and re-exported within the free zones, providing substantial cost savings for businesses engaged in international trade. There is also an exemption from personal income tax for employees as well as the unrestricted repatriation of profits and capital.
When navigating tax considerations, especially in a dynamic business environment like Dubai’s free zones, consulting with a company formation expert is invaluable. These specialists are adept at staying abreast of the latest regulatory updates and nuances in tax laws. They can provide tailored advice and interpretations that are crucial for ensuring compliance and optimising tax strategies specific to your company’s operations and goals.
As with all countries, tax laws can undergo frequent revisions in the UAE, and the implications for businesses can vary based on industry, size, and operational scope. A knowledgeable company formation expert not only helps in understanding current tax exemptions and incentives available in Dubai’s free zones but also anticipates future changes that may impact your business. In short, they’re looking to the future to help protect you in the present. This expert advice goes beyond compliance to include planning to leverage tax advantages effectively and – from structuring your business setup and managing international transactions to navigating tax treaties.
So, partnering with a company formation expert ensures that you make informed decisions regarding tax matters, safeguarding your business against potential risks and leveraging opportunities for sustainable growth in what is a very competitive market.
Conclusion
When you’re considering opening a branch office of a foreign company in Dubai, there is a lot to think about. From filing the initial application to obtaining the necessary approvals, every step must be meticulously followed to meet the requirements set by various authorities.
Unity Partners is a global network of industry specialists dedicated to offering personalised services and solutions. We assist entrepreneurs in establishing and growing their businesses in the UAE. At Unity Partners, we are experts in navigating the complexities of the licensing process, ensuring that every step, from identifying your business activity to gathering the necessary documents, is handled efficiently and accurately.
Unity Partners’ comprehensive understanding of local regulations and relationships with key government entities help streamline the approval process, saving you time and reducing potential obstacles. From company formation to legal support, Unity Partners is with you every step of the way. Your success story starts today. Contact Unity Partners for a free consultation.