Dubai is a leading global business hub, attracting companies worldwide seeking expansion opportunities. Establishing an international company in Dubai allows businesses to operate legally while leveraging the city’s strategic location, tax benefits, and pro-business policies. If you’re planning to expand into Dubai, this guide will take you through the entire process.
What is a Branch Office in Dubai?
A branch office is an extension of the parent company that operates under the same legal identity. Unlike a subsidiary, a branch office does not have a separate legal entity. It can conduct business, sign contracts, and generate revenue, but all its liabilities fall under the parent company’s responsibility.
Benefits of Setting Up a Branch Office of an International Company in Dubai
- 100% Foreign Ownership: A branch office can be fully owned by the parent company, eliminating the need for a local partner.
- Tax Advantages: Dubai offers a business-friendly tax environment, with 0% corporate tax in many sectors and no personal income tax.
- Access to a Thriving Market: Dubai serves as a gateway to the Middle East, Africa, and South Asia, providing opportunities for global expansion.
- World-Class Infrastructure: The city boasts modern office spaces, excellent connectivity, and advanced logistics facilities.
- Easy Recruitment: With a large, diverse workforce, businesses can easily hire skilled professionals.
Step-by-Step Process to Set Up a Branch Office in Dubai
1. Choose the Right Location
You can establish a branch office either in a free zone or on the mainland:
- Free Zone: Ideal for businesses focusing on international trade, offering full foreign ownership and tax benefits.
- Mainland: Best for companies looking to operate within the UAE market without restrictions on business activities.
2. Appoint a Local Service Agent (LSA)
For a mainland branch, you must appoint a Local Service Agent(LSA), who acts as a representative but has no ownership or control over the business. This is not required for free zone branches.
3. Get Initial Approval from the Department of Economic Development (DED)
Submit the following documents to the Department of Economic Development (DED):
- Parent company’s certificate of incorporation
- Memorandum and Articles of Association
- Board resolution approving the branch setup
- Power of Attorney for the branch manager
- Passport copies of shareholders and manager
4. Obtain Approval from the Ministry of Economy
The Ministry of Economy must approve the business activities and issue an approval letter. This is mandatory for all branch offices.
5. Register with the DED and Obtain a Trade License
Once approvals are in place, you need to register the branch office with the DED and apply for a trade license.The type of license depends on your business activities.
6. Secure an Office Space
Leasing an office space is a requirement for business registration. Depending on the chosen jurisdiction, you may need a physical office or can opt for a flexi-desk setup.
7. Apply for Visas and Labor Cards
After registration, apply for visas for employees and obtain labor cards from the Ministry of Human Resources and Emiratisation (MOHRE).
8. Open a Corporate Bank Account
Choose a bank in Dubai that fits your business needs and submit the necessary documents to open a corporate account.
9. Comply with Legal and Regulatory Requirements
Ensure compliance with UAE labor laws, accounting regulations, and annual licensing renewals to maintain smooth operations.
FAQs
Can a Branch Office of an International Company in Dubai trade in the UAE market?
Yes, if set up on the mainland. Free zone branches can operate within their respective zones but require a distributor to trade in the local market.
How long does it take to set up a branch office in Dubai?
The process typically takes 4 to 8 weeks, depending on document approvals and licensing.
Is there any corporate tax for a branch office in Dubai?
Dubai has a 0% corporate tax on most business activities, except for sectors like banking and oil & gas, which may have different tax structures.
Can a branch office hire employees in Dubai?
Branch offices can hire staff, issue work visas, and follow UAE labor laws.
Do I need a local sponsor for a branch office?
No, but for mainland branches, you need a Local Service Agent (LSA) who acts as a liaison with the government.
What is the difference between a branch office and a representative office?
A branch office can conduct business and generate revenue, while a representative office is limited to marketing and promotional activities.
Conclusion
Setting up a Branch Office of an International Company in Dubai is a strategic move for businesses looking to expand in the Middle East. With the right planning, approvals, and compliance, you can leverage Dubai’s business-friendly ecosystem to grow your international presence. Whether you choose a free zone or a mainland branch, Dubai provides excellent opportunities for global businesses to thrive.
If you need expert assistance, consulting with a business setup advisor can simplify the process and ensure a hassle-free launch of your branch office in Dubai.
