Starting a Foreign Company Branch in UAE is a milestone for many Foreign Business owners. Although UAE offers many advantages for companies here, starting a Foreign Company Branch in UAE has some regulations to follow. These companies have very few options & likewise, setting up this business here depends on the kind of the business. The type of company here refers to a Company branch and Representative Office.
1) Company Branch: The licensed company that intends to set up in the UAE may exercise its services freely (for which it is permitted)
2) Representative Office: A representative office can practice only promotional activities for the services & products provided by its parent Company. It cannot market its products or conduct business operations.
The Foreign Company Branch in UAE should obtain the trade license under the same name as its parent company from the Ministry of Economy before applying to DED. Also, its commercial activities must be the same as those the parent company carries out. Thus, it is not a separate/different legal firm from the foreign parent company. The objective of the Foreign Company Branch in UAE is to sell the parent company products and offer services to its customers.
You can set up the Foreign Company in the Mainland and trade freely throughout the Emirate or Start a Foreign Company Branch in UAE Freezone, which requires a local agent to trade directly in the market but the company will benefit from a hundred percent customs tax exemption, freedom to repatriate the capital and profit and zero currency restrictions.
Also, click here to learn the ten best business ideas to do in Dubai in 2022.
Steps to Start a Foreign Branch in the UAE
Starting a Foreign Branch in UAE is just a five simple steps process.
Step 1: Appointing an Emirati Service Agent
- The first step of starting a Foreign Branch in the UAE includes appointing an Emirati Agent or National Service Agent (NSA) i.e, either a company owned 100% by UAE nationals or a UAE national.
- Remember that the Parent Company owner retains 100% ownership of the branch & the NSA has no equity in the company nor any say in decision-making or management.
Step 2: Get MOE Approval
Along with the required documents, the branch must share the Company details such as the nature of business, name of the general manager, head office, share capital, etc to start the company branch in UAE.
Step 3:Apply for Foreign Branch License
This process of starting a Foreign Branch in the UAE includes obtaining authorization letters from the Ministry of Economy (MoE) and a trade license from the Dubai Department of Economic Development (DED);
Include details such as the nature of the branch business, share capital arrangements, head office address, and the name of the appointed general manager of the branch office.
License application from DED
Obtaining the Foreign Branch Company license in UAE is the following process.
- Approval letter from MOE through either ADDED (Abu Dhabi Department of Economic Development) or DDED (Dubai Department of Economic Development)
- Required document submission such as MOE initial approval, Copies of documents submitted to MOE, Copy of the proposed lease in UAE (known as “Tawtheeq” in Abu Dhabi and “Ejari” in Dubai), Engagement letter from a locally registered UAE auditor confirming company existence and two-year financial statements of the parent company.
- The trade license issued by the DED is valid for one year, and you can renew it annually.
Step 4: Obtain Visas, Office Space, and Bank Accounts
- After the approval of the license of the Foreign Company Branch in UAE, you will require to secure an office location in the UAE and acquire visa and labor cards for employees. Once you lease a space, submit the lease details to the MoE.
- You also need to open bank accounts. The banks will need complete UBO information on the Parent company and also the investor networks within the Parent company.
- Attest all foreign documents. Authorized and interpreted for use in the UAE.
Step 5: MOE Registration
- The key to Starting a Foreign Branch in UAE is MOE registration. After getting the Foreign Branch Trade License from the DED, complete the registration process with associated registration fees payment and get the MOE License within one month. Not registering to the MOE within a month is subject to penalties.
- Bank Security: Each Foreign Company Branch needs to pay a refundable Bank Guarantee deposit of AED 50,000 to the MOE through a local UAE bank & the deposit cannot be withdrawn or used for business operations & the bank will maintain it for the duration of the license.
Conclusion
Setting up a Foreign Company Branch in the UAE is an attractive proposition for corporations. RVG Chartered Accountants can provide valuable guidance throughout this process. We hope this article will provide lucrative information on setting up the branch here and is also an easy process. It is not deniable that the process requires a level of prior knowledge. Note that the application process is only explicit if the license application is free from errors and complete at the time of submission. Business valuation is equally essential as starting a business in UAE. So, before starting a company, it is wise to have thorough research.
