With globalisation at the forefront of the business world, entrepreneurs around the world have recognised that creating an international presence is important. Expanding your business into several countries can significantly improve your access to key markets. Dubai especially is a bustling market that is tech-driven with the best commercial opportunities.
As of the latest in 2021, the number of foreign companies set up in Dubai have increased by 3.5% since the previous year— and with the numbers continually increasing, branch offices in Dubai certainly have a brighter future.
When a branch of an existing business is established, a legal entity within the free zone or mainland is created that inherits the original business’s entire legal formation and organisational structure.
Foreign companies hoping to open up a branch office in Dubai have the ability of holding 100% ownership over the branch and its profits whilst carrying out the same business activity as the parent company. Key benefits like this help the parent company to focus on their end of the bargain, whereas the branch office in Dubai can reach soaring heights. To make this possible, it’s important to decide your preferred jurisdiction—mainland, or a freezone. With the help of relevant authorities like Meydan Free Zone, important documentation and business setup processes would be handled effectively.
In this blog, you will learn everything you need to know about starting a branch office, from the necessary requirements to formal registrations in addition to an overview of the many benefits- all outlined under the following:
How to Start a Branch Office In Dubai : A Step By Step Procedure
There are many reasons why a company would want to open a branch office.
One of the primary reasons is maintaining the company’s operating history and age, keeping the name of the parent company, and making it simple for an established business to continue running in a different economic jurisdiction.
A branch office is basically a legal extension of its parent company. It is 100% owned by the parent company, operates under the same name, organizational structure and conducts the same business activities. It is important to note that in order to commence business as a branch office, it is required to adhere to certain statutory guidelines. There are a few simple steps to register a branch of a company in the Dubai mainland or free zone:
Secure Business Premise and Consultant
Companies prefer to locate in the mainland or free zone area like Meydan which offers benefits like 100% exclusion from taxes and full foreign ownership. Apart from helping out with branch registration, employment visas, setup costs, and license applications and relevant authorities, the consultants at Meydan Free Zone could support you with everything your branch office requires.
File An Application
Meydan Free Zone simplifies the whole application process for companies wishing to open a branch within its premises. All they need to do is register on its award-winning portal which allows end-to-end application, permission and transactions. They have a 100% paperless environment that has been recognized by Global Business Outlook (GBO) as the ‘Best 100% Digital Free Zone’ in the UAE.
Get Your Trade License
At this stage, you can compile all the necessary documents of the parent company attested and submit them to DED. Depending on the parent company’s business activity, obtaining DED approval would be easily determined. Meydan Free Zone would resolve and verify all your paperwork and documentation, in order to make sure receiving your trade license is first priority. Once you receive it, you can freely commence business operations in your branch office.
Open A Bank Account
Submit all necessary documents and receive bank consultation to open up your bank account and go ahead with any necessary transactions.
Register With Commercial Authorities
The final step guarantees verifying your branch office’s position in the market. Authorities like the Dubai Chamber of Commerce and Industry, require registration and here onwards, you can start your business activity.
For the initial setup of a branch office, the following documents are required;
- Copy of parent company’s Trade License
- Certificate of Incorporation
- Audited statements of the past year/years (if not a start-up)
- Notarized Memorandum of Association of parent company
- Notarized Board Resolution of parent company
- Certificate of Incumbency
- Passport copies of manager/owner/director
- Proof of a tenancy contract
- Power of Attorney
- Share certificate
Types of Branches You Can Operate In UAE
The UAE has two main economic jurisdictions to set up your business in—either a branch office in the mainland or a free zone. The difference between the two is quite straightforward. For instance, a business that chooses to operate in a free zone, may be subjected to the licensing and registration requirements posed by the free zone authority, whilst mainland setup is governed by the UAE’s requirements.
If you decide to set up your branch office in the free zone, there is a zero capital requirement, allowing lower expenditure for setup costs in addition to reducing financial risks in the future. When operating in a free zone, the branch office in Dubai can access the local market due to the given permission of trade.
Meydan Free Zone offers easy bank setups and compliance with regulatory requirements. For instance, Meydan Pay provides instant banking solutions that make payment processing easier along with free zone benefits. It is possible to access a wide range of customers through both mainland and free zones, although with the nurturing business environment of a free zone, trading with the local customers would be more opportune.
Benefits of Opening A Branch Office
Foreign companies can successfully set up their businesses by embracing Dubai’s tax-free and low-cost environment. Here are some of the benefits from opening up a branch office in Dubai.
1. Low-cost entry to the market
Considering the minimum capital requirement, tax flexibility and scalable infrastructure, branch offices can operate with lower costs more efficiently. Setups only consist of standard fee, application fee, and deposits. With Meydan Free Zone, you can calculate your setup costs with ease and scale your trade license amongst many factors, such as visa requirements among others.
2. Favourable business environment
The thriving emirate of Dubai boasts a 0% corporate tax on profits earned by branch offices of foreign companies, meaning all your profits are retained without any deductions, allowing the parent company to largely benefit from this. Along with the luxurious hotels and amenities available all around, your business will definitely be considered all the more attractive.
Rather than setting up a new company as a whole, opening up branch offices could incur lower costs than expected. For example, the costs allocated to auditing will be reduced as the branch office can handle and track their transactions, which would also be legally liberating. In addition to this, opening up another branch is significantly less costly than going to lengths of launching a new company.
4. Strategic location
As discussed earlier, the branch office can be established in either mainland or a freezone, and per the requirements of the shareholders and company memorandum, the business can be set up just about anywhere. Dubai mainland is prone to offering lower rent costs, and with many other businesses operating around you, competition and lower operational costs will act as cost-efficiency drivers. On the other hand, free zone areas deliver a plethora of benefits that include its diversified transport links for better supply chain, technology-infused infrastructure and processes which will gradually lead to a lower set-up cost.
At Meydan Free Zone, the bustle of the city centre and close proximity to the airport, definitely allow easier access to transport systems and ease for employees to travel to offices for work. Not to mention, the speedy access to regional markets and different countries opens up a lot of room for growth potential.
How Much Does It Cost To Open Up a Branch Office?
Calculating the specific set up cost for a branch office varies depending on the type of business you run, business activity of the parent company, as well as the number of employees. In comparison to a local business, a branch office incurs more set up costs because of the bulkier registration process. At Meydan Free Zone, a new business with no visas required starts at AED 12,500 minimum, while companies that need up to six visas amount to a fee of AED 23,600.
Why Meydan Free Zone?
Meydan Free Zone is located at the centre of Dubai within the luxurious Meydan Hotel, just six kilometres from the Dubai International Airport. The area acts as a great base for international operations where the business is surrounded by a plethora of useful facilities and amenities such as dining, entertainment, a talented pool of human capital, and of course, futuristic technology.
The following benefits will ensure a smooth registration and onboarding process to finally launch your branch office:
- 100% foreign ownership
- Capital repatriation without restrictions
- 100% exclusion from corporate and personal tax
- Easy bank account setup
- Less costly business setup
- Different types of licenses (professional license, commercial license, industrial license)
With rewarding advantages such as the aforementioned, our supportive and knowledgeable consultants are more than ready to help you throughout every stage of your registration process to ensure the successful launch of your branch office in Dubai.