The United Arab Emirates is known for being a strong country that provides limitless business opportunities for every businessperson, including foreigners. One of the many advantages that you can obtain as a foreign investor is the opportunity to set up a foreign company branch in UAE to benefit the growth of your business.

In this article, you will learn everything you need to know regarding foreign company branch set up in the country and some tips to establish this type of business successfully. You will also learn about some advantages that you can get when you start setting up your branch company. Let’s observe:

1. What is a foreign company branch and what benefits does this business provide?

2. Difference between a branch office and a subsidiary.

3. How to set up a foreign company branch in the UAE successfully?

4. How to open a new business in the United Arab Emirates?

5. How can Connectfz help you set up a foreign company branch in the UAE?

1. What is a foreign company branch and what benefits does this business provide?

Due to the Companies Law’s statement in its 313^th article, a foreign company can be allowed to run its business and exercise its main activities in the United Arab Emirates by using a representative or a branch office in the country. This means that if you are a foreign investor who already owns a business abroad, you can set up a foreign company branch in UAE to expand your business effectively.

You can choose whether if you will set up a branch of a foreign company in Dubai or any other location in the country that might benefit your parent company according to its main business activities. If you decide to set up a branch office or subsidiary in the country, you can be sure that you will obtain certain advantages to boost your business efficiency, including the following ones:

• As a foreign investor, you will obtain 100% ownership of the branch office.
• There is no corporate or income tax in the country for foreign investors.
• Confidentiality in business is guaranteed.
• Although there is an import duty in the mainland of the UAE, it is very low (only 5%).
• You can obtain the UAE resident visa and open a corporate or personal bank account.
• Since sharing capital is not a requirement for branch companies in the UAE, investors are allowed to make their business grow with a minimum upfront cost.
• You will have the benefit of reducing the administrative burden of managing a large multi-national company.
• You can separate bookkeeping, auditing, and decentralize global offices for enhanced management.

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1.1. Purpose and main features of a foreign company branch.

A branch office of a foreign company has the main purpose of promoting and marketing the products of the parent company, just like offering its services to customers in a new territory. In order to set up a foreign company branch in UAE, the branch office will be required to have the following features:

• Since it is a branch office and not a separate entity from the foreign company, it must perform the same activities that the parent company usually performs.
• There is a requirement that the branch company must obey to ensure a bank guarantee, which is depositing AED 50,000 to the Ministry of Economy for the duration of the license that cannot be withdrawn or used as working capital.
• The parent company is 100% liable for the actions of the branch company since the branch is not considered a separate legal entity. The revenue of the branch will be taxable as the income of the foreign parent company in the country where the parent is resident.
• The NSA (National Service Agent) cannot participate in the branch office management, has no liability to the business, and do not represent the foreign branch office.

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2. Difference between a branch office and a subsidiary.

It is common to make mistakes and think that a branch office is the same as a subsidiary, but the truth is that these two types of entities are different. A branch office is known for being an extension that belongs to a business that already exists in some other country and is not considered a separate legal entity from the parent company. Besides, branch offices tend to perform the same activities as the parent company.

As for a subsidiary, it is considered a legal entity that is separated from the parent company, and in most cases, it tends to perform any activities that it desires depending on its trade license in the country.

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3. How to set up a foreign company branch in the UAE successfully?

If you have decided to set up a foreign company branch in UAE, this short guide will help you complete your goal successfully step by step. Here are the steps you should follow to register and establish a branch office in the country:

• Before starting the setup process, you must select the most suitable business jurisdiction for your company. The location could be a free zone, the mainland, or an offshore zone. If you choose to establish your business on the mainland, you will be required to appoint a Local Service Agent to liaise the administrative works with the government authorities.
• Identifying a Local Service Agent will be the next step. The agent is appointed for one year by paying an annual fee, and the contract can be renewed every year. Keep in mind that this requirement will not be necessary for your branch office will be established in a free zone or offshore, which means that the manager will be allowed to conduct the business activities of the branch office.
• Choose the name of your branch company will be next. It is required to use the parent company’s name, and then the DED (Department of Economic Development) will approve the name once the application is submitted. In case of setting up your branch office in a free zone or offshore, the name will be approved by the relevant authorities of the location.
• Documentation attestation from the UAE government authorities is the next step to complete your establishment. The company’s documentation will be attested by the UAE embassy in the home country, and then, it will be counter-attested by the Ministry of Foreign Affairs in the United Arab Emirates. Continue reading this article to find out what are the necessary documents to complete this step.
• Along with the attested documents, you will have to submit the supporting documents to the government authority to obtain a branch office license. A fee must be paid when submitting the documents. Right after this step is completed, the investor will receive the branch office license that is needed to run the branch office efficiently.
• Once the previously mentioned steps are completed, the investor will be able to apply for a UAE residence visa, open a corporate bank account, and fulfill other administrative requirements, including recruiting employees, assigning a director or general manager, process immigration card, and many other activities that will allow you to run the branch office effectively.

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3.1. General documents that are required to set up a foreign company branch.

In order to set up a foreign company branch in UAE, the following documentation will be required to proceed with the registration:

• Certificate of incorporation.
• Memorandum of Association.
• Power of Attorney to the Manager.
• Legal standing certificate (in which it can be proved that the parent company validly exists).
• Board Resolution calling for opening the branch and appointing the manager.

As for other necessary documents, they shall be asked by the pertinent authority, depending on the activity segment that the company looks forward to registering.

Here you can learn some tips to form your UAE free zone company in Dubai.

4. How to open a new business in the United Arab Emirates?

On the other hand, if you are willing to establish a new business in the country instead of a foreign company branch, here’s how to open a new company in UAE step-by-step guide to achieving your goal with success:

• Choose your business activity, the location in which you desire to set up your company, and your company’s name. Take into consideration that the business activities that your company will perform are essential to know which location will be the most suitable one and which licenses you will need to run your business legally. As for the company name, avoid using inappropriate content would be an excellent tip to follow.
• Submit the required documentation and finalize the incorporation paperwork to establish your business. The documents will be submitted to the relevant government authorities of the location, which might ask for additional documentation depending on the type of company that you want to set up and the zone in which you will establish it.
• Once your application has been submitted and processed, the government authorities will issue your company license and you will receive a license notification. It is the easiest step of them all and does not require much, and once it is done, you will be able the complete the next step.
• Opening a corporate bank account will be the next step, and here you will need again some paperwork and documentation. You will be able to choose whether if you want a bank account in a local or international bank. If you want to skip this process, you can request a business setup partner’s help to arrange meetings and solve this matter for you, this way you will save a lot of time.
• Processing your visa document will be the final step to start running your company in the UAE. You can apply for visa documentation for relatives or employees too, but this will depend on the location in which your company will be set up. Visa processing is a five-stage process, which includes entry permit, status adjustment, medical fitness test, Emirates ID registration, and visa stamping.

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5. How can Connectfz help you set up a foreign company branch in the UAE?

Set up a foreign company branch in UAE or a new company can be an easy task if you count on an efficient business partner such as Connectfz. Our professional team will help you settle in the country and complete every step of the company incorporation process, allowing you to save time and money when forming your company branch.

You can ask for any of our many services to ensure a successful setup process. For instance, you could ask for our UAE market entry services to help your business enter the market in no time and without taking risks. If you need help with taxes, you can request our tax advisory services to let us manage this affair for you.

Once you have set up your branch office in the country, you will be able to start recruiting employees. You can request our recruitment or staff outsourcing services in case you desire to save time and skip time-consuming hiring processes. Many others of our services are available for you to run your business more efficiently.

Would you like to contact Connectfz to know more about how to set up a foreign company branch office in the United Arab Emirates? If you have any question do not hesitate to call us on +97143316688 or email us at info@connectfz.ae, and you will talk to one of our representatives that will gladly answer all of your questions.