Branch Formation
Branch Office Formation in UAE
Opening a Branch Office in UAE
A branch office in UAE is an extension of a foreign parent company that is located outside of the UAE. It is a full-fledged business which can enter into contracts or perform business activities as specified in its license. Not having a separate entity, a branch office distinctly represents its parent company and conducts business under its name. The purpose to setup a branch office in UAE is to promote and market the products of parent company, undergo business transactions, forge its agreements with other businesses under the name of parent company and provide services to its customers. A branch office in UAE is ideal for tightly regulated industries such as Banking, Financial Services and Insurance.
Strong foundation for Successful Future
Features of Branch Office
- Ownership – it allows 100% foreign ownership
- Activities – Branch office shall only be engaged in activities similar to those of its parent company; it cannot perform any activity which its parent company is not allowed. Some activities are restricted (e.g. Trading, you would be required to set up as an LLC).
- Local Sponsor/ Local service Agent – Each foreign office branch in Dubai requires a local service agent.
- Liability and tax – Branch office is not a separate legal entity hence its foreign parent company is 100% liable for the actions of the branch. Also the revenue of the branch will be taxable (in the country where the relevant foreign parent is resident) as the income of the foreign parent.
- Manager – Only the manager appointed by the BOD of the parent company will be authorized to represent the company in all matters in Dubai.
- Permissions – In certain cases, branch offices are required to seek permission from the Ministry of Economy in order to perform certain functions.