One of the reasons why foreign business owners come to Dubai is because they plan to expand their business here. With that, there are a lot of international companies in Dubai that are branches of established organizations outside the United Arab Emirates (UAE), and their branches set up a representative office in Dubai as well. Since they think that they can cater to potential and existing clients more by having a presence here, they go forward with setting up a branch of a foreign company in Dubai.
However, even though it’s a known activity that businessmen do, there is still a bit of confusion between a branch and representative office.
Difference between branch and representative office UAE
Another entity can be established by a parent company in another city, state, or country and still be part of that parent company. This is called “branch”. This new entity is still fully owned by the parent company and should operate under the same name and with the same business activity.
On the other hand, a branch can have an additional activity for the sole purpose of marketing the whole enterprise’s products and services. But in this case, it’s not allowed for that office to deliver or trade the said products and services. Representative office in Dubai is registered through the UAE Ministry of the Economy and Dubai Department of Economic Development.
Setting up a branch of a foreign company in Dubai is a known move by foreign businessmen. It simply means that they have a licensed organization in another country that is growing, reaching other nations’ attention. The procedures that are followed in setting up a branch of a foreign company in Dubai are almost the same as setting up a business.
Moreover, an applicant needs to have a national service agent. This agent can be an individual or a company. But it should be noted that the agent must be a UAE national or, in the case of a company, run by UAE nationals. However, the full rights of the branch shall remain with the owners themselves and none will be given to the agent. This requirement is mandated by the federal and local government.
There are systematic procedures that are followed for setting up a branch of foreign company in Dubai. This is why seeking the help of a consultant is advisable to guide you through. A consultant can provide you with the information you need and answer your question of how to open an international office and how to set up a representative office in UAE. They are the people who can explain to you in detail the things you need to know, such as UAE foreign investment law, and even other things that you are keen to find out.
Business setup in Dubai may not seem like an easy task, but with a business setup consultant helping you, you can ensure that you are doing things lawfully and cost-effectively.
Branch setup and company formation in Dubai have advantages that come with them. Business owners who come here in the UAE have their organizations formed in their countries of origin and would like to be within easy reach to their clients. It is an advantage in itself to not spend more money in delivery and trading when a branch is set up here that ensures more effective communication with the clients and cost-effective way of dealing with the business at hand. This is why more and more international companies in Dubai are swarming the country. It’s because doing this venture brings advantages to their enterprise.
By choosing to set up another branch, it can increase your presence not just in your country but also globally. Your value as a company will be highly regarded even more as you build a better rapport with your clients and the new ones, who have a high potential of becoming one of your future consumers. The fact that the demand of your products and services is being met speaks volumes with regard to your company’s state in the industry ladder (how well known you are) and your company’s sensible move of ensuring that clients are contented. Meeting your clients halfway is always a good move.
In addition, the expansion of your business from one country to another adds to the endless opportunities of open doors with regard to being discovered by clients that you haven’t even dealt with before.
The country is known to be a business hub, trades happening here and there so the revenue of the whole enterprise also is also pulled up when a branch is set up in the UAE. The people will also see your credibility through how you treat your clients, e.g., setting up a branch near them to make things easier for them, and through how you execute your work.
Although it is a good move, it shouldn’t be done hastily. A study should be done to ensure that expanding will not hurt your business but will help it exceedingly. Setting up a branch should give positive effects not the opposite.
The business activity of a branch that will be set up should be the same as its parent company’s business activity.
For more than 30 years, we have been dealing with businessmen and their dilemmas. FAR – Farhat Office & Co. is one of the business consultants in Dubai that has helped business owners answer the question “how to open an international office” and form companies in the country and in other places as well.
The following services will be offered by us once you give us the opportunity to work with you:
- Applying and following up on behalf of the client until the collection of the Certificate of Business Registration (Trade License)
- Representing the client in front of the authorities
- Assisting the client in bank account opening
- Assisting the client in account opening with the Ministry of Labour
- Assisting the client in account opening with the UAE Immigration
- Assisting the client in leasing a premise as an address for the business
The procedure of setting up a branch of a foreign company in Dubai and anywhere in the UAE will range from 2 to 4 weeks.
- Passport copies of the shareholders
- Passport copies and CV (resume) of the Manager—for the new branch
- Personal information sheet of each shareholder and manager (template will be forwarded by our firm)
- Proof of trade name reservation for the new branch (our firm’s task)
- Proof of initial approval for the activities for the new branch (our firm’s task)
- Memorandum of Association of your existing company/entity at the place of origin—it must be attested and notarized by the UAE Embassy.
- Article of Association for your existing company/entity at the place of origin—it must be attested and notarized by the UAE Embassy.
- Board resolution to be resolute by the board of directors of your existing company/entity at the place of origin expressing their intent for establishing a new setup abroad—it must be attested and notarized by the UAE Embassy (template will be forwarded by our firm).
- Certificate of registration of your existing company/entity, license, or certificate of incorporation of your existing company/entity attested and notarized by the UAE embassy
- Certificate of good standing of your existing company/entity, issued by the registrar of the companies at the place of origin (the template can be forwarded by our firm)
- Power of Attorney appointing our firm as your legal representative for authority to act on your behalf/ on behalf of the shareholders (template will be forwarded by our firm)
- Lease agreement (documents)—Having a physical address for your business/office is mandatory in the UAE. Our firm can assist you while searching for your physical address. (This item will be required only after we obtain the initial approval from the authority.)
- Business plan (brief feasibility study)—Our firm can assist in writing a business plan if requested by the client for a minimal fee
- There are some activities which might require third-party/authority pre-approval—accordingly, additional costs and professional fees might be applicable.
- Also, during the process, the authorities might require a few other documents.
- All documents required must be translated into Arabic language. We can assist in that matter.
The below table shows the estimated cost of a company formation in Dubai or anywhere else in the UAE. If need be, you can contact us for further information and clarification.
|Setup in UAE – Branch of Foreign Company|
Table of Estimated Government Cost and Professional Fees
|Trade License Option/Activity||Cost in USD||Cost in AED|
|Application for the Ministry of Economy (UAE Government)||1,350||5,000|
|Registering with the Ministry of Economy (UAE Government)||2,700||10,000|
|Deposit with the Ministry of Economy (refundable) to be Submitted in a Bank Guaranty Format (our firm can manage)||13,600||50,000|
|Registering and Licensing with the Local Government (approximate)||2,700||10,000|
|Local Citizen—Service Agent Fees (maximum)||4,100||15,000|
|Our Firm’s Professional Fees||6,000||22,000|
ATTENTION – NOTE