Setting Up A Foreign Branch – Ministry of Economy Requirements
Setting Up A Foreign Branch – Ministry of Economy Requirements – Don’t forget
Without the right guidance establishing a company in the UAE can be a daunting task for many. The regulations and requirements are different to those in the home jurisdiction which can lead to frustration and misunderstanding for those who have not had any experience in the UAE or in fact the GCC.
So once the Foreign Branch Trade Licence is obtained many companies are excited to hit the ground running and in some cases make up for lost time and start to submit of tenders or just officially be-able to be in contract and operate legally in the UAE and the Ministry of Economy (MOE) step is surprisingly overlooked.
It is astonishing how many companies we meet or stories we hear of companies establishing a Foreign Branch here in the UAE, who have obtained their trade Licence but forget to complete the full process and also obtain their Ministry of Economy Licence.
The Ministry of Economy registration is an online process, which requires the company to register and obtain a user name and password and to upload the requested documentation via the portal. Below are a few things you need to consider as part of the registration process, which will be outside of the parent company documentation you would have provided for obtaining your trade licence.
Each Foreign Branch is required to issue a refundable Bank Guarantee (AED50,000) in favour of MOE through a local UAE bank.
This cannot be used as working capital and is held for the life of the branch.
Your chosen UAE bank will be-able to assist you with the template required by the MOE as part of this requirement.
Appointing a local based Auditor
A certified accountant operating in UAE shall be appointed for preparing balance sheet and annual final accounts of branches to be presented at renewing entry at the Ministry (If branches of the firm are numerous, a combined balance sheet shall be presented).
In the first year, you will be required to present to your chosen UAE accountant/auditor two years of audited financial statements from the mother company and then they will issue a letter to MOE advising them they have seen this accounts and will be acting on your behalf moving forward.
So what happens if you haven’t completed the Ministry of Economy Registration?
Once you have obtained your Trade Licence from the Department of Economic Development (DED), you have one month to complete the MOE registration process otherwise you will be liable for a fine amounting to (AED 1,000) monthly and with maximum limit (AED 10,000) annually with the exception that if the last day of the month is an official holiday, application shall be accepted without a fine if submitted on the next day after the holiday.
In case the firm fails to renew entry of branches and offices for two successive years, entry of those branches or offices shall be cancelled administratively and due fees and fines are to be collected out of the bank trust deposited in the name of the ministry and competent authority shall be notified.
Associated Fees for Ministry of Economy Registration
Amount AEDParticulars 5,000Registration License for establishing a branch 10,000Entry in the register 10,000Renewal of entry in the register 2,000Amending data in the register 15,000Amalgamation or sale 100Extract of entry data of foreign firms 1,000A fine for delay of entry in the register (AED 1,000) monthly Maximum (AED 10,000) for every year with part of month calculated as full month 1,000A fine for delay of renewing entry in the register (AED 1,000) monthly Maximum (AED 10,000) for every year with part of month calculated as full month 200A fine for delay of amending data of entry in the register (AED 200) monthly Maximum (AED 2,000) for every year with part of month calculated as full month
As you can see, it can be a costly oversight if you do not complete the process entirely, if you would like any assistance with the registration of the Ministry of Economy Licence or for establishing a Foreign Branch here in the UAE, please do not hesitate to get in touch and we will happily guide you through the registration process please feel free to contact our office on +971 (0)4 456 1761 or email firstname.lastname@example.org or contact us here to arrange a consultation