How to set up a Foreign Branch Office in the UAE
What is a Foreign Branch Office?
A Foreign Branch Office in the UAE is a registered company that can be 100% foreign owned, provided a local service agent is appointed. The foreign branch office is an extension of the foreign parent company and must obtain a trade licence for the same activities its parent company carries out.
The ownership belongs to the parent company and the foreign branch should be licensed with the same name and activities. The purpose of the foreign branch office is to promote and market the products of the parent company and offer services to its customers.
Features of Branch Office
- Bank Guarantee: A refundable bank guarantee deposit of AED 50,000 is required for the duration of the licence which cannot be withdrawn or used as working capital. This must be paid to the Ministry of Economy
- Liability and Tax: The foreign branch office is not a separate legal entity and therefore the foreign parent company is 100% liable for the actions of the branch and 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
- National Service Agent: The National Service Agent (NSA) has no equity participation or liability to the business, nor can the person represent the foreign branch office or participate in its management
- Activities: The foreign branch office is not considered a separate legal entity from the foreign company and therefore commercial activities must remain the same as those of the parent company
- Company Duration: The branch has longevity and is not restricted by specific contracts
What is the process for setting up a Foreign Branch Office in the UAE?
Setting up a branch office of a foreign company in the UAE is an attractive prospect as it can be 100% foreign owned, this is usually the most common type of company formation.
The process follows these key steps:
- Appoint a National Service Agent (NSA) – also called a Local Service Agent (LSA)
The foreign company must appoint a local service agent to handle the process. It is mandatory that the local agent is a UAE national or a company owned 100% by UAE nationals. The agent will then complete the trade name reservation process through the Department of Economic Development (DED)
- Obtaining Approval from the Ministry of Economy
The application includes the details of the company regarding share capital, head office, nature of the business, the name of the general manager in UAE, etc. along with certain compulsory documents
- Obtaining a licence from the Department of Economic Development
The Ministry of Economy (MOE) will issue the initial approval letter to either Abu Dhabi Department of Economic Development (ADED) or Dubai Department of Economic Development (DDED). Documents that are required include; MOE initial approval, copy of proposed lease in UAE (Tawtheeq in AD, Ejari in Dubai), copies of documents submitted to MOE, engagement letter from a locally registered UAE auditor confirming company existence and two-year financial statements of the parent company.
A commercial licence will be issues by the DED for one year and is subject to annual renewal
- Office Space and Bank Accounts
Once the commercial license is obtained, the company can investigate office space, open bank accounts and acquire visa and labour cards for employees. Note that the banks will need to see full UBO information on the Parent company and additional corporate and shareholder structures within the Parent company – all foreign documents will need to be attested, legalised and translated for use in UAE
Ministry of Economy registration is key to setting up a branch office in the UAE. There is a process that must be adhered to with associated registration fees to enable a branch company to be formed.
How can PRO Partner Group help?
Setting up a Foreign Branch Office in the UAE is an attractive prospect for businesses, however, the process can often be time consuming and complex. PRO Partner Group can offer a hassle-free solution by providing reliable support to set up your company by taking care of processes and the documentation required as well as acting as the secure NSA for the Foreign Branch.
Advantages of PRO Partner Group as a National Service Agent:
- PRO Partner Group handles all the necessary paperwork to establish your business in a timely manner. This includes applying for visas, licenses, obtaining labour quotas, translation services and assisting with the opening of corporate bank accounts
- The branch retains 100% Management Control and 100% Financial Control
- Full Management Team on hand 24/7
- Suitable for entrepreneurs, SMEs and MNCs entering the UAE market
- Transparent and reliable, keeping you fully informed