Setting up a branch office of a foreign company in the UAE is easy and an attractive prospect for clients is that it can be 100% foreign owned, provided a local service agent (Like PRO Partner Group) is appointed. A branch office, is an extension of a foreign parent company registered outside of the UAE, it is a full-fledged business, permitted to perform contracts or conduct other activities as specified in its license. A Foreign Branch office may only be engaged in activities similar to those of its parent company.
Under Commercial Companies Act No 8 of 1984 and Ministerial Decision Number 69 of 1989, a Branch office of a foreign company does not have a separate entity. It clearly represents the parent company and carries on business under its name. Purpose of the branch office is to promote and market the products of the parent company, enters into transactions and concludes agreements in the name of the parent company, and offer services to its customers. Branch Company is not allowed to partake any activities in which its parent companies are not allowed.
More Information about Foreign Branches:
- Activities – as a branch office, you are entitled to undertake the commercial activities of your parent company, although some activities are restricted (for example Trading, you would be required to set up as an LLC).
- Liability and tax – the 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.
- Sponsor/National Service Agent – each foreign branch office requires a local sponsor. The local sponsor Has no equity participation or liability to the business, nor can the person represent the branch office or participate in its management.
- Bank Guarantee – As a Foreign Branch Office you will be required to deposit a refundable bank guarantee of AED50,000 for the duration of your licence and this cannot be withdrawn or used as working capital.
Advantages of Partnering with PRO Partner Group:
- As your service provider, we will use our experience to handle 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.
- We allow your General Manager to Manage the daily operations of your company, without interference.
- Not interested in turnover or profits. A set fee, legally agreed at the start ensures stability and ease for you to budget.
- Through our corporate office, you will have access to ongoing services and around the clock support.
- We will offer networking opportunities with key local contacts and government departments.
- Change of Circumstance; not a problem although we would be sad to see you leave we will assist you in either terminating our licence or share transferring to a new sponsor.