Search
Close this search box.

How to Start a Branch of a Foreign
Company in Dubai: Your 2024 Update

How to Start a Branch of a Foreign Company in Dubai: Your 2024 Update

Table of Contents

image4

Setting up a branch of a foreign company in Dubai opens doors to a thriving, dynamic market in the heart of the Middle East. Companies from Europe and across the globe are setting up businesses and expanding their operations in the UAE in 2024. Establishing a branch of a foreign company in Dubai opens doors to a dynamic, interconnected market experiencing a surge of interest. If you’re seeking foreign company incorporation in Dubai or foreign company formation in Dubai, navigating the process can seem daunting. But fear not, ambitious international entrepreneur! This comprehensive guide offers a clear roadmap, updated for 2024, to turn your Dubai dreams into reality.

Why Choose Dubai?

Dubai’s allure for foreign investors is undeniable. The city offers a unique blend of advantages from its strategic location and ease of doing business to its low-tax environment and diverse talent pool. Recent news further highlights Dubai’s commitment to attracting foreign investment:

  • Rising GDP: Boasting an anticipated GDP growth of more than 5% in 2024, Dubai outpaces many developed nations, offering fertile ground for businesses to thrive.

  • The UAE Cabinet announces plans to streamline visa processes for foreign investors and entrepreneurs, making it easier to establish a branch of a foreign company in Dubai.

  • Dubai has a 10-year investor visa program, attracting long-term investments and further solidifying its position as a global business hub.

  • The UAE offers a Golden Visa program that grants entrepreneurs long-term residency visas for up to 5 years. Here’s a breakdown of the eligibility criteria and application process:

Eligibility:

  • You must be an entrepreneur with an economic project focusing on technology or future-oriented solutions. Innovation and risk-taking are key!

  • Your project must have a minimum value of AED 500,000, as confirmed by a UAE-based auditor.

  • You need an approval letter from three entities:

    • UAE authorities in the emirate where you plan to operate, confirming the project’s technical or future-oriented nature.

    • An accredited business incubator in the UAE, supporting your project’s establishment in the country.

With these exciting developments, the timing has never been better to consider foreign company incorporation in Dubai. This guide will equip you with the knowledge and resources to navigate the branch formation process seamlessly.

    The Key Conditions To Open Foreign Branch In Dubai, UAE

    open branch of a foreign company in Dubai

    Expanding your business to the UAE holds vast potential, but ensuring compliance is crucial. Here’s a breakdown of some of the key conditions for foreign companies to establish a branch in this dynamic market:

     

    1. Home Ground Legitimacy: 

    Your parent company must be legally registered and operational in your home country, demonstrating a solid foundation.

     

    2. Reputable Roots: 

    A clean track record in your home country signifies responsible business practices, boosting your application’s strength.

    3. Local Licensing: 

    Secure a trade license from the relevant Department of Economic Development (DED) in the chosen emirate. This authorizes your branch to operate legally.

    4. Embrace the Law: 

    Familiarize yourself with and adhere to all UAE laws and regulations, ranging from business conduct to financial reporting.

     

    Different Types of Branch Offices in Dubai

    Expanding your business to Dubai offers exciting opportunities, but choosing the right structure is crucial. Let’s explore the key features of different branch office forms:

    1. Corporate Shareholder:

    • Structure: Multiple shareholders, owning shares directly.

    • Flexibility: Allows single individuals or multiple companies to hold shares.

    • Parent Company: Can be local or international.

    • Considerations: Complex structure, requires more paperwork and potential shareholder disputes.

    2. Branch Company:

    • Structure: Sole ownership by the parent company.

    • Ease of Setup: Simpler structure, fewer legal requirements.

    • Parent Company: Can be local or international.

    • Considerations: Limited to parent company involvement, less financial autonomy.

    3. Representative Office:

    • Focus: Marketing and promotional activities only.

    • No Trading: Cannot engage in commercial transactions.

    • Restrictions: Limited scope of operations, requires additional approvals.

    • Considerations: Suitable for market research and brand building, not revenue generation.

    4. Subsidiary Office:

     

    • Separate Entity: Legally independent corporation, established in Dubai.

    • Greater Flexibility: Offers more operational autonomy and separate finances.

    • Requirements: More complex setup, higher costs, and adherence to local regulations.

    • Considerations: Ideal for long-term commitment and independent operations in the UAE market.

    How to incorporate a Branch of a Foreign Company in Dubai: A Step-by-Step Guide

    Expanding your business to Dubai? Setting up a branch office can open doors to a thriving market. Navigating the process requires careful planning and attention to detail. Here’s a breakdown of the key steps:

    1. Choose Your Branch Form:

    • Decide between Corporate Shareholder, Branch Company, or Representative Office based on your ownership structure and intended activities.

    2. Appoint a Local Service Agent (LSA):

    • Enlist a UAE national LSA to handle legal paperwork, and approvals, and liaise with authorities.

    • Sign a service agent agreement to formalize their role.

    3. File Your Application:

    • Submit a well-prepared application to the Dubai Ministry of Economy.

    • Include details like your company profile, proposed activities, and LSA agreement.

    4. Secure Approvals from Key Authorities:

    • Ministry of Economy: Gain formal approval by submitting required documents.

    • Federal Foreign Companies Committee: Their additional approval is needed for business activities.

    • Relax, It’s Streamlined: The application, complete with a permit letter for the company’s business activity from the Ministry of Economics and Commerce, is forwarded by the Dubai Economics department to the committee, simplifying your involvement.

    • Celebrate Success: Upon approval, you’ll receive a permit letter authorizing your branch operation.

    5. Obtain the Business Trade License:

    • The Department of Economic Development (DED) issues business licenses.

    • Pre-Requisite Approvals: Ensure you have the approvals from Step 4 before initiating this step.

    • Careful Selection: Specify all relevant business activities when applying, as your license restricts your operations.

    • Annual Renewal: Remember to renew your trade license annually.

    6. Register with Commercial Authorities:

    • Finalize your setup by registering with relevant authorities like the Ministry of Economic Companies Register and the Dubai Chamber.

    Additional Considerations:

     

    • Costs: Budget for application fees, legal fees, LSA fees, and potential licensing costs. Timelines can vary depending on approvals and complexity.

    • Compliance: Adhere to local regulations, visa requirements, and renewal processes for smooth operations.

    • Professional Guidance: Consider seeking expert assistance from LFL International Group

    Essential Documents for Your Dubai Branch Office Setup: A Checklist

    Setting up a branch office in Dubai, UAE, opens exciting opportunities for your business. To ensure a smooth process, here’s a checklist of vital documents you’ll need:

    1. Branch Office Registration Forms:

    • Carefully complete the forms provided by the relevant authorities.

    2. Trade Name Reservation Certificate:

    • Secure a certificate confirming your intended branch name’s availability.

    3. Parent Company Documents:

    • Provide the Memorandum and Articles of Association (MAA) that define your parent company’s structure and goals.

    • Include a copy of your parent company’s Certificate of Incorporation, proving its legal existence.

    4. Director Identification:

    • Submit copies of the branch office director’s passport for verification.

    5. Parent Company Approval:

    • Obtain a no-objection letter from your parent company, expressing their support for establishing the branch in Dubai.

    6. Delegation of Authority:

    • Provide a power of attorney authorizing the branch office director to act on behalf of your company.

    7. Board Resolution:

    • Include a formal document issued by your parent company’s board, officially approving the establishment of the branch in Dubai.

    Additional Tips:

     

    • Ensure all documents are translated into Arabic and notarized if necessary.

    • Verify the authenticity and accuracy of all documentation before submission.

    • Consider seeking professional guidance to ensure you have all the required documents and navigate the process efficiently.

    Branch Office Jurisdictions in Dubai: Mainland vs. Freezone

    Setting up a branch office can be a strategic move, but understanding the two main options is crucial: Mainland Branch and Freezone Branch.

    Key Differences:

    • Location: Mainland branches operate directly in Dubai city, while freezone branches are confined to their specific designated freezone areas.

    • Licensing: Both require licenses, but mainland branches obtain them from the Department of Economic Development (DED), while freezones have their own authorities.

    • Local Partner: Mainland branches require a UAE local service agent, while freezones offer full ownership for foreign companies.

    • Taxation: Mainland branches are subject to regular UAE taxes, while freezones can offer tax benefits (For more information, contact our tax expert)

    • Business Scope: Mainland branches can operate across Dubai, while freezone branches are limited to activities within their zone (unless they obtain additional licenses).

    Additional Considerations:

    • Article 313 of the UAE Companies Law governs foreign branch establishment, emphasizing the distinction between branches and representative offices (limited to promotional activities).

    • Ministry of Economy Approval: Both mainland and freezone branches require prior approval from the Ministry of Economy before DED licensing.

    Choosing the Right Option:

    The best choice depends on your specific needs and goals. Consider factors like:

    • Target market: Where do you want to reach your customers?

    • Business activities: What are you planning to do in Dubai?

    • Budget: Get in touch with our consultant to know the pricing differences

    • Freezone benefits: Do the tax advantages and specific freezone offerings align with your strategy?

     

    Remember, seeking professional advice can help you navigate the specifics and make the most informed decision for your branch office setup in Dubai.

    Prescribed areas for foreign company incorporation

    Expanding your business to the UAE holds vast potential, but choosing the right authority for your branch office setup can be overwhelming. Here’s a breakdown of some popular options and their key differentiators:

    Mainland Authority:

    • Department of Economic Development (DED): Permits set up in Dubai’s mainland, covering a wide range of businesses. Requires a local service agent.

    • Benefits: Ideal for general business activities, established infrastructure, and access to the entire Dubai market.

    • Considerations: Requires local partnership, higher costs compared to free zones, and more complex regulations.

    Financial Hubs:

    • Dubai International Financial Centre (DIFC): Focuses on banking, financial, and professional services. Offers a unique legal and regulatory environment.

    • Abu Dhabi Global Market (ADGM): Similar to DIFC, catering specifically to the financial sector. Provides a specialized ecosystem and international recognition.

    • Benefits: Streamlined setup, tax exemptions, and access to a global financial network.

    • Considerations: Restricted to specific industries, higher compliance costs, and stricter regulatory requirements.

    Free Zones:

    • DMCC (Dubai Multi Commodities Centre): A prominent free zone specializing in commodities trading, but also accommodates various other industries. Renowned for its infrastructure, support services, and strong business community.

    • Jebel Ali Free Zone (JAFZA): One of the largest free zones, facilitating diverse business activities. Renowned for its infrastructure and support services.

    • Ras Al Khaimah Economic Zone (RAKEZ): Offers a streamlined process and competitive rates, attracting various industries.

    • Sharjah Media City (Shams): Perfect for media and creative businesses, providing specialized facilities and networking opportunities.

    • Ajman Free Zone (AFZ): Caters to a broad range of businesses, focusing on affordability and ease of setup.

    • Benefits: Tax exemptions, 100% foreign ownership, and simplified regulations.

    • Considerations: Limited access to the mainland market (unless additional licenses are obtained), specific restrictions per free zone, and potential distance from central business districts.

    LFL International Group: Your All-Encompassing Solution for a Smooth UAE Branch Office Setup

    Establishing a foreign branch office in Dubai can be exciting, but intricacies lurk around every corner. LFL International Group goes beyond mere licensing, offering a holistic experience that propels your success:

    Experience You Can Trust: Our seasoned professionals have guided countless businesses, including foreign branch offices, across the UAE. We know the ins and outs, ensuring a smooth and efficient process.

    • Expert Relocation Assistance: Navigate visa processes, find suitable housing, and settle your team smoothly with our expert guidance.

    • Accounting Made Easy: Ensure financial compliance and optimize your operations with our team of experienced accountants.

    • Legal Expertise at Your Fingertips: Benefit from our legal acumen to navigate complex regulations and safeguard your business interests.

    • Comprehensive Compliance Support: Avoid pitfalls and stay ahead of regulations with our team’s in-depth knowledge and proactive approach.

    LFL International Group goes beyond the ordinary, empowering you to:

    • Focus on Your Core Business: Delegate the intricacies of setting up and operating in the UAE to our trusted professionals.

    • Minimize Risks and Delays: Our proven track record and deep understanding of local regulations ensure a smooth and efficient process.

    • Maximize Your Success: Leverage our expertise to unlock the full potential of your UAE expansion.

    Contact LFL International Group today and discover the difference a comprehensive support system can make for your journey into the vibrant UAE market.

    Ready to Unlock Your UAE Potential?

     

    Contact LFL International Group today:

    ● Phone: +971-50-926-5140

     

    ● Email: dubai@lfl-group.com

    Request a Call Back

    Our experienced team can help you stop wasting time and energy on the business formation process.

    +971 (0) 509 265 140 

    +971 (0) 525 977 456