5 reasons to open a branch of a company in the UAE during COVID-19
Opening a branch in the UAE market has numerous benefits. For instance, a branch/office is simply an expansion of an existing business/parent company, no matter where it is located.
A branch/office is a great alternative for foreign companies to expand their business into the local UAE market because it offers a number of benefits.
Subsidiary — Branch Office, it is an expansion of the existing business/parent company, whether it is located in the UAE or abroad, and continues to be responsible for the business operations of the branch office.
Reason № 1
A branch is 100% owned by an investor, and is considered an extension of the parent company, not a separate legal entity. Thus, opening a branch in the UAE provides 100% foreign ownership and allows all activities similar to those of the parent company.
51% of shares are not required to belong to local sponsor, only a local service agent. The local service agent is a UAE citizen or a company wholly owned by a UAE citizen. He has no rights to the assets of the company and only provides services related to the authorities, for example: visa applications. The local sponsor will charge a fixed annual fee for its administrative support, but will not own shares in the company or make any profit. This is why the UAE branch is 100% foreign-owned.
Reason № 2
Cost-effective entry into new markets. Entering new markets, especially foreign markets, can be quite expensive. This is not the case when setting up a branch in the UAE. Because there are no capital requirements, branch offices offer entrepreneurs a great opportunity to grow their business at a low initial cost. In addition, because branch offices are often smaller than the main companies, running costs are also usually lower.
Reason № 3
Strategic position in the world. 1/3 of the world’s population lives within a 4-hour flight radius of the UAE, which means there is access to customers in Asia, Africa and Europe.
Reason № 4
Discounts of up to 30% from the UAE Ministry of Economy. On April 12, 2020, the UAE Ministry of Economy announced a new list of service fees, reflecting a reduction in the 94 services it offers. Affiliates include:
- Application to open a branch or office for a foreign company – 30%
- Application for registration of a foreign company in the registry of foreign companies – 25%
- Sale, merger or acquisition of foreign companies – 25%
- Opening of branches for partnership – 25%
Now this is a fantastic opportunity and another great reason to open a branch office in UAE today by taking advantage of the good discount offered by the UAE Ministry of Economy.
Reason № 5
No audit is required. One can expect to open a branch in the UAE within days, as there is no need to create a separate financial function. All transactions and funds that pass between the parent and subsidiary are legally traceable.
The list of documents required to open a branch:
- Documents requested by the Ministry of Economy to open a branch:
- Passport of the director of the branch;
- Letter -confirmation of the appointment of the director of the branch from the founders of the parent company:
- Decision of the boards of directors to open a branch in Dubai;
- Power of Attorney from the founders of the parent company to the branch director;
- Memorandum of Association, license, certificate of incorporation of the parent company, certified by the UAE Embassy and the Ministry of Foreign Affairs of the country where the parent company was established.
- Letter from the parent company confirming the composition of the founders, director.
- Registration of the lease agreement for the branch office;
- Permission from the municipality;
A branch office in the UAE is opened within a few days. All transactions and funds that pass between the parent and subsidiary companies are legally traceable.