Opening a branch of your business in the UAE market has numerous advantages. Basically, a branch/office is simply an extension of an existing business/parent company – no matter where it is based.
A branch/office is an excellent alternative for foreign companies to expand their business to the local UAE market as it provides numerous benefits.
Basically, a branch subsidiary is an extension of an existing business/parent company – whether based in the UAE or overseas and continues to be responsible for the commercial activities of the branch.
Reason #1 – The branch is 100% foreign-owned;
The branch is considered an extension of the parent company and not a separate legal entity. Thus, opening a branch in the UAE provides 100% foreign ownership and allows you to carry out all types of activities similar to those of the parent company.
A 51% local shareholder is not required to open a branch in the UAE, but only a local service agent is required. The local service agent is a UAE citizen or a wholly-owned UAE citizen. LSA does not have any assets on the company and only provides services related to the authorities, for example: applying for a visa.
The LSA will charge a flat 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 overseas, can be quite costly. This is not the case when a branch office is established in the UAE. Since there are no capital requirements, affiliates offer entrepreneurs an excellent opportunity to grow their business with low upfront costs.
In addition, since the branches are often smaller than the main companies, the running costs are usually lower as well.
Reason #3. Strategic position in the world;
A third of the world’s population lives within a 4-hour flight radius from the UAE, which means you can easily reach your customers in Asia, Africa, and Europe.
Reason #4. Discounts 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 94 services it offers. Branches include the following:
- Application for opening a branch or office for a foreign company – 30%
- Application for registration of a foreign company in the register of foreign companies – 25%
- Sale, merger or acquisition of foreign companies – 25%
- Opening branches for partnership – 25% Now, this is a fantastic opportunity and another great reason to open a branch in the UAE today, taking advantage of the good discount offered by the UAE Ministry of Economy.
Reason #5. No statutory audit is required.
There is nothing more complicated than a statutory audit, which creates a high level of costs and time for a company.
Starting an affiliate helps to overcome most of this pain. You can expect to open a branch in the UAE within a few days as there is no need to create a separate finance function. All transactions and funds that pass between the parent company and the subsidiary are legally tracked.
Documents that the Ministry of Economy requests to open a branch
List of required documents for opening a branch:
- Passport of the director of the branch;
- Letter of 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 head of the branch;
- Memorandum of Association, license, certificate of registration of the parent company, certified by the UAE Embassy and the Ministry of Foreign Affairs of the country where the parent company was opened.
- Letter from the parent company confirming the composition of the founders, directors.
- Registration of the lease agreement for the branch-ejary;
- Permission from the municipality; A branch in the UAE opens within a few days as there is no need to create a separate financial function. All transactions and funds that pass between the parent company and the subsidiary are legally traceable