Branch registration in Dubai in 2021
Dubai has become one of the richest regions globally and currently has one of the fastest growing economies. The number of foreign investors in Dubai keeps growing and consequently every year Healy Consultants Group assists our international clients to i) choose the optimum registration strategy for our Client’s specific business activities, ii) complete the A to Z (click here) of opening a branch company in Dubai and iii) supply other post-registration support services (click here).
Numerous multi-national companies approach Healy Consultants Group to register a branch of a foreign company in Dubai to benefit from 100% foreign ownership. Healy Consultants Group will assist to i) secure approvals from the Department of Economic Development (DED) and the Ministry of Economy ii) assist to provide and appoint a UAE national agent (click here) iii) open a UAE corporate bank account iv) assist to locate physical office space; v) complete UAE embassy attestations and Arabic translations and vi) apply for employment and resident visas.
Below is a lot of what you need to know before you venture your company to register a branch office in Dubai.
- A Dubai branch office is 100% owned by the parent company, operates under the same name and is authorized to conduct the same business activity than its parent company. A branch can i) lease office premises ii) issue sales invoice to UAE and international Clients and iii) sign local legal contracts.
- A UAE Branch cannot engage in manufacturing, import nor export of products to/from the United Arab Emirates.
The Benefits of Establishing a Branch
- A Dubai branch can i) sign local contracts ii) issue sales invoice to Clients and iii) hire a local staff.
- A Dubai branch may conduct business with UAE Clients, unlike Free Zone companies.
- Establishing a Branch is one of the safest ways to enter the region as it allows our Client to retain 100% foreign company ownership in UAE. That said, the appointment of a UAE national agent (click here) is required.
- A Branch does not require to appoint a UAE-accredited auditor unlike the LLC.
Challenges with registering a Branch
- While a Branch of foreign company has no paid-up share capital, our Client must deposit a bank guarantee of AED50,000 US$13,650. Furthermore, the banks will charge an estimate fee of AED7,000 (US$1,920) to issue the bank guarantee letter confirming the deposit. Both are needed before the Ministry of Economy issues the branch approval certificate that will allow our Client to start business operations;
- The bank guarantee of AED50,000 i) will be blocked in your UAE corporate bank account; ii) cannot be used by our Client to pay branch office expenses; and iii) will be refunded to our Client only once the branch is deregistered.
- The Ministry of Economy applies a US$274 (AED1,000) fine for each month the Dubai bank will take to open your UAE corporate bank account. Because the average timeframe is 5 weeks, our Clients must budget for a 2 months’ fine payable to the Ministry of Economy. To help our Client plan in advance, Healy Consultants Group already includes these fees on our invoice fees (click here).
- A Branch license renewal is more costly when compared to that of a Dubai LLC set up, as it requires renewing the business license not only with DED, but also with the Ministry of Economy.
Requirements to open a branch office in Dubai
Healy Consultants Group will be happy to project manage our Client’s branch registration in Dubai. The total timeframe to complete a branch registration is 4 months. The following steps will walk you through the process of registration.
- Client due diligence and commitment: Prior to company incorporation, our Client i) settles Healy Consultants’ fees, ii) signs and returns our Client engagement letter and iii) provides us with all the required due diligence documents.
- Planning phase: Our in-house country experts draft a detailed engagement project plan, mapping out by week each step to engagement completion, optimizing transparency, and setting Client expectations for the company incorporation process. Healy Consultants Group then assists our Client to determine i) if the branch is the optimum type of entity ii) what class of business license is required iii) the ideal location for offices in the UAE iv) if and how a UAE national sponsor will help v) Dubai corporate banking and cash flow considerations and vi) employment visa strategies where applicable.
- Document preparation: To begin the process of branch registration our Client must notarize and legalize the parent company documents in the UAE embassy in the country of registration. Some of the documents needed are i) the parent company’s M&AA; ii) Business license; iii) Certificate of Incorporation; iv) a Board Resolution and v) a Power of Attorney. Upon completion, Healy Consultants Group will assist our client to translate the same to Arabic language and attest the set of documents with MOFA in UAE.
- Phase 1: Name reservation and application submission to Department of Economic Development (DED).
Healy Consultants Group i) reserves the proposed company name; ii) obtains initial approval on the business activities, trade name, and identity of partners (if applicable) by completing the application and licensing with the Department of Economic Development and iii) settles the required fees and registers the company for membership with the Dubai Chamber of Commerce and Industry (DCCI);
- Phase 2: Drafting and signing a Local Agent service agreement in the Dubai Courts.
Each branch of foreign company must sign a Local Service agreement with a local agent (UAE national), who will be acting as the company representative with regards to branch registration, license renewal and employment visas only. Healy Consultants Group i) provides our Client with the list of our preferred local agents and the agents’ annual fees; ii) signs a Local Agent service agreement in front of the Dubai Courts.
- Phase 3: Securing business premises.
Our Client supplies Healy Consultants Group with a 12 months lease agreement for their office premises. If required, Healy Consultants Group will assist our Client i) to find an office space according to our client’s needs; ii) to secure a lease agreement with a landlord and iii) to submit a lease agreement for Ejari attestation. Otherwise, Healy Consultants Group will supply virtual office services for 6 months until our Client finds their preferred business address.
- Phase 4: Obtaining initial approval with the Ministry of Economy.
Healy Consultants Group i) settles the fees with the Ministry of Economy; and ii) receives an initial approval certificate of Branch of Foreign Facilities.
- Phase 5: Trade license application.
After submitting the license application, Healy Consultants Group secures a trade license approval with the Department of Economic Development (DED). Under the Dubai law, our Client will apply for one of the following: i) commercial license (for engaging in trading business) ii) industrial license (for setting up a manufacturing business) and iii) professional license (for offering services including accountancy and consultancy).
- Phase 6: Corporate bank account opening
Healy Consultants Group i) prepares a detailed quality business plan to support a Dubai multi-currency corporate bank account opening with a leading local banks such as Emirates NBD, Emirates Islamic, First Abu Dhabi Bank etc.; and ii) secures a one-hour meeting with the bank officer in our Dubai office.
- Phase 7: Company registration finalization
Thereafter, our Client must deposit the required statutory amount to the local bank account. After the deposit is made, the local bank issues the Bank Guarantee Letter necessary to secure a branch registration approval with the Ministry of Economy.
- Establishment Card: For mainland and Free Zone companies, Healy Consultants Group PLC then i) applies for an establishment card from the Ministry of Labour and/or ii) registers the company with the General Directorate of Residency and Foreigners Affairs (GNRD) and iii) registers the company for Value Added Tax (VAT) with Federal Tax Authority (if required).
- WPS registration: As per a labor law every company must use a ‘wage protection system’ through the Ministry of Labour. If required, Healy Consultants will assist our Client to register with the WPS.
- Engagement completion: Healy Consultants Group PLC couriers a full company kit to our Client, including original UAE corporate documents, unopened bank correspondence, and a Client feedback survey.
Dubai branch office de-registrationFor information on de-registering your Dubai branch office, visit this page.
Healy Consultants Group PLC’s Fees
The total cost of setting up a Branch Office in Dubai amounts to US$35,450 on average per engagement. To view the breakdown of our fees please refer to our Branch invoice (click here).