Branch & Representative Offices
Branch of a Foreign Company in Dubai
If you’re thinking about starting a new business in the UAE, you’re in for some interesting options. These overseas entrepreneurs have a variety of alternatives, the two most popular of them being free zones and mainland LLCs.
Free zones provide a slew of tax breaks and allow for 100 percent foreign ownership, but commercial operations and commerce with the rest of the world are restricted. A mainland LLC, on the other hand, permits a foreign entrepreneur to deal directly with the UAE market. Initially, a mainland company could be formed only with the help of a local or Emirati sponsor who has 51 percent stake in the company. But now it has been changed. Foreigners are now given 100 percent ownership on UAE mainland, for numerous activities.
There is yet another option: establishing a representative or branch office in the United Arab Emirates.
A representative office is simply a branch of an existing company, which might be situated in the UAE or anywhere in the world. This is to handle marketing and non-transactional commercial functions. Because they are not utilized for essential company purposes, they are significantly easier to set up than a branch office. These offices are not allowed to earn profit in the UAE, and its operations are restricted to marketing and promoting the products and services of its foreign parent business.
A branch office is a separate office from the parent office that is located in a different place and performs business operations in that location. Different departments, such as HR, Marketing, and Accounting, are housed at these offices. The parent corporation owns the property.
Benefits of Representative Office
The most appealing aspect of this office is a 0% corporation tax rate with no personal income and capital taxes.
No Share Capital
It is feasible to open a representative office in the UAE without a minimum share capital requirement which proves to be a very cost-effective solution.
Prices vary based on the specific location and nature of your business, but the overall setup cost generally comes to approximately AED 100,000
Adequate Energy Supply
Inexpensive and adequate energy supply is one of the benefits of representative offices with competitive import duties and freight charges.
Representative offices extend their operations overseas by marketing their products and services directly to the UAE market, which will help them grow their business at home.
Benefits of Branch Office
Benefit from Taxes
This is possibly the most appealing aspect of a branch office layout. The UAE has a 0% corporation tax rate, making it a highly attractive place to open a branch.
When it comes to foreign auditing, the procedure gets more difficult. To a large extent, segmenting and creating a branch office is beneficial. It is considerably easier to trace the cash that travels between the parent and branch offices, which makes the audit process much easier.
Low Burden of Administration
Setting up a branch office eliminates the requirement for a separate financial department and eliminates the need for audited accounting.
In a nutshell, establishing a branch or a representative office serves as a supporting pillar and an extension of the parent firm, assisting them in capturing the mass market in various parts of the world.
Do you intend to open an office in the United Arab Emirates?
Aon Management Consultants is committed to providing all documentation requirements and local regulation compliance in setting up offices in UAE.