WHAT IS A BRANCH OFFICE?
A branch office is a location, other than the main office (parent company), where a business is conducted. Most branch offices may consist of smaller divisions of different aspects of the company such as accounting, marketing, and human resources. The most common structure for foreign companies to expand to the UAE and retain 100% foreign ownership is through establishing a branch office. Under the law, a branch office is an extension of the parent company and not a separate legal entity. Therefore, the parent company holds responsibility for any liabilities of the branch office.
WHAT CAN A MAINLAND BRANCH OFFICE DO IN THE UAE?
With a mainland branch office, the company can fully conduct business, contract with local companies and governments, open a corporate bank account, apply for UAE residency visas, invoice clients/customers and provide goods and services.
WHAT ACTIVITIES CAN A BRANCH OFFICE PERFORM IN DUBAI & THE UAE?
Foreign companies are permitted to establish wholly-owned branches in the UAE. However, a branch office is limited in the activities that it may conduct within the UAE. As per Article 314 of the Commercial Companies Law the branch office must operate and have the same activity as the parent company.
IS A UAE LOCAL SPONSOR REQUIRED FOR A BRANCH OFFICE?
Foreign entities looking to establish a branch office or representative company must appoint a UAE National Service Agent (NSA) or also known as Local Service Agent (LSA). Creation Business Consultants can provide a Corporate National Service Agent / Local Service Agent to complete the trade license formalities and obtain the branch office license.
AVAILABLE LICENSES FOR BRANCH OFFICES IN DUBAI
The available licenses for branch offices in Dubai are mainland registration with DED and the Ministry of Economy. Branch license registration is available via all most of the efree zones.
BRANCH OFFICES AND A NATIONAL SERVICE AGENT
According to Article 314 of the Commercial Companies Law, foreign companies are permitted to establish wholly-owned branches in the UAE. However, these offices are limited in the activities they may conduct within the UAE. For example, while a branch office has the ability to provide goods and services, they are only permitted to provide the same goods and services as the parent company.
Additionally, the UAE Commercial Companies Law (CCL) requires a branch office to have a National Service Agent (NSA) to comply with CCL. Creation Business Consultants can provide an NSA in order to satisfy this requirement and assist with completing the trade license formalities and issuance.
SELECTING A NATIONAL SERVICE AGENT
Also known as or referred to as the Local Service Agent (LSA), a National Service Agent must be appointed to open up a branch company in mainland UAE and it is recommended to select a corporate NSA. Creation Business Consultants’ NSA is an exclusively UAE owned Limited Liability Company (LLC). Fully managed and controlled by CBC, the NSA provides companies with greater protection and confidence using a corporate rather than an individual NSA.
The responsibilities of the NSA to the company are limited to administrative functions such as applying and receiving the license, approvals and permits, labour, immigration and visas (etc.). They do not require any responsibility or financial obligations in connection with the business or activity of the branch. Additionally, the NSA does not own any equity nor participate in the management of the branch office. In return, the NSA will receive a sponsor fee which is to be agreed between the management and the National Service Agent.
Appointing and engaging an NSA consists of drafting a written agreement that must be signed by both parties before a notary public in the respective Emirates. As there is no fixed format for the agreement, the terms and conditions of the agreement should be clearly outlined whilst complying with UAE Commercial Companies Law.
THE PROCESS OF FORMING A BRANCH OFFICE IN THE UAE
Aside from obtaining approvals from government departments, opening a branch company in the UAE requires several applications to be completed. Once the branch application is approved by the emirate where the branch is to be established, such as Dubai, Abu Dhabi or Ras Al-Khaimah (etc.), the next required step is to obtain the approval of the federal government.
Unlike other business structures, share capital is typically not required to set up a branch company. Generally, the parent company pays the standard fees, application fees, and government fees and deposits for the branch incorporation. As such, a branch office provides a cost-effective option to establish a presence in the UAE.
WHAT ARE THE BENEFITS OF SETTING UP A BRANCH OFFICE IN UAE?
- Retaining 100% ownership and control of the branch office.
- Retaining financial control and managerial control of the branch office.
- Legally permitted to do commercial activities in the UAE and can earn profits.
- National Service Agent will deal with governmental authorities on behalf of the branch office.
- Legal authority to employ staff on UAE residency visas.
- The ability to manage all labour and immigration processes.
- Segmenting the organization by establishing a branch office can alleviate the challenges associated with the international auditing process.
- Reducing many administrative burdens within the company (i.e., accounting, bookkeeping, auditing, etc.).
- Tax Benefit – The most attractive option for a branch office setup is 9% corporate tax, one of the lowest corporate tax registration rates globally. Many group companies are looking towards setting up a branch office structure to streamline their operations and receive the tax benefits the UAE has to offer.
- Cost Advantage – Setting up a branch office is cost-effective. There is no requirement for paid-up share capital. The standard government fees will apply for starting a new branch office.
- And more
CREATION BUSINESS CONSULTANTS
We recommend opting for a Corporate LSA/NSA instead of using an individual LSA/NSA. Creation Business Consultants will not have any legal interest in the administration, company, profits, or assets of the branch office. With Creation, you will only deal with our management team who will be available 365 days per year to guide and assist any government requirements. Our responsibility is to ensure that the branch is setup for success and can continue its business in Dubai and the UAE. From assisting with the applications and approvals to completing the corporate documentation, our team of experts will also help in the selection of the ideal location to conduct the business expansion within the UAE. With a Corporate Local Service Agent or National Service Agent, the branch office will mitigate risk with maximize control. For more information email [email protected] or call +971 4 878 6240.
