The United Arab Emirates is of a great interest for the opening branches and representative offices of foreign companies.
And there are a lot of reasons for it. Among them are new business opportunities, profitable taxation, profitable and reliable legislative base, etc.
In addition, if you decide to conduct business directly in the Emirates, opening a subsidiary / branch of your existing company becomes an absolutely necessary condition for working in Dubai, the UAE.
When you open a branch / office there are many different questions. This is especially related to the specific nature of UAE corporate law, which provides the possibility of registering various types and forms of companies in various Emirates, and often having a markedly different status and opportunities for permitted business activities.
Today in Dubai, there are already a huge number of companies from a variety of countries and with a wide variety of specializations. A significant number of them are branches / subsidiaries of foreign companies. At the same time, their number continues to grow significantly from year to year.
So, opening a branch of a company is a great opportunity for starting a business in the UAE. According to local legislation, the branch is “the continuation of the parent company, which bears full responsibility for it”. More than 3,000 branches of foreign companies have already been registered in the United Arab Emirates. They include branches from such countries, as the United Kingdom, the United States, France and India. This form of ownership allows you to enter the UAE market, but at the same time to control business from abroad while retaining property rights.
There are several reasons to open a branch in the UAE:
– Strategic location at the crossroads of world trade routes.
– Access to the growing market of the MENA region in a stable and safe harbor.
– Favorable tax system: zero interest rate of corporate income tax received by branches of foreign companies.
– Simple administrative processes: a branch can be opened within a few days.
– Relatively low cost of entering the new market. To create a branch, the authorized capital is not required – it is enough to pay standard fees and make deposits.
There are several legal forms of companies that meet different business objectives.
– Branch Company. It is the most common form in which the parent company remains the sole owner, no authorized capital is required.
– Corporate Stakeholder. It is a branch in which a foreign company and an individual shareholder have shares in the business.
– Representative Office.
– Subsidiary: Individual legal entities that are managed from the UAE.
The difference between opening a representative office and opening a branch in the UAE
The representative office, in fact, is a continuation of the existing business, which can be either in the UAE or abroad.
The most important difference between a branch and representation relates to business activities. While the branch can conduct business in the UAE and make a profit, the representative office can not. The representation must transfer all its work to the parent company.
Then why open an office in the UAE?
First, it can be a very cost-effective way to enter the local market. Usually, when opening a representative office in the UAE, there is no requirement for an authorized capital. Current costs are also lower.
In fact, the representative office acts as a powerful marketing and advertising tool for your existing business. Moreover, these opportunities are available at a low price and with the opportunity to use favorable tax conditions.