How to Set Up a Foreign Branch Office in the UAE?

Foreign Branch Office: An Introduction

Establishing a Foreign Branch Office in the UAE involves creating a registered entity that operates as an extension of its foreign parent company. Unlike a separate legal entity, it conducts business activities under the same name and scope as its parent company, focusing on selling products and delivering services to its clientele.

Setting Up a Foreign Branch Office in the UAE

The process of setting up a Foreign Branch Office in the UAE is designed to ensure compliance with local regulations while enabling foreign ownership up to 100%, with the appointment of a local service agent. Here are the steps involved:

Step 1: Appointment of a Local Service Agent

  • The foreign company must appoint a UAE national or a company fully owned by UAE nationals as a local service agent.
  • The agent initiates the trade name registration with the Department of Economic Development (DED).

Step 2: Approval from the Ministry of Economy (MOE)

  • Submit an application to the Ministry of Economy (MOE) detailing the company’s head office, business nature, share capital, UAE general manager’s name, etc.
  • Required documents include Memorandum of Association (MOA), Articles of Association (AOA), Certificate of Incorporation, Good Legal Standing Certificate of the Parent Company, Board Resolution for Branch Office formation, and Power of Attorney for the UAE general manager’s operational rights.

Step 3: Obtain Commercial License from the DED

  • Upon initial approval from MOE, submit documents to either Abu Dhabi Department of Economic Development (ADED) or Dubai Department of Economic Development (DDED).
  • Required documents include MOE’s initial approval, copies of submitted documents, proposed lease agreement (Tawtheeq in Abu Dhabi, Ejari in Dubai), and engagement letter from a UAE-based auditor confirming company existence and financial statements.
  • The DED issues a one-year commercial license, renewable annually.

Step 4: Acquire Office Space, Visas, and Bank Accounts

  • After obtaining the DED commercial license, secure office premises, obtain visas and labor cards for employees.
  • Open bank accounts, providing detailed Ultimate Beneficial Owner (UBO) information and corporate structure of the Parent Company.
  • All foreign documents must be attested, legalized, and translated for use in the UAE.

Step 5: Ministry of Economy (MOE) Registration

  • Complete the MOE registration within one month of obtaining the Foreign Branch Trade License from DED, avoiding penalties (AED 1,000 monthly, max AED 10,000 annually for delays).
  • The online MOE registration involves uploading required documents, obtaining a username, and paying a refundable Bank Guarantee of AED 50,000 via a local UAE bank.
  • Appoint a local UAE-based auditor to prepare annual balance sheets and financial reports, mandatory for branch renewal.

Conclusion

Establishing a Foreign Branch Office in the UAE offers strategic advantages but demands adherence to intricate legal procedures. Incomplete procedures can lead to costly penalties. Engaging with seasoned business setup consultants such as Brightlink Consulting ensures a seamless setup process. We manage documentation and compliance requirements, offering comprehensive support including acting as your Local Service Agent. Contact us for expert guidance and consultation today.

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