Foreign Branch Company-International

UAE has become an attractive heaven for foreign companies to have a business setup and do an company formation in Dubai or in any part of the UAE. The government has made flexible laws and regulations to enhance, promote and provide the best infrastructure for foreign companies to create a branch in the UAE. UAE has become a global international business hub for the world connecting East and West business districts. This is the reason so many foreign companies have opened their headquarters here in the UAE. As a foreign company, you can legally open a branch office or representative office here in the UAE. Branch Offices (BOs) and Representative Offices (ROs) are at the lowest end of the three tier system of business entities permitted by UAE law. They don’t have their own legal identity and are therefore considered as an extension of the foreign corporation, which is still responsible for their actions. The foreign parent is under direct liability for the conduct of its ‘branch’, and in UAE law, director’s duties continue to apply even after incorporation. When foreign owned, a branch office has the same commercial and company law status as a UAE-owned company. Branches have no legal personality and cannot own or convey property. The limits of liability for branches are those of the foreign company itself.

A representative office is a request to establish a branch in the UAE without any physical presence. Most of the foreign companies dealing with Company Law requiring at least one director must be accompanied by the name and program of the law or official, according to which it is governed, and a statement that the entity agrees to remain in force in relation to its obligations and laws of the state. The main benefit is that the Representative Office would be subject to no UAE source income tax or any other tax on income earned in the UAE. The Representative Office would also have no obligation to maintain audit books, accounts and other records, which could prove useful to many companies that do not have a physical presence in the UAE. A Representative Office is a cost effective means of establishing a business presence in the UAE Business landscape. An Representative Office functions at a lower cost than an LLC due to its close relationship to the parent company. Holders of these licenses are able to conduct business directly in line with the parent companies’ business plan, subject to local market requirements.

The National Service Agent (NSA) has to be established in the UAE, will be held jointly and severally liable with the foreign company for all obligations under the Law, must be a UAE national or, at least, a 100% UAE national-owned entity. It will be responsible for providing services to both branches and regional offices (RO). Each branch of a foreign company uses their own trade name. Activity of the branches and ROs is limited to selling, distributing and supplying goods of the foreign company, in addition to conducting non-financial transactions. The Unified Commercial Registration (UCR) process is an initiative undertaken by the Government of UAE to manage companies’ commercial activities. The UCR and related services are being offered by the Dubai Chamber of Commerce and Industry (DCCI) and Emirates NBD Bank PSC.