Dubai is the most important business hub and trading center in the Middle East. The emirate offers great tax advantages to companies and establishing a business there can be very advantageous for foreign traders. When choosing to conduct economic activities in Dubai, investors must also choose the appropriate business form. Two of the most popular legal entities for foreigners are the branch and the subsidiary. Each of them has its own particularities and the differences between a company branch and a subsidiary in Dubai can be relevant to the business plans of the company. Our Dubai lawyers can help you understand these differences and see how one business form or another can be beneficial for your business in Dubai.
Branches in Dubai
Dubai has several important free zones and many foreign companies open branches in these areas that offer advantages for foreign investors. A branch is Dubai needs to be registered with the Ministry of Economy and it cannot perform certain restricted activities, like commercial agencies or restaurants. Also, the nature of this business form allows it to perform only activities similar to those performed by the mother company abroad. A branch in Dubai is not a separate legal entity, but it is bound to the founding company. The company abroad is liable for the branch’s debts and obligations and must appoint a representative in Dubai to take care of the branch’s affairs.
Our attorneys in Dubai can assist you with the company incorporation procedure. The foreign investor will have to submit certain documents when registering the branch in Dubai, including relevant documents about the mother company, a board resolution authorizing the opening of a branch in Dubai, a statement containing the branch’s main operations and activities in Dubai.
Subsidiaries in Dubai
The subsidiary in Dubai is an actual separate legal entity from the parent company. This means that the foreign corporation will no longer be liable for the actions of the subsidiary, as it was the case with the branch. The subsidiary will have its headquarters in Dubai and the management activities will take place in the emirate. Foreign business owners can open a subsidiary in one of the free zones or outside of them if they have a UAE national business partner that owns 51% of the company. This type of legal entity will have to observe the taxation laws in Dubai and will have to obtain the necessary permits for functioning and for hiring employees.
Find out from this video what the best option for your company in Dubai and how you can establish a branch or a subsidiary:
The benefits of branches in Dubai
Besides the tax regime in Dubai’s free zones which probably represents the main advantage of a branch established in this city, one should know that the incorporation procedure is fast, it has low costs and it is subject to share transfers directly to investors or shareholders.
The benefits of subsidiaries in Dubai
Subsidiaries are usually known as flexible and independent structures and due to these important attributes, these entities provide more credibility among customers and potential collaborators on the market in Dubai. This is one of the solid arguments when thinking of establishing a subsidiary instead of a branch in Dubai. Additionally, a subsidiary can be registered in Dubai in a form of a limited liability company, a widely used type of business on an international scale.
Other details you need to know about the branches and subsidiaries in Dubai
The sectors in which a branch or a subsidiary can be established in Dubai are the manufacturing, business consulting, tourism, and commercial trading. Investors can also expand their businesses by establishing the activities as service providers in Dubai. Jebel Ali Free Zones, Dubai Silicon Oasis, Dubai World Central, Dubai Auto Zone, or Dubai Logistics District are only a few of the free zones available for business activities from abroad, whether as branches or subsidiaries. The legal aspects connected to these two forms of business can be explained by our advisors.
Our law firm in Dubai offers company incorporation services and can help you open a company in this emirate. We kindly invite you to contact usif you need assistance from a legal point of view or if you would like to know more about branches and subsidiaries in Dubai.
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