Setting up a representative office in Dubai, UAE gives foreign companies a great advantage of promoting and marketing their existing business in the home country with the added benefit of breaking out into the growing UAE market. Defined as the extension of the parent company, the representative office is a cost-effective company formation method that enables businessmen to take full advantage of the UAE’s zero corporate tax regime. To top it all, the benefit of no share capital requirement is reason enough for overseas businessmen to open a representative in Dubai.
Unlike the mainland LLC business setup, a representative office can have 100% ownership. While the LLC legal structure requires a local sponsor who holds 51% ownership, the representative office only needs a local service agent who doesn’t hold any company shares. Therefore business setup consultants recommend overseas entrepreneurs who hold an existing company in their home country to open a representative office in Dubai.
How to Differentiate Between a Representative Office & Branch
Entrepreneurs should not confuse a representative office with a branch office as the two entities may appear similar but are different in various aspects including the activities they are allowed to perform. The representative offices are not allowed to conduct trade activities in the UAE and should source their work back to the parent company in the home country. Since they are mainly used to promote the parent company, banks, government, and real estate companies are seen opening representative offices in the UAE. In contrast, the branch office can conduct business in the UAE market and make profits.
How to Setup a Representative Office in Dubai?
Foreign businessmen can open their representative offices in Dubai in easy steps. The UAE Ministry of Economy is regulating the representative office but the Dubai Department of Economic Development (DED) is the competent authority that issues the trade license. Foreign entrepreneurs can appoint a business setup consultant to speed up the licensing process and also for secure approvals. Follow these steps to open a representative office in Dubai:
1. Identify Local Service Agent
Foreign entrepreneurs should appoint a UAE national as a Local Service Agent (LSA), which is a prerequisite for establishing a representative office in Dubai. The LSA would mainly take care of the processes like visa, communication with the government on behalf of the foreign entrepreneur. The LSA’s role is restricted to handling administrative matters only and is a contractual relationship.
2. Initial Approval from DED
After finalizing a trad name and a business activity the businesses can approach the DED for applying for approval. The regulations and guidelines for selecting the trade names must be followed. The foreign business person can hire the services of Dubai based company formation specialists in managing these processes on his behalf.
3. Approval From the Ministry of Economy
As mentioned earlier, the UAE Ministry of Economy (MOE) is the regulator of representative offices. While applying with the MOE, businesses need to ensure that the application contains information including the business activity, permission for setting up the office and relevant documents including certificate of incorporation of the parent company, Memorandum, and Articles of Association (MOA), POA, COGS, etc. All the documents submitted to the MOE should be translated into the Arabic language. An initial fee of AED 15,000 has to be paid along with the security of AED 50,000.
4. Issuance of License by DED
Once the MOE goes through the application and the approval is granted, the DED will issue the license for setting up the representative office. The license is being issued for one year but could be renewed on an annual basis.
Documents Required to Establish a Representative Office in UAE
- Passport copies of the shareholders/directors of the parent firm
- A copy of the manager’s passport
- Tenancy Contract (Ijari)
- NOC from Visa sponsor of the shareholders
- Power of Attorney in favour of Manager ( notarized and attested by UAE Embassy in parent firm’s home country)
- Board Resolution to form a representative firm in Dubai
- Copy of certificate of incorporation of the parent company
- Copy of MoA of the parent firm
- Certificate of Good standing of the parent company
- Certificate of Incumbency of the parent company
The paperwork and documents required for the process may appear to be immense. However, the companies can hire the services of the best business setup consultants in Dubai to make the paperwork and documentation hassle-free.
Why Choose Jitendra Business Consultants?
The process of opening a representative office in Dubai, UAE becomes easier when the overseas entrepreneurs hire the services of efficient company formation specialists. Jitendra Business Consultants (JBC) is an unrivalled name among the business setup consultants in Dubai, UAE. JBC’s long list of satisfied clients is proof of the company’s expertise and experience in helping foreign investors establish their businesses in Dubai.