A branch office in Dubai is an extension of a foreign parent company that is located outside of the United Arab Emirates. As a full-fledged business, it can enter into contracts or perform business activities as specified in its license. A branch office doesn’t have a separate entity and distinctly represents its parent company and carries out business under its name.
The purpose of setting up a branch of a foreign company in Dubai is solely to promote and market the products of the parent company, undergo business transactions, forge agreements with other businesses under the name of the parent company, and offer services to its customers.
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Taxation of branches in Dubai
Branches in Dubai are considered non-resident companies, meaning they will be taxed only on the incomes generated in the UAE. As most investors know, Dubai has a very flexible and advantageous taxation system.
An important advantage of foreign companies opening branches in Dubai is that they can benefit from the UAE’s double tax treaties and thus expand the tax rebates offered by the local government. Branches of foreign companies are required to register for VAT in Dubai.
What to consider in opening a Branch Company in Dubai?
The branch office will be required to complete the same activities as the foreign company
For these activities, the parent company must apply for the necessary licenses with the Dubai authorities
The branch in Dubai is not considered a separate legal entity from the foreign company
The parent company will be liable for the obligations and debts of the Dubai branch office
From a taxation point of view, the branch office will be taxed on the income earned in the UAE
The Dubai branch office must bear the same name as the parent company.