Representative Offices Business Setup in Dubai
In case you’re making plans for business setup in Dubai, you’ve got some exciting situations ahead of you. There will be a lot of decisions to make from the type of business to the business activities that you will be launching.
Foreign investors who want to go for a business setup in Dubai and the UAE can carefully pick from several options. Each setup has its own advantages and limitations. However, the two commonly selected formations are the Free Zone and the Mainland LLCs.
Mainland LLCs give entrepreneurs the chance to grow their businesses locally and globally. This is by trading directly with the UAE local market as well as anywhere outside the UAE.
For the Free Zone, a foreign company can benefit from 0% corporate tax. They can also own 100% of the business. But, a Free Zone company can only trade within a certain area or field. They will be needing a license to deal with mainland companies.
Apart from the above, there are other ways for business setup in Dubai. It can be a branch company or it can be a representative office in the UAE. A representative office is basically an extension of an already established business. It can be based locally in the UAE or internationally.
Business setup in Dubai is often confused with branch companies. Nonetheless, there are distinguishing factors between the two. A branch company can operate a business in the UAE and generate profit while a representative office in the UAE cannot. It must hand out all its work to the parent company.
Business setup in Dubai can take a lot of work. However, it can be uncomplicated if you partner with a trusted firm. We, at IsraEmiratesLink, are ready to provide you with services for business setup in Dubai or a representative office.
Here are some points to guide you to get started in opening a representative office for your Business Setup in Dubai:
- Low cost
A representative office can be very effective in breaking into the local market. Often, there is no share capital requirement in opening an office in Dubai. Since most of these business setups are smaller, the operating costs are lower as well. Substantially, representative offices serve as a powerful promotional tool for overseas businesses while enjoying the benefits of a 0% corporate tax rate and business all at a low cost.
- Few sponsorship requirements
For a mainland company, it needs an Emirati sponsor to handle 51% of the business. However, for the representative offices, it takes only Local Service Agents who will take no share or control of your business.
LSAs only act as agents for your business to deal with administrative tasks such as getting a trading license, visa and other applications. But like the mainland, LSAs should also be UAE nationals. They will also be paid at an agreed rate for the role that they will be doing.
- Can be setup with multiple shareholders
Representative offices can be established with up to 50 shareholders, shareholders can either be individuals or corporate entities.
- No paid share capital in advance
There may be no need to share capital when setting up a representative office in UAE. However, this requirement depends on the business activity. Having a company formation firm by your side would help you determine if your business will need an advance share capital or not.
- Apply for multiple visas and sponsor’s dependent visas
As with most mainland companies, multiple visas can be applied depending on the office space that you will be occupying. If you increase the space of your office, the quota for a visa for your company can be increased with the approval of the Ministry of Labor. Sponsor’s dependants can also be applied under representative office. Whether you wish to sponsor your child, spouse or parent, the process will be the usual.
With low operating cost and access to the local market, representative offices can be a stepping stone for businesses who wish to grow their business in the UAE. It is a way to familiarize yourself with the business customs and practices and assess the possibility of establishing a standalone company.