Difference between a Branch Office and Representative Office in UAE
June 12, 2021
Planning to set up a business in the UAE could open doors to a complete turnaround in your life. The UAE is a land of experimenting, investing, and reaping the fruits of labour when it comes to business. It is what every entrepreneur dream of in terms of opportunity, favourable business conditions, geographic location, rules & laws, and liquidity options.
Overseas entrepreneurs willing to set up a Business in Dubai/UAE have a plethora of options to choose from, in terms of zones or jurisdictions. The two most commonly explored are free zone and mainland. Both of them carry their own set of pros. and cons. Free zones can offer 100% foreign ownership, but the same in the mainland can be limited.
What is a Branch Office and Representative Office in UAE?:
Representative Office in UAE: A representative office essentially is an extension of an already existing business- which may be located in the UAE itself or overseas. That may often lead to it being confused with a branch office, however, the difference lies in the fact that the business activity and work procedures of both are different. A branch office can conduct a business in the UAE to turn a profit, a representative office in the UAE however cannot.
Branch Office in UAE: A branch office is a location, apart from the main office where a business is conducted. Brach offices mostly consist of various smaller divisions of different aspects of the company such as human resources, marketing, and accounting. The Legal structure available in both cases-Mainland and Free Zone are branch.
Following are the three basic differences between a Branch office and a representative office in UAE:
- Activities: A representative office does not engage in any type of sales, service, or commercial activity whatsoever. It exists solely for the promotion of the parent company. A branch office however can carry out both the activities.
- Sponsorship: Sponsorship concept is applicable only in case of Mainland branch office.
- Banking Procedures: The refundable deposit bank guarantee is also applicable only in case of Mainland branch office.
In a nutshell. a representative office is a branch office that is established by a parent company that is useful in promoting a Foreign Company in the UAE market. A representative office cannot export, import, or sell in the UAE. A representative office practices only promotional business for the products and services of its parent company. A branch office on the other hand can conduct business in UAE along with just a promotional purpose.
Why Set up a Representative office in UAE/ Dubai?
One of the major reasons why you can opt for setting up a representative office in Dubai, keeping in mind your specific needs, is that it is extremely cost-effective. There is usually no requirement of a capital share to open a representative office. The business operations are usually smaller, as most of the resources remain with the parent company- running costs are lower as well. With free zone setups, you can maintain 100% ownership of the company since it is considered an extension of the parent company.
A representative office acts as a powerful promotional and marketing tool for existing businesses. This ensures a great foothold in the growing UAE market which expanding your business at home- at low costs and favourable tax conditions.
Advantages of a Representative office:
- Easily setup
- Minimal sponsorship requirement
- Straightforward pricing structure
- Setting up with multiple shareholders
- Applying for multiple visas
- Possibility of no paid upfront share capital
Why Set Up a Branch Office in UAE/ Dubai?
The branch office is one of the most important business structures which can be established by a foreign company for making investments in specific industries in Dubai. They are a more convenient option as they engage in commercial activities and make profits compared to the liaison office. The branch office is an extension of the parent company.
For taxation rules, the branch offices offer the same advantages as any other local company in Dubai, including repatriation of profits without any additional surcharges when setup in Dubai.
Advantages of Branch Office in UAE:
- Favourable tax system
- Enter the MENA region from a stable base
- Easy administrative process and auditing
- Strategic business location
How does MBG Help?
Whether it is a branch office or a representative office e that you wish to set up in any of the UAE commercial zones, our team of experts specialized in Business Setup Services in UAE can help you through the process. We are here for you right from guiding you about it to helping you choose your commercial zone to set up a business, liquidity options, complementary services after the setting up of business.
Whatever your needs related to Business Setup services in the UAE, we are here for you right from the beginning to the end.
To know more about our Business Setup Services specific to UAE/ Dubai, click here
You can directly reach out to us for your query related to "Setting up a Business in UAE/ Dubai":
Whatsapp: +91 88601-90008,
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