Branch vs. LLC: Which option should your company choose?

Branch vs. llc

Branch vs. LLC: Which option should your company choose?

Branch vs. LLC: Which option should your company choose?

Thinking of starting a business in Qatar? While there are plenty of decisions you will have to make during this process, one of the most important involves choosing the correct structure for your company.

Two of the most common company structure options available to foreign investors setting up a business in Qatar are the branch office and the limited liability company (LLC). In this post, we’ll look at these two options side-by-side, so you can see what each offers, to then decide if either would work for you as you expand your business in Qatar.

Getting Started

Before we get into the finer details of what the branch office and LLC structures offer, we should first get a feel for what you want your business to do in Qatar. Understanding how your business will operate, and what kind of activities you will undertake should make it easier to work out which structure will best suit the needs of your company.

Here are some questions you may want to consider, which should help you narrow your options.

  • Do you require a physical presence in Qatar?
  • Will your business sell products or services?
  • What activities will your business undertake?
  • Where and what is your target market?
  • Do you have a government contract?

Limited Liability Company

The limited liability structure is the most common company structure for foreign investors starting a business in Qatar. Unlike certain other options, the LLC can take advantage of a wide range of trading opportunities within a extensive selection of sectors, and can carry out and fulfil an unlimited number of contracts simultaneously.

Choosing to establish an LLC in Qatar may mean you need a local partner, depending on your chosen business activities. As required by law, this partner must hold a 51% stake in your company, and must be either a Qatari individual, or a company that is wholly owned by Qatari nationals.

However, handing over that stake in your company doesn’t necessarily mean handing over control of your business. By choosing the right partner, you can retain full control of day-to-day operations, while benefiting from your partner’s guidance and knowledge of the local market in Qatar.

Some of the advantages of choosing an LLC include:

  • There are no limitations to the number of products or services an LLC can offer.
  • An LLC is recognised as a local company, which allows it to take part in government and private tenders.
  • An LLC is not subject to withholding tax.

Branch Office

Another popular company structure for foreign investors is the branch office. Allowing foreign investors to establish a presence in Qatar, a branch office essentially acts as an extension of its foreign parent company, which means it can only carry out the same activities as that parent. These activities must be approved in advance by relevant local authorities.

One of the advantages of choosing the branch office structure is the fact that you don’t need a local partner. This allows for full foreign ownership. It’s also worth noting that, unlike setting up an LLC in Qatar, setting up a branch office has no share capital requirements. However, branch offices are fully taxable, unless they are granted a special exemption.

Some of the advantages of choosing a branch office include:

  • A branch office allows full foreign ownership.
  • There is no need for a local partner with the branch office structure.
  • There are no share capital requirements when establishing a branch office.

Choosing Fusion

With years of experience in company formation in Qatar, Fusion can help guide you through the process of setting up your business as you expand within the Middle East. Whether acting as your local partner or simply as your guide, Fusion can offer you the advice and essential services your business needs on your journey towards success.

Want to find out more? Call Fusion today to arrange a no obligation consultation.

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Sarah Chaker
sarah@fusion-me.com
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