What Is a Branch of a Foreign Company in Dubai? Pros and Cons + Examples (2025)

Understanding Branches of Foreign Companies in Dubai

A branch office is a legally dependent extension of a foreign parent company that can conduct business activities in Dubai. The parent company retains full liability for all branch operations and debts.

The UAE removed key barriers in 2024 and 2025. Foreign companies no longer need a UAE local  service agent or AED 50,000 bank guarantee to establish a branch office.

Examples:

• A UK software company can open a Dubai branch to sell directly to UAE clients while using the same business name
• A German manufacturing firm can establish a branch to distribute products across the Middle East market

Features of a Branch Office in Dubai

Branch offices carry the same business activities as the parent company. They can generate revenue, sign contracts, and hire employees in Dubai.

The foreign parent company bears unlimited liability for all branch operations. This includes debts, legal obligations, and regulatory compliance.

Key Features:

• Full commercial activity scope – Can engage in profit-generating business activities
• Same business name – Uses parent company’s exact name with ‘Branch’ designation
• Parent company liability – Foreign parent remains fully responsible for branch obligations
• No separate legal identity – Branch operates as extension of parent company
• Direct market access – Can trade directly in Dubai mainland market

Comparison: Branch vs Representative Office

A representative office can only conduct marketing and promotional activities. It cannot generate revenue or sign commercial contracts.

The table below shows key differences between branch and representative office structures:

Branch Office:

• Revenue generation allowed
• Commercial contracts permitted
• Full business activities
• Annual audit required

Representative Office:

• Marketing and research only
• No commercial contracts
• Promotional activities only
• Limited audit requirements

Registration of a Foreign Company Branch in Dubai

The registration process follows a specific sequence. Companies must obtain Ministry of Economy (MoE) initial approval first, then secure the Dubai Department of Economy and Tourism (DED) trade license.

The process removes the AED 50,000 bank guarantee and UAE national service agent obligations.

Procedure for Registration of a Branch

The registration follows a mandatory sequence: trade name reservation, MoE initial approval, DED trade license, then final MoE branch registration within one month.

Late registration after trade license issuance may result in significant penalties, subject to Ministry discretion. No fixed fine is published, but delays can complicate compliance.

Registration Steps:

• Step 1: Reserve trade name with relevant authority
• Step 2: Submit application for MoE initial approval
• Step 3: Obtain DED commercial trade license
• Step 4: Complete final MoE branch registration within 30 days
• Step 5: Obtain establishment card and visa allocations

Licensing a Branch of a Foreign Company

The Ministry of Economy grants initial approval based on parent company documentation and proposed activities. The Dubai Department of Economy and Tourism issues the commercial license.

Activity scope must match the parent company’s licensed business activities. Branches cannot engage in activities beyond the parent company’s authorized scope.

Examples:

• A parent company licensed for ‘software development and IT consulting’ can establish a branch for those exact activities
• The same company cannot use the branch for ‘retail trading’ unless the parent company adds this activity first

Documents Required for Initial Approval

Foreign documents need full legalization and Arabic translation. The MoE might accept temporary filings while legalization is pending, but fully attested versions must be submitted within 3 months. The grace period is at the Ministry’s discretion and may not apply in every case.

Documents must be current and properly authenticated by the parent company’s home country authorities and the UAE missions abroad.

Required Documents:

• Certificate of incorporation of the parent company
• Memorandum and Articles of Association
• Board resolution authorizing branch establishment
• Certificate of good standing from home jurisdiction
• Audited financial statements (latest 2 years)
• Power of attorney for UAE representative
• Parent company’s commercial registration certificate

Required Documents for Final Registration

Final registration requires additional UAE-specific documentation. All documents must be current and properly formatted according to MoE specifications.

Physical office premises are mandatory. Virtual offices are not accepted for branch registration purposes.

Final Registration Documents:

• Passport copies of authorized representatives
• UAE visa and Emirates ID copies
• Tenancy contract (Ejari) for physical office
• No-objection certificate from relevant authorities
• Bank account opening certificate
• Professional indemnity insurance (if applicable)

Benefits of Setting Up a Branch

A branch allows 100% foreign ownership with direct access to Dubai’s mainland market under the parent company’s established name and reputation.

Learn more about mainland company formation here

Branches can conduct full commercial activities including sales, contracts, and revenue generation. They access Dubai’s strategic location for regional expansion.

Key Benefits:

• 100% foreign ownership – No local partner requirements
• Direct revenue generation – Full commercial activities permitted
• Established brand recognition – Use parent company’s reputation
• Mainland market access – Trade directly with UAE customers
• Regional hub potential – Serve Middle East and Africa markets
• Tax Efficiency – Potential for Optimized Group Structure and Home Country Tax Treaties. Note: UAE Corporate Tax applies at 9% on UAE-source profits above AED 375,000.

Disadvantages of a Branch in UAE

Parent companies remain fully liable for all branch debts and legal obligations. This creates unlimited exposure for the foreign parent company.

Branch activities are restricted to the parent company’s licensed scope. Expanding into new business lines requires parent company amendments first.

Examples:

• If a branch defaults on a AED 2 million contract, creditors can pursue the parent company’s global assets
• A software company branch cannot start trading consumer electronics without first adding retail activities to the parent company’s license

Key Disadvantages:

• Unlimited parent company liability – Parent company remains fully responsible for branch obligations
• Activity restrictions – Limited to parent company’s licensed activities
• Annual operational costs – License renewals and compliance requirements
• Regulatory compliance – Must meet UAE audit and reporting obligations
• Tax complexity – Potential permanent establishment issues in home jurisdiction

Renewal of Branch Registration

Branch registration requires annual renewal with the Ministry of Economy. Companies must file renewal applications in the month before expiry to avoid late fees.

Late renewal may result in penalties and service disruption. While specific fines vary, timely submission before expiry is critical. The process requires updated, audited financials and compliance documentation.

Examples:

• A branch registered in March 2024 must file renewal by March 2025 to avoid late fees
• Renewal requires current audited financials and confirmation of ongoing compliance with UAE regulations

Legal and Compliance Considerations

Federal Law No. 2 of 2015 on Commercial Companies governs branch operations. The 2024 amendments removed bank guarantee and service agent requirements.

Branches must comply with UAE corporate tax, VAT registration, and economic substance requirements based on their activities and revenue levels.

Examples:

• Branches generating over AED 375,000 annual revenue must register for UAE corporate tax at 9%
• From 2025, multinational groups with €750M+ in global revenue may be subject to a 15% domestic top-up tax under OECD Pillar Two rules, including their UAE branches.

Law Governing Branch Registration

Federal Law No. 2 of 2015 on Commercial Companies and Ministerial Resolution No. 138 of 2024 govern branch registration and operations.

The 2024 resolution eliminated bank guarantee requirements and simplified documentation procedures. Article 339 of Commercial Companies Law sets audit requirements.

Examples:

• Under the 2024 changes, companies no longer deposit AED 50,000 guarantees with authorized UAE banks
• Ministerial Resolution 138/2024 allows temporary document filing with 3-month completion periods

Branch vs LLC Compliance

The table below compares compliance requirements for branches versus UAE limited liability companies:

Both structures require similar compliance procedures, but liability exposure differs significantly between the two options.

Branch Compliance:

• A branch is not a separate legal person. The foreign parent bears full liability
• The Ministry of Economy requires yearly renewal for registered branches.
• Annual audits must comply with UAE audit requirements by a licensed local auditor, regardless of parent company standards.
• Branches can only engage in the exact licensed activities of the parent company.

LLC Compliance:

• The liability of each shareholder is limited to the amount of their capital contribution.
• Requires annual trade license renewal and compliance with Emirate-level authority obligations.
• UAE GAAP audit standards
• Broader activity scope permitted

Why Work with Juriszone for Branch Setup

Juriszone offers comprehensive business setup services for UAE branch establishment and ongoing operations. The firm provides end-to-end support from initial planning through operational compliance.

Professional representation minimizes regulatory risks and ensures compliant operations throughout the branch lifecycle.

Juriszone Services:

• Regulatory expertise – Deep knowledge of UAE commercial laws
• Established relationships – Direct connections with MoE and DED
• Complete documentation – Professional preparation of all required documents
• Compliance management – Ongoing regulatory monitoring and updates
• Renewal services – Annual registration and license renewal management
• One-stop solution – Comprehensive support from setup through operations

Frequently Asked Questions

1) Do we still need a Local Service Agent (LSA)? No. The Ministry of Economy’s 2024 regime removed the legacy LSA requirement for foreign branches. Some older checklists still mention it,those are outdated.

2) Is the AED 50,000 Ministry of Economy bank guarantee still required? No,also removed under the new regime. If you see MoE pages that still list it, treat them as not yet refreshed.

3) Who’s liable for the branch’s obligations? The branch is not a separate legal person; the foreign parent remains fully liable for UAE branch debts and obligations. If you need ring-fencing, choose a subsidiary (LLC) instead.

4) Can the branch carry on different activities from our HQ? Generally no. A branch must mirror the parent’s licensed activities. If you plan new or unrelated lines, consider a separate entity.

5) Can we use a different trade name for branding? Typically, the trade name follows the parent’s name with a “Branch” suffix (varies by registrar). Expect pressure to align with the parent’s name.

6) What office setup is required—can we use a virtual office? A physical UAE address is required for branch registration; virtual offices don’t meet the rule.

7) How are mainland branches taxed under Corporate Tax (CT)? Standard CT applies at 9% on taxable profits above AED 375,000 for financial years starting on/after 1 June 2023.

8) Do large multinational groups face a 15% top-up (Pillar Two)? Yes. From 1 January 2025, the UAE applies a 15% Domestic Minimum Top-Up Tax (DMTT) to groups with consolidated revenue ≥ €750m (in 2 of the previous 4 years).

9) Is an annual audit required? Yes, branches must appoint UAE-licensed auditors for annual financial audits. Auditor appointments cannot exceed 6 consecutive years.

10) What payroll rules apply (WPS)? Pay salaries through the Wage Protection System (WPS)—mandatory on the mainland.

11) Are there Emiratisation quotas? Yes for mainland companies with 50+ employees: meet semi-annual/year-end targets for Emiratis in skilled roles. Penalties apply for shortfalls.

12) Do we need to file UBO information? Yes. Keep your UBO and Nominee registers up to date according to Cabinet Decision 109/2023.

13) What documents must be legalised for setup? Board Resolution/POA, constitutional docs, and auditor appointment typically require home-country notarisation + UAE Embassy attestation + UAE MoFA attestation before MoE accepts them.

14) What’s a realistic setup sequence to avoid delays? Legalise docs → MoE initial approval & branch registration → trade license → lease office (Ejari) → bank account onboarding → WPS setup → establishment/immigration cards → employee visas.