Setting up a Branch Office in Dubai, UAE
Planning to expand your business in the UAE? Learn how to open a branch office in Dubai with this detailed step-by-step guide for international companies.
How to Open a Branch of a Foreign Company in Dubai, UAE
Expanding your business into Dubai isn’t just about growth but also positioning. Dubai has become a hub for international companies thanks to its central location, strong infrastructure, and favourable tax regime.
But entering this market means making a few critical decisions early on. One of the most important is choosing the right legal structure for your business.
For many multinational firms, setting up a branch office in Dubai, UAE, is a smart, straightforward choice. It allows you to operate under your existing corporate umbrella while tapping into Dubai’s local economy. But while it may seem simple, there are essential rules, requirements, and responsibilities that come with it.
This guide breaks it all down. You’ll learn what a branch office is, what it takes to set one up, and the key legal and operational points to keep in mind.
If you’re planning your company’s next move into the UAE, this is where to start.
What is a Branch Office in Dubai?
A branch office in Dubai is an extension of your parent company abroad. It is not a separate legal entity. It carries out the same activities as the head office. The branch is fully owned by the foreign company and can generate profits inside the UAE.
Why Set Up a Branch Office in Dubai?
Dubai offers a business-friendly environment, excellent infrastructure, and strategic global access. Here’s why many international firms choose to open a branch in Dubai:
- 100% foreign ownership allowed
- Access to Middle Eastern, African, and South Asian markets
- Tax advantages
- Modern banking and legal systems
- Skilled workforce and professional services
Key Differences Between a Branch Office and a Subsidiary
| Feature | Branch Office | Subsidiary |
|---|---|---|
| Ownership | 100% foreign-owned | May require local shareholding (outside free zones) |
| Legal status | Extension of parent company | Separate legal entity |
| Activities | Must match parent company | Can vary |
| Liability | Parent company is liable | Separate liabilities |
Who Can Open a Branch Office in Dubai, UAE?
Setting up a branch office in Dubai is not for every business. It’s best suited to foreign companies that are already operational and looking to expand their footprint in a strategic market. The structure works well when you want full ownership, brand continuity, and direct market access without creating a completely new legal entity.
This route is ideal for:
- Multinational companies
- Well-established foreign businesses
- Service-based companies (legal, consulting, finance, tech)
- Manufacturing firms expanding operations
Industry-Specific Approvals: What You Need to Know
Not all business activities fall under the same umbrella. Some industries require special approvals from sector-specific regulators. If your business deals in finance, education, healthcare, media, or aviation, you’ll need an extra layer of permissions.
Below you will few examples of business activities:
Finance
For financial services, approval from the Central Bank of the UAE is a must. They assess your business model, capital adequacy, and risk profile before giving the go-ahead.
Healthcare
If you’re setting up a medical clinic, wellness center, or healthcare consultancy, you’ll need clearance from the Dubai Health Authority (DHA). Licensing standards here are strict and often include site inspections.
Education
Institutions or training centers must pass through the Knowledge and Human Development Authority (KHDA). This includes everything from curriculum reviews to staff qualifications.
Media
Any media-related activities like publishing, broadcasting, or content creation must be approved by the National Media Council (NMC).
Our EZONE team will assist in obtaining the necessary approvals for setting up branch offices in these industries.
Taxation and Compliance
Corporate Tax
The UAE introduced a federal corporate tax starting in 2023. If your branch generates more than AED 375,000 in annual profit, you’re subject to a 9% tax rate.
- Tax is based on net profit.
- Deductions are available, but documentation is key.
- You must register with the Federal Tax Authority (FTA).
VAT (Value Added Tax)
If your branch’s annual turnover exceeds AED 375,000, VAT registration in Dubai becomes mandatory. The standard rate is 5%.
- Applies to most goods and services.
- Quarterly returns are required.
- You need to issue tax invoices.
Economic Substance Regulations (ESR)
Some business activities require you to meet ESR compliance. This includes demonstrating real economic activity within the UAE.
If applicable, you’ll need to:
- Maintain local operations.
- Employ UAE-based staff.
- File an annual ESR notification and report.
Banking for Branch Offices in Dubai
One of the most critical but often underestimated steps in setting up your branch office is opening a corporate bank account in the UAE. Without it, you can’t manage local transactions, pay employees, or invoice clients effectively.
Opening a bank account in the UAE can take some time, especially for foreign-owned entities, due to the UAE’s strict banking and compliance regulations.
Knowing what’s required ahead of time will save you frustration and speed things up. Once your branch is licensed, the next step is opening a business bank account.
Documents Needed:
- Trade license
- MoE approval certificate
- Passport copies of directors and signatories
- Lease agreement
- Company structure chart (sometimes requested)
Tips for a Smooth Process:
- Choose a bank that has experience working with international firms.
- Be prepared for compliance checks. UAE banks are strict due to global AML rules.
- Some banks may ask for a local utility bill or proof of address.
Popular Banks to Consider:
- Emirates NBD
- Mashreq Bank
- Abu Dhabi Commercial Bank (ADCB)
- HSBC Middle East
Get expert assistance from our team in opening your branch bank account in the UAE.
Hiring, Visas, and Labour Rules
Setting up a branch of a foreign company in the UAE requires careful planning when it comes to hiring employees. From securing the right talent to ensuring compliance with local labor laws, having an in-house team is essential for smooth operations. The UAE has a well-structured system for obtaining visas, work permits, and adhering to labor regulations, making it easier for businesses to onboard employees efficiently while staying compliant with government requirements.
Visa Quota
The number of visas you’re allowed depends on your office size. As a general rule:
- One visa per 80 to 100 square feet of office space.
Employment Contracts
You must issue employment contracts through the Ministry of Human Resources and Emiratisation (MOHRE). These must be in Arabic and outline salary, hours, benefits, and duties.
Work Permits and Residency
Once the offer letter is accepted:
- Apply for a work permit
- Undergo medical testing
- Complete Emirates ID registration
- Finalise the residency visa
Emiratisation
Some sectors now require Emirati nationals in specific roles. Check if your sector has a quota or recommendation. Keeping employee files, issuing timely contracts, and renewing visas on time are critical to avoid penalties.
Compliance Requirements for Setting Up a Branch Office
- Trade License Renewal: Must be renewed annually through the Department of Economy and Tourism (DET). Start early to avoid last-minute delays.
- Lease and Ejari Renewal: Your office lease must remain valid and registered under Ejari. Any lapse can affect your ability to renew visas and licenses.
- Audit and Accounting: Maintain up-to-date financial records. Some branches, depending on their activities, may be required to undergo an annual audit by a certified auditor in the UAE.
- Corporate Tax Filing: Submit your corporate tax return to the Federal Tax Authority (FTA) before the annual deadline. Late filings can result in penalties.
- VAT Returns: If VAT-registered, you must file quarterly returns, even if there were no taxable transactions.
- ESR Reports: If your activity falls under ESR scope, submit the annual notification and full report, including economic substance proof (like local employees and operational expenses).
- Immigration Card and Labour Card Renewals: These are essential for managing visas and work permits. Letting them expire can suspend your ability to hire or renew visas.
- Beneficial Ownership Register (UBO): Ensure your UBO records are updated and submitted as per UAE regulations.
- Anti-Money Laundering (AML) Compliance: If your branch deals with finance, consultancy, or real estate, you may need to register with goAML and meet AML reporting standards.
Failing to follow these steps could lead to fines or a suspended license. Using a compliance calendar and working with our PRO service experts in Dubai will help keep you on track and avoid penalties.
Branch vs. Other Business Structures
| Feature | Branch Office | Free Zone Company | Limited Liability Company (LLC) |
|---|---|---|---|
| Ownership | 100% foreign-owned | 100% foreign-owned | May require local partner (for some activities) |
| Legal Identity | Same as parent company | Separate entity | Separate entity |
| Activities | Must match parent | Limited to zone-approved | Wide range (depends on license) |
| Liability | Parent company liable | Limited to UAE branch | Liability limited to LLC |
| Mainland Access | Yes | No (unless via distributor) | Yes |
| Setup Speed | Moderate | Fast | Moderate to slow |
| Local Service Agent Required | Sometimes (depends on activity) | No | Depends on activity |
| Cost | Moderate | Lower to moderate | Can be higher depending on structure |
Pros for Setting Up a Branch Company in Dubai:
- Separate legal identity
- Broader range of business activities
- Can trade freely in the mainland
Cons for Opening Up a Branch Company in Dubai:
- May require local partner (for some activities)
- Setup cost can be higher
Final Thoughts
A branch office offers international companies a direct path into Dubai’s economy. It gives you full ownership, access to local markets, and continuity with your existing operations. But it also comes with responsibility, compliance, reporting, and clear oversight from regulators. With the right plan and support, you can set up with confidence.
Thinking about expanding into Dubai? Talk to our business setup consultants in Dubai and get clarity on every step—from licensing to launch. Let’s help you build your branch company the right way.
FAQ’s for Starting a Branch Office in Dubai
Yes. A branch office is a fully licensed entity under UAE law. Once you've obtained your commercial license and opened your business bank account, you're legally allowed to invoice clients for your goods or services. Invoices must be issued in AED and must comply with UAE VAT requirements if your branch is registered for VAT.
Yes, foreign branches are allowed to hire international employees. However, the number of visas you can obtain is linked to your office space and quota as determined by MOHRE. You'll need to follow the UAE's visa process, including work permits, medical testing, Emirates ID registration, and visa stamping.
Yes, the law allows a foreign company to register multiple branches across different emirates. Each branch must have its own license and physical office, and the business activity must remain consistent with the parent company. This can be a strategic move if you're looking to serve clients in multiple locations across the UAE.
Yes, if the branch's annual net profit exceeds AED 375,000, it is subject to the UAE corporate tax rate of 9%. The tax is applied to profits generated within the UAE, and foreign income may be excluded depending on double taxation agreements and the nature of operations. Your branch must register with the Federal Tax Authority and file annual returns to remain compliant.
