Setting Up a Branch Office in Dubai for a Foreign Company: A Comprehensive Guide

If your company is planning for regional expansion, setting up a branch office in Dubai will be a hard choice to ignore. Dubai attracted $11 billion in foreign direct investment capital, showing strong confidence from foreign investors in Dubai as a global business hub.

A branch office is a legal extension of a foreign parent company, which means it usually operates under the same name and remains linked to the parent company legally and financially.

While the overall process of setting up a branch office in Dubai is quite similar, some steps can vary depending on whether you’re setting up the branch in the mainland or a free zone, because each one has its own procedures.

In this guide, you’ll learn:

• What a branch office in Dubai actually is and how it works.
• The difference between a branch office and a subsidiary.
• Whether mainland or free zone registration is better.
• What are the documents and steps required.
• What are the costs and post-license requirements to plan for.

Branch office vs Subsidiary

When foreign companies want to enter the UAE’s market, they become confused about the two popular choices when setting up a branch office in Dubai. Should they choose a branch office or a subsidiary?

Each one has its own advantages, so you need to understand the difference between them. You will find below a quick comparison to help you clearly understand the branch vs subsidiary in UAE.

Where to Register Your Branch in Dubai: Free Zone vs Mainland

Once you decide to open a branch office in the UAE, your next step will be to choose either a free zone or the mainland. The right choice will depend on your business needs and how you plan to grow in the UAE.

Documents You’ll Usually Need (Parent Company + Manager)

When setting up a branch office in Dubai, you’ll need to prepare some documents required by the licensing authority. While most requirements are similar, some details may vary depending on where you register. For example, free zones like DMCC may have different requirements compared to mainland authorities, such as the DET. You’ll find below the common documents you’ll need during the registration process.

Step-by-Step: Setting Up a Branch in a Dubai Free Zone

If your company wants to open a branch in Dubai and benefit from a fast setup process, the Dubai free zones will be the best choice. Some free zones present a simple setup approach, such as DMCC, and the registration process only takes around 10 working days. You'll find below a guide for the setup process to help you understand how the branch's registration process actually happens.

Step 1: Choose the right free zone

When you open a branch office in Dubai, you have to choose a specific free zone that matches your branch’s business activities, because each free zone focuses on a specific sector, which determines the activities your company is allowed to do.

Popular free zones to consider:

• DMCC for commodities and trading.
• Dubai Internet City for tech companies.
• Dubai Media City for media services.
• JAFZA for logistics and manufacturing.
• IFZA for Services and Consulting.
• DIFC for finance.

Step 2: Prepare the documents

Gather all the required documents that verify your parent company. The completeness of the documents helps you open a branch office in Dubai much faster and avoid any delays that could happen.

Common documents needed:

• Parent company incorporation certificate.
• MoA/AoA documents to show the parent’s activities.
• Board resolution for the branch.
• Office lease certificate
• Certificate of Good Standing.
• Manager passport copies.
• Power of Attorney for the branch manager.

Step 3: Apply for the initial approval

Prepare all the documents and submit your application through the free zone authority’s portal. Then, the authority will check if your parent company is qualified to proceed with the setup process.

During this step, you need to:

• Submit the initial application form through the free zone portal.
• Upload all the required documents.
• Wait for the authority to review the application and issue the initial approval.

Step 4: Secure the office space

After receiving the initial approval, you’ll need to secure the office space for your company. Free zones offer flexible office options that match different business needs.

Popular office options include:

• Flexi-desks: They suit startup businesses that need an affordable office option.
• Shared office space: It’s suitable for companies that want a more professional working environment.
• Private office: It fits SMEs companies that run a lot of operations from the free zone branch.

Step 5: Pay the fees and complete the license issuance

After you complete all required steps, you will need to pay all required fees to obtain the branch license in Dubai. This allows your company to legally operate within the Dubai free zone.

In this step, you need to:

• Review the final fee breakdown shared by the free zone authority.
• Pay the registration fee and the branch license fee.
• Receive the branch license once the approval is finalized.

How Much Does It Cost to Open a Branch Office in Dubai?

The costs of setting up a branch office in Dubai may vary depending on the authority that is responsible for checking your business activity, and also the office and visa requirements that your business needs.

You can also read Dubai free zone company setup cost, so you can deeply understand all cost components required by the free zone authority.

After Approval: Office, Visas, VAT, and Ongoing Operations

When you obtain the license and start to operate, you will need to start the post-setup requirements that help your branch office in the UAE stay compliant with the authority regulations. You’ll find the most important post-setup procedures you have to keep in mind.

Office requirements

All branch offices in the UAE have to register a business address to operate from. Leasing an office is essential for both a free zone and a mainland setup. You can choose from different office options based on your needs, but also keep in mind that your office size affects your visa eligibility.

Visa Processing

You need to apply for residency visas for the branch manager and employees, so they can live in the UAE and work for the branch in a fully compliant way. The number of visas you can obtain for the manager and employees depends on your office space.

This process usually includes:

• Applying for entry permits.
• Completing medical tests.
• Applying for the Emirates ID.

Opening a corporate bank account

After setting up a branch office in Dubai, you will start operating financially, which includes handling transactions and managing everyday financial requirements. All of these operations require a corporate bank account for the branch office.

Banks will usually require:

• Parent company documents.
• Branch trade license.
• Passport copies of shareholders.
• Office space contract.
• Some banks ask for an initial deposit or a brief business plan.

VAT registration

If your branch office in the UAE meets the required threshold, which is AED 375,000, then you must register for VAT in UAE through the FTA portal. You will be charged for 5% on goods and services; you have to plan for the VAT registration to avoid any penalties during the branch operations.

Corporate Tax Registration

All businesses in the UAE must register with the FTA portal for corporate tax once their income exceeds AED 375,000; they will be charged 9% on their income. However, free zones such as DMCC offer unique advantages for specific businesses if they are recognized as QFPZ, as they become eligible for 0% Corporate tax.

Financial Record Keeping

Maintaining accurate financial records is important for any branch office in Dubai, especially since some authorities usually ask for annual audits. This process usually includes tracking expenses and financial statements, so you need to ensure that when you open a branch office in Dubai, your financial records are organized for any financial checks.

Employee Payroll

Once you start the business operations, you can begin hiring employees, but you must follow the UAE labor rules. Which means that you should have the correct employee documents and manage their salaries through a proper payroll process.

Renewal requirements

You have to keep in mind the branch’s office renewal requirements, so you can stay compliant with the UAE regulations. The renewal process usually includes the trade license, office, and visa renewals. All of these requirements have to be renewed annually to avoid suspension, which could happen to your business.

Do You Need a Local Sponsor or Agent?

The answer today is no, you don’t need a local sponsor or agent when setting up a branch office in Dubai. Because of the new regulations, which are the ministerial resolution No. 138 of 2024, which allows foreign companies to establish a mainland branch without a local service agent and still keep 100% ownership and full liability under the parent company.

This change was introduced to make it easier for international companies to expand into the UAE while maintaining full control of their operations. However, the requirements can vary depending on the authority and business activity.

 If you’re thinking about setting up a new company in the Dubai mainland, you can read Dubai mainland company setup to understand all setup requirements.

FAQs about setting up a branch office in Dubai

How to set up a branch office in Dubai?

First, you have to choose whether you’ll set up your branch on the mainland or in the free zone. Foreign companies setting up a mainland branch complete registration with the Ministry of Economy and Tourism (MOET), while free zone branches register through the free zone authority.

How can I open a branch office in UAE?

To open a branch office in Dubai, you must first choose the appropriate jurisdiction, whether it’s a free zone or mainland, then submit an application with the parent company documents. After receiving the initial approval, you have to secure an office and pay the fees, so you can obtain the license and start operations.

How much does it cost to set up a branch office in Dubai?

The cost depends on the jurisdiction, office type, and visa requirements. But usually you’ll find that the costs range between AED 50,000 to 100,000 for mainland branches and AED 35,000 to 60,000 for free zone branches.

How much is a branch license in Dubai?

Branch licenses in Dubai don't have a fixed price, because it depends on the business activity and whether the branch is on the mainland or in a free zone. However, branch license costs range between AED 12,500 and 30,000 for many foreign branches in Dubai.

What is the difference between branch and subsidiary in UAE?

A branch office is an extension of the foreign parent company, so in this structure, the parent company remains responsible for the branch obligations. On the other hand, a subsidiary is a separate company that has its own legal identity and liability structure.

Quick Checklist Summary before setting up a branch office in Dubai

Once your branch starts operating, managing accounting and compliance manually can become a pressure for you. Using a system like Daftra accounting software helps you in all compliance tasks, such as tracking expenses and financial reporting, which makes it easier to focus more on growing your business and staying compliant.