How To Establish a Foreign Branch Company In Dubai, UAE

Dubai is an international business hub that attracts multinational companies aiming to expand into the Middle East. Establishing a foreign branch company allows global firms to continue business under their parent setup with 100% ownership among all forms of business structure, which is undoubtedly one of the biggest pluses.

This is a step-by-step overview of how to establish a foreign branch in Dubai Mainland or a Free Zone, covering legal requirements, procedural steps, and cost considerations. 

What is a Foreign Branch Company?

A foreign branch company was simply an extension of the parent company, conducting operations under similar legal and business names. In contrast to an LLC, it does not have a separate legal status since a foreign source owns it.

Features

100 percent foreign ownership– no local shareholder is needed.

The same line of business—the branch’s business activities must be closely aligned with those of the parent company.

Direct entrance into the market- one can act as a seller or trading company on behalf of its parent company in Dubai and the UAE.

Conformance to UAE laws– required licensing and taxes have to be fulfilled. 

Benefits of Setting Up a Foreign Branch in Dubai

1. Market Expansion

Dubai is a gateway to the Middle East, Africa, and South Asia, providing a strategic location for international business operations.

2. Full Ownership and Control

Unlike an LLC, where a local partner is sometimes needed, a foreign branch will allow the parent company to remain completely inserted with ownership and control.

3. Tax Efficiency

• 0% Corporate Tax in Structured Free Zones.
• There is no personal income tax in the UAE.
• 5% VAT is only applicable in certain situations.

4. Simple Financial Management

A foreign branch can benefit from the parent company’s financial strength without additional capital investment in Dubai. 

Step-by-Step Process to Set Up a Foreign Branch in Dubai

Step 1: Appoint a Local Service Agent (LSA) [Mainland Only]

Mainland branches have to have a Local Service Agent (LSA). LSAs have no ownership rights but facilitate approvals from government authorities or regulatory compliance.

Free Zone branches do not require the appointment of an LSA.

Step 2: Obtain Initial Approval from the Dubai Economy and Tourism (DET)

The parent company should apply to the DET for approval to register a foreign branch. The following documents must be submitted along with the application

• Trade name reservation certificate
• Parent company’s registration documents
• Board resolution authorizing the formation of the branch
• Letter of Power of Attorney for the branch manager

Upon review, DET will issue an Initial Approval Certificate to proceed with the setup process. 

Step 3: Obtain Approval from the Ministry of Economy [Mainland Only]

For mainland branches, additional approval is required by the Ministry of Economy. The MOE assesses the following:

• The financial position of the parent company.
• Compliance with the UAE Commercial laws.

 This does not apply to the free zone branches.

Step 4: Drafting and Notarization of Legal Documents

The following documents must be translated, attested, and notarized:

• Memorandum of Association (MOA)
• Service Agent Agreement (if any)
• Lease Agreement (Ejari registration)
• Bank guarantee (if any)

Verified in person by a foreign entity outside the UAE, to be legalized by the UAE Embassy in the home country and authenticated by the UAE Ministry of Foreign Affairs. 

Step 5: Trade License

Once approvals are in place, the Trade License is issued by DET (for the mainland) or the Free Zone Authority (for free zones), enabling the branch to start doing business.

Step 6: Register for VAT & Corporate Tax (where relevant).

• VAT registration is required for companies with annual revenue exceeding AED 375,000.
• Under UAE law, corporate tax applies for all taxable sectors at 9 %.

Step 7: Open a Corporate Bank Account

The foreign branch must open a corporate bank account in Dubai to facilitate transactions. The documents needed to support this include:

• UAE Trade License
• Parent company’s financial statements
• Shareholders’ and managers’ passport copies

Each bank has different compliance requirements; seeking expert guidance is a good idea. 

Investment Considerations: Cost Which Goes into Setting Up a Foreign Branch

The investment associated with establishing a foreign branch in Dubai varies based on jurisdiction, business activity, and legal requirements. Below is an approximate cost breakdown:

Trade Name & Initial Approvals

• Trade Name Reservation: AED 620 – AED 2,000
• Initial Approval from DET: AED 2,000 – AED 5,000
• Ministry of Economy (MOE) Approval (Mainland): AED 10,000 – AED 15,000

Licensing & Legal Documentation

• Trade License Fee: AED 10,000 – AED 30,000
• Legal Translation & Attestation: AED 1,500 – AED 3,000

Office Setup & Administrative Costs

• Ejari (Lease Registration): AED 2,000 – AED 5,000
• Local Service Agent Fee (if required): AED 10,000 – AED 25,000
• Bank Guarantee (if applicable): AED 50,000 – AED 300,000

Total Estimated Investment: AED 50,000 – AED 100,000+ (depending on business activity and jurisdiction).

Mainland vs. Free Zone: Choosing The Right Setup

Reasons to Opt for RAS Corporate Advisors

Establishing a foreign branch requires a delicate balance of the regulatory process within Dubai. RAS Corporate Advisors will guide you through these complicated processes for a fast and seamless business setup.

Our Expertise Covers

✔ Strategic Consultation – Guidance on the proper business structure.

✔ Government Liaison – Accelerated approvals with DET, MOE, and Free Zones.

✔ Legal Formalities and Documentation – Complete preparation of documents and attestation.

✔ Corporate Banking Help – Simplification of the process to open a bank account.

Reach Out for Professional Help Today

To set up your foreign branch company in Dubai, call RAS Corporate Advisors for expert consultation!