How to Open a Branch Office in Dubai?

The setup of a branch office in Dubai is governed by specific laws and authorities. Understanding this framework is the first step toward a successful business formation in the UAE.

The primary law is the UAE Federal Law No. 32 of 2021 on Commercial Companies. This law outlines the rules for foreign companies operating in the UAE.

Several authorities oversee the licensing process:

• Ministry of Economy (MoE): This federal body provides the initial approval for any foreign company to open a branch in the UAE.
• Department of Economy and Tourism (DET): For a branch on the Dubai mainland, the DET is the local authority that issues the trade license.
• Free Zone Authorities: If the branch is located in one of Dubai’s many free zones, that specific free zone’s authority will handle the licensing.

For mainland branches, there is a unique requirement: the appointment of a UAE National Service Agent (NSA). An NSA is a UAE national or a company wholly owned by UAE nationals. The NSA handles administrative and government-related tasks but holds no equity, liability, or management control over the branch.

The process of setting up a branch office in the UAE involves several key stages. It requires obtaining approvals from multiple UAE authorities and meeting strict documentation and translation standards to ensure compliance.    

A. Pre-Approval & Documentation

The first phase involves preparing the necessary legal documents from the parent company. These documents must be legally translated into Arabic and attested by the UAE Embassy in the parent company’s home country and the Ministry of Foreign Affairs in the UAE.

Key documents include:

• A board resolution from the parent company approving the opening of the branch.
• Legally attested copies of the parent company’s Certificate of Incorporation, Memorandum, and Articles of Association.
• A Power of Attorney in favor of the branch’s appointed General Manager.

B. Ministry of Economy Approval

With the attested documents ready, the next step is to apply to the Ministry of Economy. This is a crucial step in the journey to register a branch office in the UAE. The application is for the registration of a foreign company. For mainland business setups, this is also the stage where the National Service Agent agreement is submitted. Once the MoE reviews the application and finds everything in order, it issues an initial approval certificate.

C. Local Licensing

After receiving MoE approval, the process moves to the local licensing authority (either the DET for the mainland or a free zone authority).

• Trade Name Reservation: A suitable trade name for the branch must be reserved.
• Office Lease: The branch must have a physical office address. A valid tenancy contract and Ejari registration are required.
• License Issuance: All documents, including the MoE approval and office lease, are submitted to the DET or free zone authority to issue the final commercial license.

D. Visa & Immigration Setup

Once the license is issued, the final stage is to set up the company’s immigration and labor files. This allows the branch to hire staff and process visas.

• An Establishment Card is issued by the immigration authority.
• The company registers with the Ministry of Human Resources and Emiratisation (MOHRE).
• With these registrations complete, the branch can apply for employee visa quotas and begin hiring.

Setting up a branch office involves multiple stages, but with expert guidance, it can be completed efficiently. Contact us to ensure a smooth and compliant registration process for your branch office in Dubai.

The cost of opening a branch office varies depending on whether it is on the mainland or in a free zone. For example, DIFC and ADGM branches have higher setup costs due to financial regulations. The following table provides an estimated breakdown of the main expenses.

Note: These figures are estimates and can vary based on the specific free zone, office size, and business activity.

Operating a branch office in Dubai entails ongoing responsibilities to maintain legal compliance and ensure smooth business operations. These obligations include several key regulatory and administrative tasks that the branch must follow consistently:

• Annual License Renewal: The commercial license must be renewed every year with the relevant authority. This also involves renewing the office lease agreement.
• Financial Reporting: Some authorities may require the branch to submit audited financial statements annually.
• NSA Contract Renewal: Mainland branches must renew the National Service Agent agreement annually.
• VAT Registration: If the branch’s annual revenue exceeds the mandatory threshold of AED 375,000, it must register for Value Added Tax (VAT) with the Federal Tax Authority.

Free Zone vs Mainland Branch Office

Choosing between a mainland and a free zone location is a critical decision. Each has distinct advantages. This table highlights the key differences for those considering opening a branch office in the UAE.

The setup process can present some challenges. Being aware of them can help ensure a smoother experience.

• Delays in Document Attestation: The process of legalizing parent company documents can be time-consuming. 

Solution: Start this process early and work with a reputable legal services provider.

• Misunderstanding NSA Roles: Some companies misunderstand the role of a National Service Agent. 

Solution: Understand that the NSA is for administrative purposes only and has no ownership or liability. Draft a clear contract.

• Choosing the Wrong Jurisdiction: Selecting between the mainland and a free zone without proper research can be costly. 

Solution: Analyze your business model. If you need to trade directly within the UAE, the mainland is necessary.

• Overlooking Compliance Timelines: Missing renewal deadlines can lead to fines. 

Solution: Keep a calendar of all important dates for license, visa, and contract renewals.

Opening a branch office in Dubai is an excellent way for a foreign company to establish a presence and tap into the region’s vast market potential. Whether on the mainland or in a free zone, the process remains well-defined. By understanding the legal framework, following the step-by-step process, and being aware of ongoing compliance duties, businesses can successfully expand their operations. The key is careful planning and choosing the right structure that aligns with the parent company’s strategic goals.