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A branch of a company is a legal business entity in Dubai free zones that is dependent on its parent company. The branch office can be owned by a single individual or multiple shareholders based on the number of parent company shareholders, as per the Dubai Development Authority. Also, it is mentioned that a branch office has a similar legal formation and structure to the parent company on the Jafza official portal.
As a dependent legal entity, the liability is owned by its parent company, as per the DMCC free zone. However, it allows 100% foreign ownership, tax exemptions, pre-built procedures as per the parent company, and access to world-class infrastructure.
Although being part of the free zone, it operates following the parent company’s regulations under the jurisdiction of a specific Free Zone Authority. It must align with UAE Commercial Companies Laws (Federal Decree-Law No. 32 of 2021). For example, to open a branch office at Jebel Ali Free Zone you have to follow JAFZA business regulations.
The branch of a company offers notable advantages. It provides a simplified process by the continuation of the existing business, retaining the brand name, and empowering brand identity. Along with this, it offers investors 100% tax exemptions for qualifying income, as per the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022).
To establish a branch office in a free zone you have to get a license following the same business activity and trade name. Just like the parent company the establishment of a branch of the company follows legal and transparent procedures. However, these processes may not be the same in every free zone.
The documents you need to submit are based on the company type you are establishing a branch for. For instance, in JAFZA, for the branch of the company, the Articles of Association (AoA) and the Memorandum of Association (MoA) are a must along with Know your Customer (KYC).
The process for setting up a branch of a company takes 2–5 weeks to complete, and the estimated cost is from 15000-50000 AED but this depends on the individual Free Zone. For instance, to open a branch in DMMC it costs AED 38,145 as per their official website.
What is the Branch of a Company in the Dubai Free Zone?
A branch of a company in the Dubai Free Zone is a legally dependent extension of a parent company, sharing the same business activity, brand name, and brand identity. It offers 100% foreign ownership, 100% tax exemption on qualifying income for 50 years, and 100% repatriation of profits following Federal Decree-Law No. 47 of the UAE Corporate Tax Law and Federal Law No. 2 of 2015 on Commercial Companies.
The branch of a company is operated by its parent company which is regulated by the specific free zone authority under UAE Commercial Companies Laws. The purpose of a branch company is to simplify the business establishment process and leverage the expertise and operational experience of the parent company.
How does a Branch of a Company Operate in Dubai Free Zones?
A branch of a company is operated by its parent company and must be 100% owned by the parent. It operates under the same name and conducts the same business activities as the parent company. It is also overseen by the specific free zone authority in accordance with UAE Commercial Companies Law.
Each free zone has different regulations regarding the setup and operations of a company branch. For instance, to set up a branch, it is necessary to declare all shareholders with 25% ownership or more, until the ultimate beneficial owner(s) are identified as the Ultimate Beneficial Owner (UBO) for the parent company as per DMCC’s official website.
The branch of a company is limited to operating activities within the boundaries of the parent company. However, it is not necessary for the parent company to be based in a specific free zone for the establishment of a branch. For example, you can set up a branch in JAFZA even if the parent company is located outside of the free zone, as per the official Jebel Ali Free Zone portal.
Along with similar operational procedures, you still need to submit the AOA, MOA, and UBO forms as per the Company Formation – Application for a Branch Company. However, the other requirements like cost and physical presence vary from one free zone to another.
How many shareholders are there in the Branch of a Company?
The number of shareholders in a branch company is not the same as other free zone entities. Being dependent on the parent company, it does not have independent shareholders. Since the parent company maintains 100% ownership of the branch, no new shareholders can be added. In other words, the number of shareholders in the parent company directly represents the number of shareholders in the branch company.
Setup Process of Establishing Branch of a Company
Establishing a branch of a company in a Dubai Free Zone requires a Certificate of Registration of the parent company and other legal documents such as the Certificate of Good Standing, AOA, and MOA.
Additionally, showcasing the role of the applicant is mandatory, as per DMCC guidelines for establishing a branch of a company. The main process for setting up a branch in a free zone is outlined below. However, this is not a hard and fast rule, as it may vary for different free zones.
- Register your interest online or visit the free zone administration office in person
- Submit Attested Trade License
- Submit Attested Memorandum & Articles of Association
- Submit the Share Certificate of the parent company
- Submit Chamber of Commerce Certificate
- Submit Board Resolution & Power of Attorney
- Submit No-Objection Certificate
- Submit EHS Application Form & KYC Forms
- Select Solution & Pay
- Receive your License & Start your business
What is the cost of Setting Up a Branch of a Company in Dubai?
The cost of setting up a branch of a company in Dubai ranges from 15000-50000 AED. At Dubai Multi Commodities Centre it costs AED 38,145 as per their official portal. However, the cost depends on several factors. The four main factors include:
- Free Zone
- Business Activity
- Office Space
- Number of Employees
However, to help you estimate your investment, our experts have divided the costs based on different factors. The table below outlines the costs of setting up a branch of a company.
| Cost Item | Minimum | Maximum |
| License Registration | AED 12,500 | AED 50,000 |
| Office Space | AED 25,000 | AED 50,000 |
| Visa and Immigration | AED 4,000 | AED 4,000 |
| Bank Account Opening | AED 1,500 | AED 5,000 |
| Renewal Fees | AED 16,000 | AED 16,000 |
How much time is required to set up a Branch of a Company in Dubai?
The time required to set up a branch of a company in Dubai is different for different conditions. It typically takes 5-12 business days. This depends mainly on the specific free zone authority and the entity type of the parent company. For instance, with Felix Happich Consultancy, you can complete the setup in just 7 days for LLC and 11 days for PLC.
What are the legal requirements to set up a Branch of a Company in Dubai?
The legal requirements to set up a branch of a company within the free zone in Dubai are mentioned below.
- Obtain Business License
A business license is mandatory for setting up a branch to have legal operations in free zones according to the UAE’s official website. It is provided by the free zone authority as per Federal Law No. 2 of 2015 on Commercial Companies and the regulations specific to each free zone. This license authorizes the branch to conduct its specified business activities within the designated free zone.
- Appoint Shareholders & Directors
The branch office itself does not have independent shareholders, but the shareholder and director information of the parent company is crucial for the branch setup process. This information is essential for identifying the legal owners, verifying legitimacy, and understanding the company’s organizational framework. For instance, when establishing a branch office at DMCC, you are required to submit the Emirates ID (front and back) for each Consultant, POA, Manager, and Secretary.
- Secure Office Space
Office space within the free zone depends on the specific free zone. For instance, you are required to have office space in DMCC, but in Dubai Silicon Oasis (DSO), office space is not mandatory for certain activities such as consulting, IT, and freelance-related services.
- Legal Documentation
Although the branch is not a separate entity, investors must submit certain legal documents, including a Certificate of Incorporation, Articles and Memorandum of Association, and UBO, among others. Some of the key documents are listed below.
- Electronic Signature Undertaking
- HR Signatory Appointment Letter
- Identification Documents
- Proof of Residence
- Consultant’s Appointment Letter
- Power of Attorney (POA)
- Parent Company Documents:
- Certificate of Registration/Trade License
- Certificate of Incumbency
- Memorandum & Articles of Association
- Auditing & Reporting Process
The branch of a company in Dubai must perform strict auditing and reporting as per the requirements of the UAE Commercial Companies Law, which requires financial audits by an independent auditor once a year. Branches are obligated to maintain accurate financial records and submit detailed financial reports such as income statements, balance sheets, and cash flow statements, as outlined in Federal Law No. 2 of 2015 on Commercial Companies.
What are the Advantages of a Branch of a Company in Dubai?
The advantages of a branch of a company in Dubai include operational ease and 100% foreign ownership. Below are the 9 key advantages of setting up a branch of a company in Dubai free zones:
- 100% Ownership
- Tax Benefits
- Repatriation of Profits
- Simplified Business Setup
- Customs and Logistics Support
- Advanced Infrastructure
- Regulatory Support and Guidance
- Networking and Collaboration
- Brand name and brand identity empowerment
What are the Disadvantages of Establishing a Branch of a Company?
Establishing a branch in a Dubai Free Zone offers advantages but also presents potential drawbacks. These can affect the overall costs and operations. Below are the 4 key challenges of setting up a branch in a Dubai Free Zone.
- Limited Scope of Activities
- No Independent Shareholders
- Limited Control Over Operations
- Parent Company Liability
What is the difference between the Branch of a company and the Free Zone Company(FZC)?
The distinction between a branch and an FZC lies in their ownership, operational scope, and financial independence. Knowing these differences is essential for choosing the right business entity. Below is a comprehensive comparison of the branch and FZC for better clarity.
| Feature | Branch of Company | Free Zone Company |
| Legal Independence | Not legally independent | Legally independent |
| Ownership | 100% owned by the parent company | 100% owned by the individual or entity |
| Activities | Same as the parent company | Defined as per the license acquired |
| Taxation | Taxed as part of the parent company | Taxed as a separate entity |
What is the difference between the Branch of a company and PLC?
The difference between a branch of a company and a PLC lies in ownership structure. They also differ in taxation regulations. Additionally, they vary in operational independence. Below is a detailed overview of the common differences.
| Feature | Branch | Public Limited Company (PLC) |
| Legal Independence | Not legally independent | Legally independent |
| Ownership | 100% owned by the parent company | Ownership via public shareholders |
| Activities | Same as the parent company | Wide-ranging business activities |
| Taxation | Taxed as part of the parent company | Taxed as a separate entity |
What is the difference between the Branch of a company and a Subsidiary?
The difference between a branch and a subsidiary lies in their legal independence, ownership structure, and operational scope. Understanding these distinctions is crucial for selecting the right entity for your business needs. Below is a detailed comparison of the branch and subsidiary to assist in making an informed decision.
| Feature | Branch | Subsidiary |
| Legal Independence | Not legally independent | Legally independent |
| Ownership | 100% owned by the parent company | Owned by the parent company (partially or fully) |
| Activities | Same as the parent company | Can conduct different activities |
| Taxation | Taxed as part of the parent company | Taxed as a separate entity |
What is the difference between the Branch of a company and a Representative Office?
The difference between a branch and a representative office mainly lies in permitted activities, legal obligations, and taxation rules. Below is a detailed comparison of a branch and a representative office for your reference.
| Feature | Branch | Representative Office |
| Legal Independence | Not legally independent | Not legally independent |
| Ownership | 100% owned by the parent company | 100% owned by the parent company |
| Activities | Can generate revenue and sign contracts | Limited to marketing and promotion |
| Taxation | Taxed as part of the parent company | Not subject to corporate taxes (on qualified income) |
