Foreign Branch in the UAE: Meaning, Setup, Pros and Cons
A foreign branch (also called a branch office or representative office) allows a foreign company to establish a presence in the UAE without creating a separate legal entity. The branch operates under the parent company’s name and legal identity.
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What Is a Foreign Branch?
Foreign companies choose a branch when they want to: maintain a single global identity, avoid setting up a separate UAE company, and conduct business in the UAE under their established international brand. The branch can bid on government contracts, open bank accounts, and hire employees in the UAE.
Is a branch the same as a subsidiary?
No. A branch is part of the parent company (same legal entity). A subsidiary is a separate legal entity (typically an LLC) owned by the parent company. The key difference is liability: the parent company is directly liable for all branch obligations, while a subsidiary’s liability is limited to its own assets. Large corporations often choose a subsidiary for liability protection.
Types of Branches
| Feature | Full branch | Representative office |
|---|---|---|
| Commercial activities | Yes, same as parent | No, liaison and marketing only |
| Revenue generation | Yes | No |
| Invoicing clients | Yes | No |
| Government contracts | Yes | No |
| Setup cost | Higher | Lower |
Pros and Cons
Is a branch easier to set up than an LLC?
Not necessarily. A branch requires all parent company documents to be legalised and attested (MOFA attestation), which can take several weeks. The parent company’s home-country documentation (certificate of incorporation, board resolution, articles of association) must be translated into Arabic by a legal translator. The actual license issuance is similar in timeline to an LLC.
How to Set Up a Branch
- Prepare parent company documents. Certificate of incorporation, MOA, board resolution, financial statements.
- Legalise and translate. MOFA attestation and Arabic translation.
- Appoint a branch manager. Must be a named individual with a power of attorney.
- Arrange a local service agent. UAE national for government liaison.
- Lease office space. Ejari-registered address.
- Apply for the branch license. Submit to DED or free zone authority.
Branch Setup Cost
The additional cost compared to an LLC comes from document attestation and translation of parent company documents. These are one-time costs that do not recur on renewal (unless the parent company documents change). See the full cost breakdown for detailed estimates by emirate.
Branch Office: Frequently Asked Questions
Can a branch do different activities from the parent company?
No. A branch can only conduct activities that the parent company is licensed for in its home country. If the parent company is an engineering firm, the UAE branch can only provide engineering services. If you want to conduct activities not covered by the parent company's license, you need to set up a separate UAE company (LLC or free zone company).
Some branches are set up specifically for government contract bidding, where the parent company's international credentials and track record are required for pre-qualification.
Does the parent company pay UAE corporate tax?
The UAE branch is subject to corporate tax on its UAE-sourced income at the standard rate of 9%. The parent company's global income is not taxed by the UAE. The branch files its own UAE tax return and is assessed separately from the parent.
Double taxation agreements between the UAE and the parent company's home country typically prevent the same income from being taxed twice. Consult a tax adviser to understand the specific implications for your situation.
Can a branch open a UAE bank account?
Yes. A branch can open a corporate bank account in the UAE under the parent company's name. Bank account opening for branches may require additional documentation (parent company financials, audited statements) compared to a standalone LLC. Some banks are more comfortable with branches from well-known international companies.
The branch manager (named on the license and power of attorney) is the primary signatory on the bank account. Bizstart assists with bank introductions and document preparation for branch accounts.
Can I convert a branch to an LLC?
Yes. Converting a branch to an LLC creates a separate legal entity in the UAE. The process involves: setting up the new LLC, transferring assets, contracts, and employees from the branch to the LLC, and then closing the branch. This takes 4 to 8 weeks and requires careful planning to avoid disruption.
Common reasons for conversion: the business wants limited liability (instead of parent company liability), the business wants to conduct activities beyond the parent's scope, or the ownership structure is changing. Bizstart manages the conversion process to ensure continuity.
About This Guide
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