For foreign companies aiming to expand into the Middle East, few places offer the strategic advantage of the United Arab Emirates. Among the many options for establishing a business presence, the Branch Office stands out as a powerful structure that provides direct access to the UAE market without creating a separate legal entity.
If your company is exploring entry into the UAE, this guide outlines everything you need to know about launching and managing a Branch Office in 2025.
🌍 What Is a Branch Office?
A Branch Office is not a separate company. It is a legal extension of a foreign parent company, operating under the same name, ownership, and legal structure. The parent company holds full financial and legal responsibility for the Branch’s operations.
Unlike a subsidiary, which is independently incorporated, a Branch Office is controlled directly by the parent company and shares the same corporate identity.
🏢 Business Activities and Limitations
What a Branch Office Can Do
• Offer services
• Execute projects
• Conduct research and development
• Provide consultancy or professional services
What a Branch Office Cannot Do
• Import and distribute goods without appointing a local agent
• Undertake activities not aligned with the parent company’s core operations
Branch Offices can operate on the mainland or within a Free Zone, depending on the strategic objectives and client base.
🧭 Why Choose a Branch Office?
✅ Market Access
A Branch Office allows foreign companies to operate directly in the UAE, making it easier to serve local clients, participate in tenders, and understand customer behavior.
✅ Brand Continuity
Your company retains its global identity, which helps with brand recognition and trust in a new market.
✅ Cost-Efficiency
No minimum capital is required, making it a lean entry model for international businesses expanding into the region.
✅ Strategic Control
You maintain centralized governance and control over operations, processes, and decision-making, ensuring alignment with your global business model.
✅ Resource Sharing
Leverage the expertise, systems, and infrastructure of the parent company to operate effectively and efficiently.
🛠️ How to Set Up a Branch Office in the UAE
Step 1: Approval from the Ministry of Economy (MoE)
• Obtain initial approval by submitting required documents, such as:
• Certificate of Incorporation
• Memorandum and Articles of Association
• Board Resolution
• Power of Attorney
• Audited Financial Statements (2 years)
• Parent Company’s Business License
Note: All documents must be attested by the UAE Embassy in the country of incorporation and the UAE Ministry of Foreign Affairs (MOFA).
Step 2: Register with the Department of Economic Development (DED)
• Submit MoE approval letter and all supporting documents
• Sign a Local Service Agent (LSA) agreement
• Provide proof of office lease
• Obtain trade name registration
• Receive your business license from the DED
🤝 The Role of a Local Service Agent (LSA)
Although the LSA has no equity in the Branch Office, they are crucial in navigating government procedures. The LSA must be a UAE national or a company owned by UAE nationals. Their role is primarily administrative, acting as a local representative for licensing and legal compliance.
📑 Documents Required (Fully Attested)
• Certificate of Incorporation
• Memorandum and Articles of Association
• Board Resolution
• Power of Attorney
• Audited Financials (2 years)
• Parent Company License
• Passport copies of directors and general manager
• Lease Agreement
• Local Service Agent Agreement
• MoE Approval Letter
• Trade Name Reservation
• Specimen Signatures
⚠️ Operational Considerations
Business Activity Scope
You must stay within the boundaries of the parent company’s licensed operations unless further approvals are granted.
Local Law Compliance
You are required to comply with employment, tax, health, and safety laws, and hold the proper regulatory licenses for your industry.
Import Restrictions
Branch Offices cannot import and distribute goods directly. You must appoint a UAE-based commercial agent for that purpose.
Financial Oversight
All UAE operations must be reported back to the parent company. Branch financials are usually integrated into the global audited accounts and must also comply with local reporting standards.
💰 Tax and Compliance Requirements
• Corporate Tax: Branch Offices are subject to UAE’s corporate tax on profits above the threshold.
• VAT: Must register for VAT, charge 5% on taxable services, and file periodic returns.
• Audits: Annual financial statements must be prepared under IFRS and audited by a registered auditor in the UAE.
• Transfer Pricing: Must comply with UAE transfer pricing rules if conducting inter-company transactions.
👤 Who Should Open a Branch Office in the UAE?
A Branch Office is ideal for:
• Multinational corporations looking to expand operations
• Companies wanting to enter the UAE without forming a new entity
• Firms offering services, consulting, or engineering with international experience
• Businesses that want to maintain full ownership and control under a single global brand
✍️ Final Thoughts
A Branch Office offers the flexibility, market access, and brand consistency foreign companies need to succeed in the UAE. It allows you to build a solid local presence, work closely with clients, and expand without the need to form a new legal entity.
However, success depends on understanding the regulatory framework, appointing the right Local Service Agent, and ensuring ongoing tax and compliance accuracy.
🚀 Ready to Open Your Branch Office in the UAE?
Compare Free Zones, explore your licensing options, and connect with trusted local agents.
👉 Visit www.licensemarket.ae to start your Branch Office setup.
Quick, compliant, and cost-effective.