Many foreign companies wanting to have an established presence in Dubai have open branch offices or subsidiaries. The main difference between a branch office and a Dubai subsidiary resides in the independence the subsidiary has. While the branch office is tied to the parent company, the subsidiary will be able to conduct its own operations in Dubai. With a vast knowledge of company formation in Dubai, our specialists can help those who want to set up a subsidiary in UAE in 2024.
|Applicable legislation (home country/foreign country)
UAE Company Law
Best used for
Minimum share capital
|No, except mainland Dubai
|Time frame for the incorporation (approx.)
Around 2-3 months
|Legal representative required
|Local bank account
|Independence from the parent company
|Liability of the parent company
|No, the subsidiary is fully liable
|Corporate tax rate
|No, except the oil&gas and banking sectors
|Possibility of hiring local staff
Table of Contents
Characteristics of subsidiary companies in Dubai
Foreign companies seeking to have a presence in Dubai will choose the subsidiary because it is a legally independent company operating under the laws of the UAE and the Emirate it is established in. Compared to the branch office, which is not considered a legal independent structure, the parent company of a subsidiary will be able to decide on completing other activities through a Dubai subsidiary which can increase its profits substantially. Even if the subsidiary is regarded as an independent entity, the foreign company will act as a shareholder, therefore will have a decisional power of the subsidiary.
Those who want to create subsidiary companies in UAE should consider the following:
- the subsidiary will undertake its own operations under one of the business structures covered by the UAE and Dubai legislation;
- private and public companies are the most employed types of structures for subsidiaries in Dubai;
- it is possible for a foreign company to establish a subsidiary in a Dubai free zone under the form of a free zone company;
- the subsidiary will be subject to the tax legislation in Dubai which will favor both the local and the parent company;
- the subsidiary can benefit from enhanced protection under the double tax agreements signed by the UAE.
When it comes to the registration of a subsidiary company in Dubai in 2024, the same requirements apply to foreign companies as to foreign citizens.
If you need more information on the features of a subsidiary company or how to decide between a subsidiary and a branch office, you can rely on the expertise of our company registration advisors in Dubai.
While a subsidiary can be established in mainland Dubai in about 2-3 months, things change for the free zones of the city. Here, you can incorporate a subsidiary in approximately 2 or 3 weeks.
The corporate tax regime has been introduced in UAE starting in July 2023. The new tax regime concerns all businesses established in the UAE, comprising subsidiaries of foreign companies.
We invite you to see our scheme on how to create a subsidiary in Dubai in 2024:
Share capital requirements for a subsidiary in Dubai, UAE
One of the greatest benefits of opening a Dubai subsidiary is related to the share capital requirements which apply differently for mainland companies and free zone structures. From this point of view, it is important to notice the fact that most of the time free zone authorities will impose different share capital regulations.
It is advisable to research the free zone in which you will set up a subsidiary in UAE. Also, it is just as important to understand that each free zone targets one or more industries.
If you are interested in setting up a business in Dubai and you are considering a subsidiary of your foreign company, our local agents can offer all the support needed.
Under the new tax regime in Dubai (UAE), the corporate tax rate is set at a flat rate of 9% and it is applicable for taxable profits surpassing AED 375,000. Nevertheless, there are specific exemptions from this tax and also deductions available. As such, the corporate tax rate can be reduced in the case of some businesses.
Registration steps for opening a subsidiary in Dubai in 2024
All companies operating in Dubai are required to register with the Department of Economic Development (DED). The first step towards establishing a subsidiary in Dubai is to appoint a local agent to handle the registration procedure.
Under the Dubai Company Law, foreign entities are allowed to register subsidiaries under the form of limited liability companies which is one of the most popular business vehicles in the country. The following steps must be followed to register a subsidiary in Dubai:
- reserving a company name;
- obtaining approval from the DED for the trading activities to be undertaken;
- drafting and notarizing the Memorandum and Articles of Association for the subsidiary;
- submitting information about the shareholders with the DED;
- VAT registration is also mandatory when opening a subsidiary.
Establishing a subsidiary in Dubai is fairly advantageous for a foreign investor looking for business expansion and development in this territory. He or she can benefit from 100% ownership of the company, varied tax savings, business expansion among UAE, and Group Cooperation Council markets.
Immigration to Dubai is a relatively easy process, with simple formalities, but in order to eliminate document errors from the start, we recommend that you contact our specialists. Those interested in residency can apply for the Dubai residence by investment program and invest AED 1 million in a property. As for the relocation of family members, citizens already established in Dubai will act as sponsors in this case. Contact us for a free case evaluation.
Obtain a trading license for the Dubai subsidiary
In order to obtain the trading license, the following documents must be submitted to the Dubai Chamber of Commerce and Industry:
- the Memorandum and Articles of Association of the Dubai subsidiary in original and copy;
- an application form;
- a name approval letter issued by the DED;
- a company approval letter issued by the DED;
- copies of the shareholders’ passports.
The Dubai subsidiary will also need to obtain clearance from the Municipality Building Department, as it must have a registered office in the Emirate.
Setting up a subsidiary company in a Dubai free zone
The creation of a subsidiary company in a Dubai free zone implies the registration of the chosen business form with the Dubai free zone authority in which the business will operate. The main advantage of establishing a subsidiary in a Dubai free zone is that no local sponsor or partner is required, as total independence is allowed here.
The company registration requirements for a subsidiary in a Dubai free zone are the same as those of an onshore company, however, when it comes to the registered office of the company, this must be located in that free zone. From this point of view, all Dubai free zones have an excellent infrastructure for accommodating the needs of small, medium and large-sized companies.
We kindly invite you to get in touch with our local consultants if you want to open a company in Dubai or to set up a subsidiary in UAE.
Taxation of subsidiaries in Dubai
As mentioned earlier, the subsidiary will be taxed in accordance with the legislation applicable in Dubai. At this point, there is 9% corporate tax applied to Dubai companies, apart from those operating in the oil and gas, and banking sectors.
The only recent change in the taxation of companies in Dubai is the introduction of the value added tax and the excise tax.
When it comes to the accounting and reporting requirements of Dubai subsidiaries, the parent company is required to file annual audited accounts.
We offer a wide range of accounting services for local and foreign companies operating in Dubai, including for subsidiary companies established in UAE.
Why open a subsidiary in Dubai/UAE?
Among the reasons for setting up a business in Dubai under the form of a subsidiary, we remind the following:
- it is easy to register and allows for total independence, including that offering distinct services from the parent company;
- from a taxation point of view, the repatriation of profits to foreign shareholders is free of charge in Dubai;
- the subsidiary can be set up by companies in various industries, as there are no restrictions in this sense;
- the visas for the representatives detached by the parent company are easier to obtain now.
The video below presents the main steps to take when opening a Dubai subsidiary:
For information related to trade licenses available for setting up subsidiaries in the Emirate, please contact our company formation agents in Dubai. You can rely on our agents for accounting services also.