Dubai is one of the top choices for global companies looking to expand in the Middle East. Setting up a subsidiary company in Dubai allows foreign businesses to build a strong local presence while keeping control of their operations. With investor-friendly laws, tax benefits, and easy access to regional markets, Dubai gives international firms everything they need to grow.
In this detailed guide, we’ll explain every step of subsidiary company formation in Dubai, legal requirements, benefits, setup process, and how to stay compliant.
What Is a Subsidiary Company in Dubai?
A subsidiary company is a legally independent business entity that is owned or controlled by another company, usually known as the parent company. In Dubai, a subsidiary can be fully owned by a foreign company and registered either in the mainland or free zones, depending on the business needs.
How a Subsidiary Differs from a Branch Office
A branch office is an extension of a foreign company and not a separate legal entity. In contrast, a subsidiary company in Dubai can act independently, enter into contracts, hire staff, and operate like any other local business. This makes it a better option for companies that want long-term operations and legal protection.
Why Set Up a Subsidiary in Dubai?
Dubai offers a strong business climate, tax benefits, and international exposure. It’s one of the easiest places to set up and operate a business in the Middle East.
Advantages of Setting Up a Subsidiary in Dubai
- 100% foreign ownership allowed in most sectors
- Access to UAE’s double tax treaties
- Full repatriation of profits
- No personal income tax
- Strategic location between East and West
- Free zone and mainland options
- Modern infrastructure and skilled workforce
Setting up a subsidiary in Dubai is also seen as a signal of serious investment in the region. It builds credibility with local partners, customers, and government bodies.
Choosing the Right Jurisdiction: Mainland vs Free Zone
When setting up a subsidiary, you must choose between a Dubai mainland license or a Dubai free zone license. Each option has different benefits and rules.
Dubai Mainland Subsidiary Company
- Can operate across all of UAE
- Requires approval from the Department of Economic Development (DED)
- Can bid for government contracts
- Requires local office space
Dubai Free Zone Subsidiary Company
- Offers 100% ownership
- No corporate tax in many zones
- Cannot operate directly in mainland without a local distributor
- Faster setup process and simplified compliance
Depending on your business type, customer base, and expansion plans, you can choose the most suitable structure.
Legal Structures Available for Subsidiary Companies
Dubai allows various legal forms for subsidiaries. The most common ones include:
Limited Liability Company (LLC)
- Suitable for both mainland and free zone
- Offers liability protection
- Requires one or more shareholders
Free Zone Company (FZC/FZE)
- Used within free zones
- 100% foreign ownership
- Minimal capital requirement
- No need for local sponsor
Private Joint Stock Company (PJSC)
- For large businesses
- Requires at least 3 shareholders
- Good for industrial or financial sectors
Choosing the right legal structure is crucial to comply with UAE laws and meet your business goals.
Documents Required for Subsidiary Company Registration in Dubai
To register your subsidiary company in Dubai, you need to submit various documents for verification. These include:
For the Parent Company
- Certificate of incorporation
- Memorandum and Articles of Association
- Board resolution approving the Dubai subsidiary
- Power of attorney
For the Subsidiary
- Trade name reservation
- Initial approval certificate
- Passport copies of directors/shareholders
- Lease agreement or tenancy contract for office space
All foreign documents must be notarized and attested by the UAE Embassy and Ministry of Foreign Affairs.
Step-by-Step Process to Register a Subsidiary in Dubai
Setting up a subsidiary requires going through a few steps. Each step ensures that your business is legally compliant and ready to operate.
Define Business Activity and Jurisdiction
Decide on your activity, whether it’s trading, consulting, manufacturing, or services. Based on this, choose between mainland or free zone setup.
Choose a Trade Name
Select a unique business name and get it approved by relevant authorities. Avoid offensive or religious terms.
Obtain Initial Approval
Apply for initial approval to confirm that the government has no objection to your business setup.
Finalize Office Space
Secure a physical address for your company. For mainland, Ejari is required. Free zones often offer flexi-desks or shared offices.
Submit Legal Documents
Submit the notarized and attested documents of the parent company and the planned subsidiary.
Obtain Business License
Once all documents are verified, the business license is issued. This license will define your permitted activity.
Register for Corporate Bank Account
Open a corporate bank account in the UAE under the name of the subsidiary. Most banks require detailed KYC and business plans.
Apply for Visas and Immigration Card
Register with immigration and apply for employee visas, starting with the investor visa for the owner or manager.
Costs Involved in Subsidiary Company Setup in Dubai
The subsidiary company registration cost in Dubai depends on several factors:
Main Cost Components
- License fee (depends on activity and jurisdiction)
- Office rent or desk fees
- Documentation and attestation costs
- Visa processing charges
- Bank account setup fees
- Consulting or PRO service fees
On average, a subsidiary company in a free zone may cost AED 15,000–30,000, while a mainland setup could range from AED 25,000–50,000+ depending on activity.
Banking for Subsidiary Companies in Dubai
Opening a business bank account in Dubai is essential for operations. UAE has a range of international and local banks with corporate banking services.
Required Documents for Bank Account
- Business license
- Shareholder passport copies
- Parent company documents
- Company structure chart
- Proof of address and utility bills
Processing time can take 2–4 weeks, depending on the bank’s internal due diligence.
Tax and Compliance for Subsidiary Businesses
One of the key benefits of a subsidiary company in Dubai is the low-tax environment. However, with recent changes, businesses must understand compliance requirements.
Corporate Tax in UAE
As of 2023, UAE imposes a 9% corporate tax on net profits above AED 375,000. Subsidiaries must register with the Federal Tax Authority (FTA) and file returns annually.
VAT Registration
If the annual turnover exceeds AED 375,000, VAT registration is mandatory. Businesses must charge and collect 5% VAT and submit VAT returns quarterly.
Compliance Responsibilities for Subsidiary Companies
After registration, you must meet ongoing obligations:
- Renew trade license annually
- Maintain proper bookkeeping
- File annual audits (mandatory in most free zones)
- Renew visas and Emirates ID
- Submit tax returns on time
Failure to comply can result in penalties, blacklisting, or license cancellation.
Common Challenges in Subsidiary Setup
Setting up a subsidiary business in Dubai can come with hurdles, especially for first-time investors.
Top Challenges
- Choosing the right business jurisdiction
- Navigating local regulations and approvals
- Attestation and legalization of documents
- Bank account delays due to compliance checks
- Understanding VAT and corporate tax rules
With proper planning and professional guidance, these challenges can be managed smoothly.
How Professional Consultants Make the Process Easier
Setting up a business in Dubai involves coordination with multiple departments. Company setup consultants simplify the entire process by handling:
- Trade license registration
- Legal documentation and attestation
- Business location support
- Banking assistance
- Visa processing and employee onboarding
- Ongoing compliance and renewals
Working with experts helps you avoid delays, meet legal requirements, and focus on business growth.
Conclusion
Setting up a subsidiary company in Dubai is a smart and strategic move for businesses that want to grow in the UAE and GCC market. With tax benefits, full ownership, and world-class infrastructure, Dubai offers everything needed to run a successful business.
Whether you choose a mainland setup or free zone company, taking the right steps and working with professionals ensures smooth operations.
If you’re planning to expand your business, get in touch with our Company Setup Consultants in Dubai, UAE — and let us help you launch with confidence.
FAQs
What is the difference between a branch and a subsidiary in Dubai?
A branch is part of the parent company and not legally separate. A subsidiary company in Dubai is a fully registered legal entity with its own license, capable of operating independently.
Can a foreign company own 100% of a subsidiary in Dubai?
Yes. In most sectors and jurisdictions, especially in free zones, 100% foreign ownership is allowed.
Is it mandatory to have a local sponsor for a subsidiary in the mainland?
No. With recent law changes, many business activities allow full foreign ownership in the mainland without a local sponsor.
How long does it take to set up a subsidiary in Dubai?
It usually takes 2 to 4 weeks, depending on jurisdiction, documentation, and business activity.
Do I need to rent office space to register a subsidiary in Dubai?
Yes. A physical address is mandatory. Free zones offer flexible desk options, while mainland setups require a physical office with Ejari registration.
What are the minimum capital requirements for a subsidiary?
Most free zones have no minimum capital, while some mainland setups require proof of capital during incorporation, depending on activity.
Do I need to file annual financial reports?
Yes. Many jurisdictions require annual audit reports, especially free zones and companies registered under UAE corporate tax law.
Can a subsidiary apply for employee visas?
Yes. Once licensed, a subsidiary company in Dubai can sponsor employee visas through the immigration department.
