Does a branch of a foreign company need to file Corporate Tax?
DOES A BRANCH OF A FOREIGN COMPANY NEED TO FILE CORPORATE TAX?
Does a branch of a foreign company need to file Corporate Tax in the UAE? Learn when filing is required, examples, and compliance steps. TAXESMAN.
Does a Branch of a Foreign Company Need to File Corporate Tax?
Does a branch of a foreign company need to file Corporate Tax in the UAE?
In most cases, yes. A foreign company branch operating in the UAE is generally treated as a taxable presence and may need to register and file Corporate Tax.
This question is especially important for international groups expanding into Dubai, Abu Dhabi, Sharjah, or UAE free zones. Many assume the head office handles everything abroad, but UAE rules work differently.
In this guide, you will learn when a foreign branch must file Corporate Tax, how the Federal Tax Authority views branches, and practical examples to help you avoid compliance mistakes.
If you want a clear answer for your business, contact TAXESMAN today.
Does a Branch of a Foreign Company Need to File Corporate Tax in the UAE?
The short answer
Yes. A branch of a foreign company generally needs to file Corporate Tax in the UAE if it conducts business activities in the country and is considered to have a taxable presence.
Under UAE Corporate Tax rules, a foreign company may be subject to Corporate Tax if it operates through:
- A branch
- A permanent establishment in the UAE
If you are unsure whether your UAE presence qualifies, this should be reviewed carefully.
Before relying on any exemption, get expert advice from TAXESMAN.
Why Is a Foreign Branch Treated as Taxable in the UAE?
The FTA focuses on where business activities are carried out, not only where the parent company is incorporated.
A UAE branch typically:
- Performs commercial activities locally
- Earns UAE-sourced income
- Is licensed and regulated in the UAE
Because of this, the branch is expected to comply with UAE Corporate Tax rules, including registration and filing obligations.
This is where many global headquarters misunderstand the rules. UAE operations are assessed separately for tax purposes.
Unsure how to calculate corporate tax for your foreign branch? TAXESMAN can guide you every step of the way.
Does a Branch of a Foreign Company Need to Register Before Filing?
Yes. Registration comes before filing.
If a branch of a foreign company needs to file Corporate Tax, it will usually also need to:
- Register for Corporate Tax with the FTA
- File an annual Corporate Tax return
- Pay any Corporate Tax due by the deadline
Even if no Corporate Tax is ultimately payable, registration and filing obligations may still apply.
TAXESMAN can help you determine your obligations.
How Is Corporate Tax Calculated for a Foreign Company Branch?
Corporate Tax for a foreign branch is generally based on:
- Profits attributable to the UAE branch
- Proper allocation of income and expenses
- Accounting records maintained for UAE operations
This means your branch should have:
- Separate tracking for UAE income and costs
- Clear support for head office charges
- Proper documentation for intercompany transactions
Mixing UAE and global accounts is one of the most common compliance risks.
If you need help calculating corporate tax for your foreign company branch, TAXESMAN is here to assist.
Examples: Does a Branch of a Foreign Company Need to File Corporate Tax?
Dubai Example: European Consulting Firm
A French consulting company opens a branch in Dubai to serve Middle East clients.
The Dubai branch earns fees locally and signs contracts in the UAE.
Result: The branch generally needs to register and file Corporate Tax in the UAE.
Abu Dhabi Example: Manufacturing Group
A manufacturing group headquartered abroad operates a branch in Abu Dhabi to manage regional sales.
The branch generates UAE income and incurs local expenses.
Result: The branch is typically subject to UAE Corporate Tax filing.
Free Zone Example: Foreign Technology Company
A foreign tech company sets up a free zone branch to support regional operations.
Even in a free zone, a branch of a foreign company may still need to file Corporate Tax, depending on the activities performed and income classification.
Free zone rules add complexity, but they do not automatically remove filing obligations.
Need clarity on corporate tax for your foreign company branch? Let TAXESMAN handle it for you.
Are There Any Exemptions for Foreign Branches?
Some exemptions may apply in limited situations, but exemptions are not automatic.
Key factors include:
- Whether a permanent establishment exists
- The nature of the branch’s activities
- Relevant double tax treaties
- Specific FTA guidance
Assuming an exemption without formal confirmation can lead to penalties later.
To assess whether your foreign branch qualifies for any exemption, it’s best to seek confirmation from TAXESMAN.
Common Mistakes Foreign Companies Make
When asking whether a branch of a foreign company needs to file Corporate Tax, many groups make these mistakes:
- Assuming head office filing covers UAE operations
- Failing to register the branch on time
- Mixing UAE and global financial records
- Ignoring transfer pricing and related party rules
These errors significantly increase audit and penalty risk.
To avoid risks from incorrect exemption assumptions, consult TAXESMAN for proper tax guidance.
Does a Branch of a Foreign Company Need to File Corporate Tax?
To summarise, does a branch of a foreign company need to file Corporate Tax in the UAE?
In most cases, yes. If the branch conducts business activities in the UAE, it will generally need to register, maintain proper records, and file a Corporate Tax return with the FTA.
Do not rely on overseas practices or assumptions. UAE Corporate Tax compliance for branches must be handled locally and correctly.
For clarity on exemption eligibility and FTA requirements, TAXESMAN is here to help.
FAQs: Does a Branch of a Foreign Company Need to File Corporate Tax?
Does a branch of a foreign company need to file Corporate Tax in the UAE?
Yes, in most cases, if it conducts business activities in the UAE.
Does a foreign branch need to register for Corporate Tax?
Yes. Registration is generally required before filing.
Does this apply in free zones?
Yes. Free zone status does not automatically remove filing obligations.
Is Corporate Tax based on global profits?
No. It is generally based on profits attributable to the UAE branch.
Who can help with Corporate Tax for foreign branches?
TAXESMAN provides registration, filing, and ongoing Corporate Tax support for foreign company branches.