Foreign company branch liquidation in Dubai is a formal and regulated process that differs significantly from closing a locally incorporated entity. Foreign companies operating in the Dubai often choose to establish branch offices to expand their presence without creating a separate legal identity. However, when it comes to ceasing operations, the liquidation of a branch follows a specific, legally governed process.
This article explains the complete liquidation process for foreign company branches in the Dubai, including required documentation, legal obligations, timelines, and common challenges.
What is a Branch of a Foreign Company in the Dubai?
A branch office is an extension of a foreign parent company, legally dependent and not a separate legal entity. It operates under the parent’s name and engages in similar business activities. It does not have its own share capital and cannot conduct activities beyond those permitted to the parent company.
Why Proper Liquidation of a Branch Is Essential
If a foreign branch is no longer operating, it must be formally closed through legal liquidation. Failure to do so can lead to:
- Accrual of penalties and fines from authorities
- Blocking of parent company future registrations
- Immigration and labor issues for associated employees
- Reputational risk for the parent company
Step by Step Process for Liquidating a Foreign Branch in the Dubai
Whether the branch is in Dubai, Abu Dhabi, or any other emirate, the following steps are generally applicable:
Board Resolution from the Parent Company
The parent company must issue a board resolution confirming the decision to liquidate the branch. This resolution must:
- Be attested by the relevant foreign authorities (Ministry of Foreign Affairs)
- Be legalized by the Dubai Embassy in the parent company’s country
- Be translated into Arabic and attested by the Dubai Ministry of Foreign Affairs
Appoint a Licensed Liquidator
A registered and approved liquidator must be appointed to carry out the process. The appointment letter must be submitted along with the board resolution.
Obtain Initial Approval from the Licensing Authority
- Apply for initial approval for liquidation with the relevant licensing body:
- DED (Dubai Economic Department) for mainland companies
- Free Zone authorities if operating within a Free Zone
- Submit the required documents and pay the initial fees.
Publish Liquidation Notice in Newspapers
- A notice must be published in two local newspapers (one Arabic) for a period of 45 days.
- This is to notify creditors and allow them to raise claims, if any.
Cancel All Visas and Labor Permits
- Cancel all employee visas and obtain MOHRE clearance (if applicable).
- Cancel Immigration Establishment Card from the GDRFA.
- Obtain final clearance from the Ministry of Human Resources & Emiratisation.
Settle All Outstanding Liabilities
- Clear all financial obligations including:
- Employee dues and gratuity
- Utility bills
- Rent and lease agreements
- Bank liabilities
- Supplier payment
- Submit No Objection Certificates (NOCs) from:
- Landlord (Ejari : tenancy contract)
- Telecommunication providers
- Utilities (DEWA, SEWA, etc.)
- Bank account closure letter
VAT Deregistration (if applicable)
- If the branch was VAT registered, you must apply for VAT deregistration with the Federal Tax Authority (FTA).
- Failure to deregister may result in fines of up to AED 10,000.
Submit Final Liquidator’s Report
- The liquidator will prepare a Final Report, confirming:
- All liabilities are settled
- No outstanding legal or financial claims
- Company assets and records are accounted for
- This report must be submitted to the licensing authority.
Receive Final Clearance and Deregistration Certificate
Once all steps are completed and documents are submitted, the relevant authority will issue:
- Final clearance certificate
- Branch deregistration certificate
- License cancellation confirmation
Key Documents Required
Here’s a list of documents typically required for liquidating a foreign branch:
- Parent company board resolution for liquidation
- Power of Attorney (if using a PRO or consultant)
- Liquidator appointment letter
- Trade license copy
- MOA / Service Agent Agreement
- Emirates ID and passport copies of local manager
- Visa cancellation proof
- Labor and Immigration clearance
- Final audit report (if required)
- FTA VAT deregistration certificate
- Lease termination and DEWA clearance
- Bank account closure certificate
Cost of Liquidating a Foreign Branch in the Dubai
Legal Translation & Attestation
The cost for translating and attesting legal documents usually falls between AED 3,000 to AED 7,000, depending on the number of documents and complexity.
Newspaper Advertisements
Publishing the required public notice for liquidation in newspapers generally costs around AED 1,000 to AED 2,500.
Liquidator Fees
Appointing a licensed liquidator is a mandatory step. Liquidator fees typically range from AED 5,000 to AED 10,000 or more, based on the branch size and liabilities involved.
Clearance & Government Fees
Obtaining clearances from government authorities, ministries, and relevant departments can cost approximately AED 3,000 to AED 6,000.
Total Estimated Cost
When combining all expenses, the total estimated cost of liquidating a foreign branch in the Dubai usually ranges from AED 12,000 to AED 25,000 or higher, depending on the complexity and outstanding obligations.
Common Challenges in Liquidating Foreign Branches
- Delays in attestation of foreign documents
- Outstanding employee dues or labor complaints
- Bank account closure complications
- Delayed VAT deregistration and FTA penalties
- Unresolved lease contracts or landlord disputes
Tips for Smooth Branch Liquidation
- Plan 2 to 3 months in advance
- Appoint a qualified liquidator and PRO
- Start visa and labor cancellations early
- Ensure all government and tax filings are up-to-date
- Communicate clearly with all stakeholders
Frequently Asked Questions (FAQs)
No. Appointing a licensed liquidator is mandatory for closing a foreign branch. The liquidator handles the financial settlement, prepares the final report, and ensures compliance with all legal obligations.
The full process usually takes around 45 to 90 days, depending on how quickly clearances, attestations, and cancellations are completed.
Yes. If the branch was VAT-registered, you must apply for VAT deregistration with the Federal Tax Authority (FTA) as part of the liquidation process.
If you do not complete legal liquidation, penalties will continue to accumulate. Government records will show the branch as active but non-compliant, which can lead to blocked services, fines, and legal complications for the parent company.
Yes. Employment contracts must be legally terminated, all dues paid, and work permits canceled. MOHRE clearance is required to confirm no outstanding employee liabilities.
Conclusion
The liquidation of a foreign company branch in the Dubai is a multi-step legal procedure that requires strict compliance with Dubai laws. From document attestation to clearances from multiple departments, every step must be handled diligently to avoid fines, delays, or legal complications. If your foreign branch is no longer active or you’re planning a strategic exit, formal liquidation is not optional it is mandatory.
