Trade can only be legal in the UAE with relevant registration and the appropriate commercial or professional licence in Dubai. The procedure of registration and licence helps the UAE law govern every single trade conducted within its jurisdiction. So, to have a seamless business, work or an alternate profession, obtaining an apt licence from the DED is pivotal.
Dubai Business Licence – The Law:
In Dubai, the Department of Economic Development (DED) is responsible for issuing licences for various business activities. It has three popular business licence categories: commercial, professional, and industrial. While trading activities require a commercial licence and most manufacturing activities require an industrial licence, service-oriented businesses must obtain a professional licence in Dubai. The Department of Economic Development (DED) in Dubai governs the issuance and regulations of all these licences. You can find detailed information and specific requirements on their website or consult a business setup specialist in Dubai.
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Professional licence in Dubai vs the commercial licence – Understanding the difference
What is a professional licence in Dubai?
A professional licence in Dubai is for individuals or entities offering professional services, expertise, or artisan skills. Roles such as consultants, auditors, engineers, doctors, freelancers, and influencers come under this category. For example, as a doctor, if you want to open a physical space such as a clinic or practice from home, either way, you will need a professional licence. It is necessarily a service licence. Holding a professional licence means operating independently and offering specialized services across Dubai.
Key Features of Dubai professional licence:
- Allows 100% foreign ownership.
- Requires a local service agent for legal and administrative processes.
- It is ideal for professionals wanting to practice their expertise.
What is a Commercial licence in Dubai?
Conversely, a commercial licence is for businesses trading, buying, or selling goods. Such trading includes various activities from import-export to retail and wholesale trading.
Key Features of Commercial licence in Dubai:
- Necessary for companies involved in trade or commerce.
- Allows for a broader range of business activities under a single licence.
Professional vs. Commercial licence in Dubai for Businesses:
Choosing a suitable licence is crucial for setting up your business in Dubai. Here’s a breakdown of professional and commercial licences:
1. Professional licence in Dubai:
- Activities: Ideal for businesses offering services based on expertise such as consultancy, design, legal advice, medical practice and other services.
- Ownership: 100% foreign ownership is allowed, making it attractive to expats.
- Liability: Unlimited liability for the licence holder unless the company chooses to be a limited liability company (LLC).
- Minimum Share Capital: AED 150,000 (approx. USD 41,000)
- Cost: Approximately AED 11,000 (approx. USD 3,000)
2. Commercial licence:
- Activities: Covers businesses trading goods and services, like import/export, retail, restaurants, and car rentals, among other trades.
- Ownership: 100% ownership is possible based on activities.
- Liability: Limited liability for shareholders, offering protection from personal assets.
- Minimum Share Capital: AED 150,000 (approx. USD 41,000)
- Cost: Approximately AED 17,000 (approx. USD 4,600)
Why do you need a business licence in Dubai?
Obtaining the correct licence ensures:
- Compliance with Dubai law: Operating without a licence is illegal and can lead to penalties.
- Business legitimacy: Having a licence establishes your business as legitimate, fostering trust with customers and partners.
- Access to specific activities: Certain activities are only permitted under specific licences.
- Work visas for employees: Businesses need a licence to sponsor and obtain work visas for foreign employees.
Who needs business and trade licences in Dubai?
Everybody and anybody who wants to earn an income through a trade, service or engage in a business will need a licence. Roughly, the following categories may help you understand better the types of business that fall under each of these licence.
- Dubai Professional licence: A consulting firm, a freelance graphic designer, and a private medical practice.
- Dubai Commercial licence: A clothing store, a restaurant, a car dealership, an import-export company.
Ownership and Control:
One of the stark differences lies in ownership. Professional licence in Dubai allows 100% foreign ownership, ensuring complete control over operations. In contrast, Dubai’s commercial licence traditionally requires a UAE national as a majority partner (except in free zones where 100% foreign ownership is possible).
Nature of Business Activities:
Professional licences in UAE are made for service-oriented professionals, whereas commercial licences cater to trading activities, necessarily selling or buying goods. The choice between them depends on whether your business delivers professional services or engages in trade.
Legal and Administrative Requirements:
While all licences are administered and issued by DED, the requirements for obtaining and maintaining these licences vary. Dubai professional licences typically require less stringent requirements but need a local service agent. Given their potential impact on the local economy, commercial licences in Dubai involve more comprehensive documentation and approvals.
Business licence in Dubai: the Application Process
The application process for both licences involves several steps, including choosing a business activity, registering a trade name, and submitting the necessary paperwork to the DED. However, Dubai professional licence applicants must also demonstrate their qualifications and expertise in their field.
Cost Implications
The cost of obtaining and renewing these licences varies, with commercial licences generally incurring higher fees due to their broader business scope. The price also depends on the location (mainland or free zone) and your business’s specific activities.
Instant licence in Dubai: Cut through the process
Two methods of obtaining a business licence in Dubai are the standard (normal) and the instant.
The standard method is following all the procedures and waiting to receive the licence. However, Dubai offers an innovative solution for entrepreneurs looking to quicken the business setup process with the “Instant licence” initiative. This streamlined service is designed for a commercial and professional licence in Dubai applicants, enabling businesses to launch operations promptly.
Applicability: The Instant licence is available to various business types, simplifying the setup for start-ups and established entities. Whether you’re a professional offering specialized services or a trader, this option cuts through the red tape.
Renewal Process: Instant licences typically require annual renewal, ensuring businesses meet Dubai’s regulatory standards continuously. The renewal process is straightforward, supporting uninterrupted business operations.
Cost Considerations: The price of obtaining an Instant licence varies based on the business activity, location, and specific requirements. While offering a faster setup, it remains cost-effective, particularly for new entrepreneurs struggling through the initial stages of establishment.
Dubai’s Instant licence represents a significant leap towards facilitating business innovation and entrepreneurship. Especially for the commercial licence in Dubai, a lengthier and
more strenuous method of obtaining the licence. Minimizing bureaucratic hurdles opens new vistas for rapid business deployment through Dubai professional licences and commercial licences.
Renewal and Cancellation of Business Licence in Dubai:
In Dubai, the efficient management of business licences, including their renewal, cancellation, and adherence to legal requirements, is vital for operational success. licences typically require annual renewal, ensuring businesses remain compliant with evolving regulations. Failure to renew or comply can lead to automatic cancellation by legal authorities, highlighting the importance of diligent licence management.
Cancelling a licence involves submitting a formal request and necessary documentation to the Dubai Department of Economic Development (DED) or the relevant free zone authority. This step is crucial for businesses looking to cease operations legally and avoid potential fines.
Legal authorities in Dubai have the power to cancel licences for non-compliance, such as violations of local laws or failure to renew on time. This underscores businesses’ need to stay informed and compliant with local regulations.
Whether for your professional licence in Dubai or the commercial licence, partnering with a consultancy of experience is foremost.
NNCA offers comprehensive support for businesses navigating the complexities of licence renewal, cancellation, and compliance. With expertise in legal documentation, regulatory compliance, and liaison with authorities, NNCA ensures businesses can focus on growth while maintaining legal and operational integrity.
