Dubai, one of the most popular and fastest-growing cities in the United Arab Emirates (UAE), is a hub of international trade and commerce. Due to its strong economic climate, many entrepreneurs choose Dubai as the hub for their business operations. In fact, over 55,000 new business licences were granted in the previous year alone, highlighting the city’s appeal for new businesses.
However, the process of starting a business in Dubai can be overwhelming for newcomers, and obtaining a trade licence is a crucial step in the process. In this article, we will provide you with a comprehensive guide to explain what a trading licence is, what are its various types and how to obtain one.
Keep reading to find out.
What is a trade licence in Dubai?
A trade licence is essentially a legal document that allows a business to operate in Dubai. It is issued by the Department of Economic Development (DED) in Dubai and is required for all businesses in Dubai, whether they are owned by individuals or corporate entities. Without a licence, it is illegal for a company to operate in Dubai.
The licences allow businesses to engage in commercial activities such as importing and exporting goods. In addition to mainland businesses, trading licences are also available to companies operating within Dubai Free Zones. Moreover, professionals who offer services unique to their business can also apply for a licence.
Types of trade licences in Dubai
In Dubai, trading licences are not uniform, and there are three main types of licences available:
1. Professional licences: For individuals who provide specific services.
2. Commercial licences: For all types of business activities.
3. Industrial licences: For companies engaged in manufacturing and industrial operations.
Before applying for any of these licences, it is important to ensure that all required paperwork is in order. Failure to do so may result in delayed issuance of the licence.
There is also a type of licence called the e-trader licence.
The e-trader licence Dubai is a digital licence that allows businesses to operate online without the need for a physical presence. This means that businesses can operate from anywhere in the world as long as they have an internet connection. The licence is issued by the Department of Economic Development (DED) in Dubai and is valid for one year.
The next obvious question will be who can apply for the e-trader licence Dubai?
The e trader licence is designed for individuals who wish to conduct business activities through social media platforms and e-commerce websites. This includes activities such as selling products and services, advertising, and marketing. The licence is available for UAE citizens, GCC citizens, and expatriates residing in Dubai.
Difference between Mainland, Free Zone and Offshore trade licences
The location where you establish your business, whether in a free zone or on the mainland, will determine the type of licence that you must apply for.
When setting up a business on the Dubai mainland, you must obtain a mainland licence, which is subject to the approval of various government agencies and the regulations that apply to mainland operations, as issued by the DED. On the other hand, licences for free zone trade are granted by the authorities in the relevant free zone. Each licence comes with its own set of restrictions and advantages.
Let’s look at these types of licences in detail.
Mainland trade licence
A mainland licence allows a company to operate anywhere in Dubai. The company can operate within the UAE and can engage with international clients. Additionally, a mainland licence also allows a company to bid on government contracts and participate in exhibitions and conferences.
Free zone trade licence
A free zone licence allows a company to operate within a specific free zone in Dubai. There are several free zones in Dubai and each free zone has its own regulations and requirements. With this licence, a company can only conduct business within the free zone. However, a free zone licence comes with numerous benefits, such as 100% foreign ownership, tax exemptions, and easy access to the global market.
Offshore trade licence
An offshore licence allows a company to operate outside the UAE. It is not a licence to operate within Dubai or the UAE, but it provides a number of benefits, including 100% foreign ownership, tax exemptions, and asset protection.
Various benefits of having a trade licence in Dubai
Establishing company branches or organisations in the UAE is a popular choice for many business owners due to the nation’s numerous business advantages. Below are some of the key benefits of having a licence in Dubai.
1. Expand domestic and international trade
With a general commerce licence, business owners have plenty of opportunities to manufacture or import goods. They can choose to sell their goods in the Dubai market or export them to foreign markets, and thereby earn revenue from both.
Furthermore, a general trading licence allows for the re-export of products, which can significantly enhance a company’s capacity for international trading of goods and services.
2. Enhance credibility
While some companies may look for ways to increase profits by circumventing laws and regulations, customers tend to trust businesses that abide by the rules. A trading licence goes a long way in increasing a company’s visibility in the markets it serves, improving its credibility and promoting customer loyalty.
3. Minimal trade restrictions
Dubai is known for having few trade restrictions, making it an ideal location for businesses to operate and thrive. As long as their products are registered under a general trading licence, business owners need not worry about limitations.
4. Easy setup process
Issuance of a trade licence in Dubai is significantly more quickly than other company licences in the UAE. However, as long as you have the necessary paperwork you should have no reason to worry about getting your licence. The processing period for Dubai trade permits is also super quick. In a matter of a few weeks, you can establish a business in any free zone or on the mainland of Dubai.
Furthermore, once you obtain your licence, it is not mandatory to submit your auditing report for the time being. You avoid creating a tonne of paperwork in the future by doing this.
5. Sponsorship options
The simplicity of sponsoring dependents is one of the main advantages of obtaining a trade licence in Dubai. You can therefore bring your family or coworkers to Dubai. You can assist individuals in obtaining visas if you have a trading licence. This makes starting a new life or business in Dubai simpler than ever for you.
6. Tax exemptions
Businesses find Dubai attractive because it offers numerous tax exemptions and incentives. Free zone companies, for example, receive 100% tax exemption on corporate and personal income tax as well as import and export duties limited to certain products. The corporate tax shall be introduced from 1st of July 2023, 1st of January 2024 or 1st of April 20, 2024 depending on the financial year followed. There would continue to be 100% tax exemption on personal income tax.
7. Easy access to financial funding
Companies with a licence in Dubai can access a range of funding options, such as bank loans, venture capital, and private equity. All thanks to Dubai’s robust financial sector.
8. Government Support
Companies with a licence receive support from the government. Dubai’s government provides a range of services and support to businesses, including training programs, networking events, and government contracts.
Now that we know the benefits of having a trading licence in Dubai, let’s explore the benefits various individuals can avail with their e-trader licence Dubai. They are as follows:
Flexibility: The licence allows businesses to operate online from anywhere in the world.
Cost-effectiveness: The licence fee is affordable, making it accessible to small businesses and individuals.
Ease of application: The application process is simple and can be completed online.
Validity: The e-trader licence Dubai is valid for one year and can be renewed online.
Compliance: The licence ensures that businesses operate in compliance with Dubai’s regulations and laws.
Documents required for obtaining a trade licence in Dubai
The documents required for obtaining a trading licence in Dubai vary depending on the type of licence and the nature of the business. However, some of the common documents required are as follows:
- Passport copies of all shareholders and partners.
- A copy of the lease agreement for the business premises or proof of ownership.
- A No Objection Certificate (NOC) from the sponsor, if the business is owned by a foreign national.
- A business plan detailing the nature of the business, its objectives, and financial projections.
- A trade name reservation certificate.
- Memorandum of Association (MOA) or Articles of Association (AOA).
- Proof of payment of the trade licence fee.
- Any additional documents as required by the specific licensing authority.
How to get a trade licence in Dubai?
The process of obtaining this licence in Dubai can be complex, and it is recommended that you seek the assistance of a business setup consultant. That said, here are the steps required for obtaining a trading licence in Dubai.
Step 1: Choose a Company Name
The first step in obtaining your licence is to choose a suitable trade name that follows the UAE’s rules for choosing a company name. Additionally, ensure that no other active entity is currently using the name.
Step 2: Establish Your Legal Framework
To proceed with your licence application, select your company’s legal structure. The legal framework will determine how your firm operates and who is responsible for it.
Step 3: Define Your Commercial Activities
After deciding on your company’s name and legal form, specify the commercial activities you intend to carry out.
Step 4: Complete the Application Form
The next step in the process is to complete the application form and submit it to the DED for initial approval.
Step 5: Approval from other authorities (if required)
It is possible that they might need to obtain additional approvals for certain business activities. To avoid rejection of your licence application, ensure that you conduct thorough research before finalising your business formation process.
Step 6: Gather necessary documents
In addition to your completed application, you will need to provide several supporting documents along with your licence. Compile these documents and make sure that all the required signatures are present.
Step 7: Choose a business location
You have several options when it comes to the type of trade licence you wish to apply for. However, for a mainland licence, you will need a physical business location.
Once you have chosen a location, obtain a tenancy agreement that includes Ejari attestation, which you will provide along with the rest of your application paperwork.
Step 8: Submit your application
Once you have all the necessary materials and a business location, submit your licence application to the DED along with all required paperwork.
Step 9: Pay the licence fees
Obtaining the licence involves payment of both the licence fee and the issuance fee, so keep this in mind while preparing your application.
Time taken for the approval of trade licence
The time taken for approval of a trading licence in Dubai varies depending on the type of licence and the nature of the business. Fortunately, obtaining a Dubai trade permit doesn’t require an extensive wait.
Typically, the processing time for this licence ranges between three days to four weeks. However, the precise time may vary depending on the required approvals and the type of business activities involved. Provided you have all the necessary documents in order, your application should be processed promptly. To ensure your licence is granted as soon as possible, make sure to review and verify your application forms before submission.
Securing a trade licence in Dubai can be a straightforward process if you follow the necessary steps and meet the requirements. However, navigating the legal and financial requirements can be challenging, and that’s where we come in.
As one of the leading business consultants in UAE, our team of experts at Nair & Nelliyatt Chartered Accountants can help guide you through the process of obtaining a trade licence and e-Trader licence Dubai, ensure that you meet all the necessary requirements and avoid any potential pitfalls.
If you’re looking to start a business in Dubai or need assistance with your current trading licence, don’t hesitate to reach out to us at email@example.com or +97143577678. Take the first step towards setting up your business today.