The United Arab Emirates is the economic heart of the Middle East. Starting a business here is incredibly straightforward. The process begins with obtaining a business license.
There are many aspects to consider when selecting a trade license. They’re not just a legal requirement but a prerequisite.
Understanding the types of trade licenses is crucial. They determine how – and where – you can operate in Dubai and the rest of the UAE.
As we’ve said, it is an uncomplicated process to start a business in the UAE – when you’re dealing with an expert like Trade License Zone, that is.
So, here’s everything you need to know about how to start a business in the UAE and apply for the right trade license.
Trade License and Business Law
A trade license serves as your company’s identification and provides you with legal trading rights. It also assigns businesses to specific business activities in a region. What that means is your business can operate in a region and trading zone. And, you will also be able to make use of incentives and support specifically offered to those types of business license holders.
Types of business licenses in UAE
• A Commercial License for General Trading Businesses
• A Professional License for Service-Related Businesses
• An Industrial License for Manufacturing Businesses
• A Tourism License for Travel and Tours Business Activities
Selecting the Right Trading License in Dubai
The Department of Economic Development (DED) has set up these trading licenses to align with the type of business activity you wish to start. For example, if you’d like to start an e-commerce business, you’ll need a Commercial License. You can’t make your own products with this license type, though. For that, you’d need an Industrial License. And, in the same way, Industrial License holders can’t sell directly to the general public. We’ve got a curveball for you, too: your e-commerce business can also sell offline. But, it can’t offer a service to help other traders and customers – that would require a Professional Trade License.
We can also tell you that a trading license varies on the industry you’re involved in, your company’s legal holding structure, your location, and your business activity.
Choosing the wrong business license can result in your application being denied or delayed. Don’t stress. Friendly advice awaits you.
Trade License Zone will help you through the whole process: creating your company’s legal structure (and even the company name), choose the right trade license for your business, the license application, complete all the required documents, attain initial approval from government agencies, manage all aspects of the license application process, communicate with the authorities on your behalf, and let you know when you’re ready to trade.
What are Offshore, Free Zone or Mainland Licenses?
There are three further types of business licenses in Dubai and the other Emirates. These trading zones cover all the business activities in the UAE.
A Mainland license allows a company to do business in the Dubai mainland or Dubai onshore areas. The trading license is issued by the Department of Economic Development (DED). And, approvals are required from governmental and non-governmental agencies as well.
Mainland companies have a limited number of benefits when compared to Offshore or Free Zone companies. Sadly, they don’t enjoy any tax exemptions. But, they are exempt from customs duty on imported equipment for their business activities.
Free Zone Licenses
A Free Zone license is granted by a specific Free Zone authority. Free Zones are specialised commercial sectors designed for specific business activities. For example, a music production company would apply for a Free Zone business license to operate in the Dubai Music City.
Entrepreneurs and investors can set up a Free Zone company without even having to visit Dubai, which makes them very popular among entrepreneurs who are not familiar with setting up businesses abroad. Plus, they are exempt from taxation for 20 years – if their head office is located in a Free Zone. Free Zone companies are also exempt from customs duty on imported equipment for business activities.
Offshore trading licenses are the most common type of new company in the UAE. The Offshore licenses aren’t quite the same as Mainland licenses and Free Zone licenses.
The biggest difference is that offshore companies are not allowed to trade within the UAE.
A Mainland license is actually an incorporation certificate that allows this type of company to trade via UAE bank accounts.
Offshore companies must have an offshore bank – and these are exempted from local taxation and are taxed only on the interest income earned by the business. This means that there are no restrictions on repatriation of capital or profits back to their home countries.
What is the renewal process of trade licenses in Dubai?
All trade licenses must be renewed annually. It is an uncomplicated process. It is a matter of getting all the required documents in hand, following all the rules, and you’ll be issued a renewed trading license.
That sounds straightforward – but you might not be familiar with all the different governmental bodies’ requirements and documentation for external approvals beforehand.
For example, a restaurant business in Dubai will need an approval letter from the Food Safety Department and a special approval letter from the local municipality before you’re able to apply for a business license renewal. You’ll also need to submit all the documents of your company formation, banking facilities, your business location and tenancy contract, and business activities.
Are you sweating about this now? Don’t. Trade License Zone will help with every step and will let you know when your new business license is ready for collection or delivery to your office.
Steps to apply for a trade license in the UAE
Once you submit your application for a UAE trade license, it can take up to 30 days before your registration is completed and approved.
There is an instant license you can obtain to being trading immediately – but your final license has no currency restrictions or an additional issuance fee.
Additional documentation might be required for your application, depending on the type of business. For example, if you are setting up your own private limited liability corporation (LLC), then you will have to submit additional documents such as an Emirates ID copy, your company’s business registration certificate and the general trading license.
The easiest way to start a business in the UAE
It’s easy to feel daunted by the prospect of starting your own business in Dubai and applying for the right trade licenses. However, while the application process is very particular, help is always at hand.
A company formation expert can handle every aspect of your application for you, liaising with all authorities on your behalf and advising on the type of setup that best suits your needs.
That’s why it’s always advisable to acquire the services of a business setup company if you wish to start a business in Dubai. We not only advise on the process but also seek out the most suitable way forward based on your needs and your budget. Our dedicated team of business people are here to help you.
When you work with us, all you need to provide is some basic documentation and a little information about the nature of your business. Then, sit back and let the experts take care of the rest – managing your license and visa applications, communicating with all relevant departments and authorities, and reporting back when you’re ready to start trading. It really is that simple.