No business in the United Arab Emirates can operate without a trade license. The two most popular types of trade licenses issued in Dubai are the Commercial License and Professional License. These allow you to start your new business as a foreign investor in the UAE.
In this article, we will explain the differences between a Commercial License and a Professional License, the advantages of each, and how to set up a business in the UAE.
Commercial License vs Professional License: The Difference Explained
The Department of Economic Development (DED) issues both trade license types. The Commercial and Professional license types regulate the business activities of companies registered – and knowing the difference is important for the operation of your business. Let’s take a closer look at them in this section:
- A Commercial License allows businesses and companies to undertake any trading activities. Consider this as a general trading license for goods for import/export and retail business activities.
- A Professional License is aimed at service-related business activities for individuals or companies that offer expertise in a specific business area and educational background.
The major differences between the two license types are in terms of ownership, trade license fees, share capital, and legal liability.
Ownership:
- Commercial licenses in Dubai allow foreign investors to only own up to 49 percent of the business’s shares and an Emirati national or local service agent must hold a minimum of 51 percent.
- Professional license holders may own 100 percent of the company’s shares and can be the sole owner.
Minimum Share Capital:
- The minimum share capital for a company with a Commercial License is AED 300,000.
- A Professional License holder’s company needs only a minimum share capital amount of AED 150,000 in comparison.
Government License Fees:
- Commercial License fees are higher than for Professional Licenses.
Liability:
- Commercial License holders are issued with limited liabilities.
- A Professional License means a company has unlimited liabilities. Should a Professional License holder wish to limit its liabilities, it needs to change its legal structure as an L.L.C. This will divide the ownership between the ex-pat or foreign investor and a required Emirati national partner.
Advantages of a Commercial License
Commercial licenses are issued to businesses whose whole process revolves around any type of commercial trade activity. As we have mentioned, consider this as general trading activities across retail, construction, and real estate sectors. This license category includes specialized traders too.
The benefits of a Commercial License in Dubai are:
- Can conduct a maximum of ten activities under one Commercial License.
- Several company registration options for business setup.
- Local government business support.
- Residence visas for employees and company management.
- Ease of access to opening corporate bank accounts and other banking facilities.
- Simple trade license renewal process.
Advantages of a Professional License
Professional licenses are issued to individuals who are skilled professionals in specific service-related business sectors with a relevant educational background.
The benefits of a Professional License in Dubai are:
- A fixed annual fee for Professional License holders.
- Transparency in dealing with clients.
- Residence visas for your business’s employees.
How to set up a Business in the UAE: Step by Step
Step 1: Partner with Trade License Zone
Partnering with a local company setup agency is the first step to opening any type of business in Dubai. Our business consultant experts at Trade License Zone will manage all aspects of your company setup, all the business activities, complete all the required documents, and trade licenses for you to trade as soon as possible.
Step 2: Choose a Legal Structure
The UAE has implemented innovative Free Trade Zones to stimulate and support industries and market sectors. By choosing the right legal structure, you can apply for a company license in a relevant Free Zone for maximum benefits and local government support.
Step 3: Choose and Register a Business Name
Trade License Zone can help you choose and register your company name with the UAE’s Registry Office. The business name must adhere to the UAE’s strict naming regulations. Business names cannot include any offensive or blasphemous language, nor any references to Allah or Islam. If you wish to include your name in your company name, you must use it in full rather than just your surname or initials. We’ll also check that your chosen name is available to be registered.
Step 4: Notarization of Business Documentation and Submission of Trade License Application Form
After your company name has been approved by the Registry Office, you need to apply for notarization of the company’s Memorandum of Association (MOA) and Articles of Association (AOA) with the Department of Economic Development (DED) in Dubai.
Along with your completed application form and business plan, you’ll also need to submit the following documentation to the DED:
- Proof of ID and address for directors and shareholders
- Passport copies for shareholders and directors
- Copy of company name confirmation
- Memorandum of Association (MOA)
- Articles of Association (AOA)
Step 6: Getting your Visas
Trade License Zone can help you get residency visas to live and work in the UAE. With your relevant work visa, you can sponsor your dependents for their visas, too. Our specialist teams will guide you through every step of the process.
Step 7: Choose a Premises
With your trade license in hand – and if it applies to your business activity, industry and trade license type – we can help you find the right rental premises and complete a tenancy contract.
Working with Trade License Zone
Business setup in the UAE is straightforward, but it remains a complex process – even if you think you know what you’re doing. When you partner with Trade License Zone, we will save you from unnecessary delays or rejections and make the entire process a streamlined one. When you work with the specialists at Trade License Zone, 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 trade license and visa applications, communicating with all relevant departments and authorities, and reporting back when you’re ready to trade. It really is that simple.