If you are starting a commercial business, it is necessary for you to get a commercial license in Dubai. There are different types of licenses issued by the authorities for each business sector, i.e, general trading license and commercial license. A commercial license covers limited and specific business activities.
A company can select a commercial license according to the requirements of business activities, type of business, and jurisdiction. A commercial trade license is a popular choice for many entrepreneurs. This business allows a company to trade all kinds of commercial goods. You can select mainland UAE or a free zone where the authorities issue commercial licenses for businesses.
Let us look at a commercial trade license in Dubai and how to get it in detail.
What is a Commercial License in Dubai?
A commercial license allows a business to buy and sell in the country and Import and Export. Dubai’s location plays an important role and lets businesses reach international markets. A commercial license not only allows you to run your business locally but also with international clients.
How to Get a Commercial License in Dubai?
A company needs to follow a few steps to get a commercial license in Dubai. The main steps involved are given below.
Choose a Jurisdiction
The first step is choosing a suitable location for your business, such as a Free Zone or mainland Dubai. It is important to keep in mind the laws and initiatives of these zones before selecting one for your business.
Choose a Name
Selecting a suitable name is also an important step for getting a commercial license in Dubai. Keep in mind that the name you choose must be unique and original and available to register.
Get initial Approvals
Your business license will need initial approval based on the business activity you select. The Department of Economic Development in Dubai can provide this approval.
Arrange Memorandum of Association
Arrange a memorandum of association for your company, as this is necessary to draft policies and regulations that the company and its workers will follow.
Submit your License Application
A mainland company can submit its application for a business license to the Department of Economy and Tourism. You must submit your application to the Free Zone Authorities for a free zone business. Along with the application, arrange all necessary documents and submit your fee.
Get an Office
It is important to get an office where you can properly run your business in the UAE. You can rent a building for this purpose and get it registered.
Open a Bank Account
After getting your commercial license in Dubai, Open a Bank Account for your company. This account will help you record all business dealings and finances.
Required Documents for Commercial Trade License in Dubai
Certain documents, given below, are required for completing the process of getting a commercial license.
- Photocopies of IDs and passports of all shareholders and owners
- Two passport-sized photos
- Filled application form
- Document of Rental Agreement (if any)
Commercial License in Dubai Cost
The Cost of a commercial license in Dubai is between AED 15,000 and 28,500. With the help of a business consultant you can easily manage these costs.
Benefits of a Commercial License in Dubai
There are so many benefits of getting a commercial license in Dubai, some of which are discussed below.
Exemption from Taxes
If you have set up your company in a free zone, you will get immunity from taxes. This benefit helps a company greatly, as it can save more and use this money for the future.
Reaching Global Markets
Companies can reach global markets and expand their business through international trade with a commercial license.
Multiple Business Activities
Under one commercial trade license in Dubai, companies can choose multiple business activities. There are many activities allowed by the Economic Development Department of UAE. You can select similar activities under one license and grow your business.
Get Visas for Foreign Workers
A company with a commercial license can get visas for its workers. This helps the company to hire experienced employees from all over the world.
Sell Different Goods
Under one license, a company can sell a wide range of goods and services in the UAE. This is a huge benefit for companies as it helps with business growth.
Safeguards your Business
Getting a business license helps with compliance with the regulations and protects against legal and financial crises.
Process to Get a Commercial License in a Free Zone
Getting a commercial license in a free zone is simple and involves a few steps which are given below.
- Select the type of license, trade activities, type of visa and office.
- Submit necessary documents such as a completed application form, a copy of your passport and visa, a passport-sized photo, and an Emirates ID.
- Register your documents through the registration portal.
- After the approval of the documents, you’ll get your commercial license in the free zone.
How to Renew a Commercial License in Dubai
The valid period of a business license is usually one year and needs to be renewed after that. Here is how you can renew the license.
Renewal Process of Commercial License in Mainland
The renewal process can be done by following the given steps.
- Go to the Economic Development Department’s website and log in.
- Select the option of “Renew License” and provide your license number.
- After that, review the details and pay your fee and collect the license from DED.
Renewal Process of a Commercial License in a Free Zone
The process of renewing a commercial license in the Dubai Free Zone is simple which involves the following steps.
- Application form
- Paying renewal fee
- After making a payment, you can get it via email or through related free zone authorities.
Remember that these steps may differ according to the type of company and related jurisdiction.
Allowed Business Activities Under a Commercial License
The kinds of activities for mainland and free zones differ in the UAE. Let us look at both of them separately.
Allowed Activities in Mainland
The activities allowed on the mainland are limited, which are,
- Import/export
- Real Estate
- Tourism
- Electronics Products
- Construction Material
- Brokerage Services
- Supply Chain Network
Allowed Activities in Free Zone
You can choose from a wide range of business activities in a free zone. As a free zone’s primary focus is technology and software development, the activities are similar to those of these sectors. The most common activities are,
- E-Commerce
- Software Development
- IT consulting services
Additionally, a free zone related to healthcare allows business activities related to it, such as,
- Trade of medical equipment
- Healthcare Consulting Services
Types of Business Licenses in Dubai
The authorities offer different types of Business licenses in Dubai. Some of the main types include:
Commercial License
A commercial trade license is for business related to general Trading in the UAE. With this license a company can sell their products in the local market as well as international. It is one of the most popular choices of entrepreneurs and allows several business activities.
Professional Business License
A professional license is suitable for companies involved in service-focused activities. These companies include consulting businesses, the educational and training sector, technology, and management consulting.
Industrial License
An industrial license is a good choice for companies involved in manufacturing goods from raw materials. These companies produce new products and semi-manufactured goods. An industrial license mandates that the company get a warehouse for running its business in the UAE.
Tourism Business License
A tourism company in Dubai can get a tourism license to run its business. Under this license, it can choose from many activities, such as hotels, travel agencies, tour operators within the country and outside, vacation homes, and boat trips.
Difference between a Commercial & Professional License
Knowing the difference between a commercial and professional license in Dubai is important before selecting a business license. Let’s examine the contrast between both.
Kinds of Ownership
A major difference between both is ownership. In the UAE mainland, commercial license holders can own only 49% of the shares of their business, while the remaining shares are owned by local Emiratis. A professional license holder can own 100% of the shares of their company.
Trading Activity
The difference in trading activities that both of these licenses cover is vast. Under a commercial license, you can select physical goods and services like rentals, automobile parts, software trading, and development services.
On the contrary, a professional license is essential for companies that provide training and education for different business sectors. Examples are business management consultancy, handicrafts, training programs, and medical care.
Business Ownership Liability
There is a huge difference between a commercial and professional license in terms of business ownership liabilities. A business with a commercial license possesses limited business liability, while a professional license holder company has unlimited business liability, except in the case of a limited liability company (LLC).
You must carefully consider your company’s business activities and objectives before selecting between a professional and a commercial license in Dubai. Understanding their differences will also help you make the right choice for your business and help with future growth.
Sum Up!
In summary, a commercial trade license in Dubai is an attractive option for new businesses in Dubai. Under this license, companies can conduct any kind of commercial activity in the UAE. You can get a normal license, which requires a memorandum of association, an Instant license, which is issued within five minutes and does not need external approvals, or an e-trader license for home-based businesses.
The procedure for getting a commercial license in the UAE is quite simple but requires proper knowledge and research. Get help from our expert team at Al-Riyady for a smooth legal work process. Our expert team is here to assist new entrepreneurs with easy business setup. Our services include Tax Consulting, accounting, auditing, and more.