What is a Trade License?
Dubai is home to one of the largest and most complex business markets in the world. It offers a boundless array of business opportunities and benefits that draw thousands of investors to the region each day. With comprehensive incentive plans and little to no taxation on profits, it’s the perfect place to run your new business for maximum profits.
But it’s not a free-for-all in the UAE! Before you can create and run a business, you must obtain a trading license from the Department of Economic Development (DED). This license allows investors to form companies and conduct business in the various business sectors in the region.
Types of Trade Licenses in the UAE
Securing a trade license in Dubai usually depends on the type of business an entrepreneur wishes to conduct and where they plan to locate. The DED has established different license types to cover each sector.
1. Commercial License
This license covers most general trading businesses, including specialized trading activities.
2. Professional License
A professional license is directed towards businesses that engage in service-related professions like doctors, teachers, and lawyers.
3. Industrial License
Industrial licenses are provided to most manufacturers and the overall industrial sector.
4. Tourism License
Tourism licenses are given to businesses involved in the travel, tourism, and hospitality industries.
The Step-By-Step Process for Acquiring a Trade License in Dubai
When applying for a trade license in Dubai, it’s imperative to thoroughly research all the requirements and gather the necessary documents to complete the process. Failing to do so can result in outright rejection. Below, we’ve compiled a step-by-step guide to help you through securing a trade license.
• Select a Business Activity
The first step in acquiring a trade license is choosing a business activity for your new company. There are numerous available business activities, each with its own requirements and regulations. You’ll want to thoroughly research which sector provides the most benefits for your business.
• Choose your Business Location
Once you’ve picked a business activity, it will often dictate which location in the UAE works best for you. Each business sector will cater to different industries.
1. Mainland and Offshore
Businesses that hope to sell their products or services within the UAE will likely want to apply to mainland Dubai. However, formed companies in the mainland are limited to 49% ownership, with a UAE national sponsor owning the remaining 51%.
2. Free Zones
Dubai is also host to many free zones that preside over different business types. Companies founded in the free zones are restricted from trading within the UAE, but they are allowed 100% foreign ownership with no sponsorship necessary.
• Pick Your Legal Form
An important decision for your business, choosing your legal structure will give you a road map of how to allocate resources and assets.
• Register Your Company Name
The time has come to pick a name for your business! You’ll need to submit your business name to The Department of Economic Development (DED) for approval. During this phase, it’s important to note that the DED will not permit the use of duplicate, offensive, or blasphemous names.
• Gather Your Documents and Submit Application
You’ll want to gather all required documents and submit your application for approval.
Some of the essential documents you’ll need:
- A copy of passports for all shareholders and employees
- Your Memorandum of Association
- Bank Reference Letter
- Notice of Sponsorship (if necessary)
• Choose Your Business Office
At this point, you’ll need to choose an office space to accommodate your employees. There are numerous options available depending on the size of your company. The size of this office space will also determine how many visas you can request.
• Receive Approval
Once you’ve submitted your application with the appropriate documents, you’ll receive an initial approval letter.
• Collect Documents and License
After receiving your initial approval, you’ll be free to collect your documents and your trade license. Once you’ve received the license, you’re legally able to conduct business in Dubai!
The Renewal Process
Assuming you’ve had your business license for almost a year now, the time has come to complete the renewal process. Failing to submit the renewal application can result in penalties or even the termination of all business activities. Therefore, it’s vital to handle this annual renewal in a timely fashion. Below, we’ve laid out some of the steps to help you through trade license renewal in Dubai:
1. Check your Tenancy Contract
The contract for your office space must be renewed for longer than three months beyond the trade license renewal date.
2. Acquire Licensing Approval
You’ll need to secure approval from whichever authority presides over your business type. For example, a restaurant will need to consult with the Food Safety Department and secure approval prior to submitting the renewal application.
3. Gather Appropriate Documents
At this point, you’ll need to gather the appropriate documentation for your renewal application. These include, but are not limited to:
- A copy of your original trade license
- Audit reports
- Renewal confirmation for P.O. box
- Photocopies of passports for all shareholders
- Other documentation depending on your business activity and location
4. Submit Your Application
You’ve already done the hard part! Now you’ll just need to submit your application.
5. Receive a Payment Voucher
The DED will supply you with a payment voucher and a transaction number after submitting your application. You’ll want to make sure to pay all trade license costs to receive your final approval.
6. Receive License Renewal
The final step will be to receive your license renewal. This renewal will grant you the ability to conduct business in the UAE for another year.
Services in Dubai, UAE?
The Advantage of Trade Licenses
There are many advantages to securing a trade license in Dubai. In fact, you won’t be able to do business in the Emirates without one!
• Tax-Free Business
Most businesses are exempt from income and corporate taxes, allowing you to efficiently run your business and maximize profits.
• 100% Repatriation of funds on both capital and profit
This allows foreign businesses to keep the profits they make and return it to their home nation.
• Local and International Trade
Traders can sell their services in products locally and internationally.
Dubai fully understands that the future lies in the digital realm. To prepare, the DED has developed an E-Trade license for companies conducting business via an online medium. This allows home businesses to operate without being required to secure local partners or sponsors. As a result, any investor hoping to form an online business must own 100% of the company. Additionally, E-Trade licenses do not require the company owner to purchase physical office space to conduct business.
Obtaining an E-Trade license is perfect for investors hoping to take advantage of online sales’ enormous business opportunities.
MSZ Consultancy Can Help Guide You Through the Trade License Process!
There has never been a better time to apply for a trade license in the UAE! Securing your license will give you the power to set up shop and start conducting business. But it can be a daunting, complicated process for foreign nationals unaware of how day-to-day business operations work in the region. Therefore, many investors choose to hire consultants that are intimately familiar with regional laws and business customs. These advisors can help new business owners navigate the rocky terrain of business formation. And that’s where we come in!
With over 32,000 happy customers, MSZ Consultancy is among the leading experts in UAE business. From the UAE Mainland to the many free zones, our team of specialists can help you navigate any business hurdle! We provide professional advice on company formation, visa applications, trade license renewals, PRO services, and more! We’re your one-stop-shop for anything business-related.
Our experts are trained to provide you with insider advice on business operations in the Emirates and help you develop your company for maximum success. Give us a call today at +971 52 544 1248 and let us help you get back to business!