Establishing a company in the heart of the UAE is thrilling, but all the spadework required to register your business in the emirate and obtain various licences to be able to trade in the desired territories and cities can make your heart skip a beat! One of the mandatory licences you need to operate legally in the UAE as an expat business person is a trade licence, a government approval in black and white giving you a go-ahead to carry on the planned commercial activities in the emirate you are registered.
What is a trade licence?
Obtaining a trade licence is an obligatory requirement and the mainstay of the company registration process in Dubai, UAE. It’s your trade licence only that allows you to trade in the city or any part of the UAE. Based on the nature of trade or business you are going to take forward, you can apply for any one of the three types of trade licences available in the UAE – Normal Licence, Instant Licence and DED trader licence. From illustrating the types of trade licences, to opting for the right licence – they have to consider several factors involved. In order to licence and register your business in Dubai, it’s important that you read this ultimate guide on Dubai Trade Licences.
Types of Trade Licence
Before we get into the various types of Dubai trade licences, let’s know who is in charge of trade licence issuance in Dubai. Well, it’s the location of your company that decides the licencing authority for the trade permit. While Dubai mainland or onshore businesses are licenced by the Department of Economic Development (DED) together with some governmental and non-governmental bodies responsible for several other approvals, free zone entities are licensed by their respective free zone authorities. As far as trade licence for offshore entities is concerned, it doesn’t exist. Because an offshore company in Dubai is not allowed to do business within the UAE, it doesn’t require a trade licence but an offshore incorporation certificate. Being an offshore entity, you are free to trade outside the nation through the UAE bank accounts. Now coming to trade licence kinds, broadly there are three types of trade licences, a business person can apply for:
Normal/General Trade Licence: This is a general commercial licence that is suited for businesses trading in a wide range of goods, whether related or unrelated. The perk of getting a normal trading licence is that it enables you to trade in a vast variety of goods – from food items to apparel to toys to electronic parts – under a single licence. It asks the existence of a Memorandum of Association (electronic or manual) and a site lease contract.
Instant Licence: This is the best option for those entrepreneurs who can’t wait to start a business in Dubai. As the term suggests, this type of trade licence is basically an express form of professional or commercial licence that can be applied without the usual approvals and documentation through DED eservices or through a business formation service provider in Dubai. Just one step and the licence is yours within a matter of 5 minutes if you are planning to conduct an activity or a bundle of activities that do not require external approvals. With an instant licence you right away can start trading and continue it for one year (with a virtual office) without submitting any MoA, EJARI or other documentation. The service package that you get to enjoy with instant trade are as follows:
- Dubai chamber membership for commercial activities
- The establishment card issued by the General Directorate of Residency & Foreign Affairs
- The establishment card provided by the Ministry of Human Resources and Emiratisation (MoHRE) where the client gets a text message approving the opening of the establishment card and an automatic file for the employment of 3 employees. This licence is available for the four legal forms i.e., Limited Liability Company (L.L.C.), Limited Liability Company Single Owner (L.L.C. – SO), Sole Establishment and Civil Company.
Why does one need a trade licence to run a business in Dubai?
Just like your Emirates ID card provides identification to you, a trade licence in Dubai furnishes an identification to your company and validates it as a legal entity. Besides keeping accountability of the business activities in the region, trade licences also categorise, protect and secure the interests of the companies’ proceedings. Trade licences ensure that your company acts in accord with the Commercial Companies Law of the UAE. Also, holding a trade licence in Dubai permits you to do business freely while complying with the regulations levied by governmental bodies.
What all trade licences in Dubai an entity can apply for?
There are majorly four types of business licences an entity who is intended to do conduct business activities in Dubai can obtain:
- Commercial Licence for General Trading Businesses
- Professional Licence for Service-Related Businesses
- Industrial Licence for Manufacturing Goods
- Tourism Licence for Travel and Tours Industry
Which trade licence is right for my business?
Trade licences in the UAE are issued to either shrink or expand the scope of your business. For instance, to commence an e-commerce business, a portal licence can suffice. However, in order to trade in self-manufactured products online, one needs to obtain a general trading licence in line with the guidelines issued by the Department of Economic Development (DED). This licence will allow them to become authorised traders and enjoy the freedom to trade offline as well. To figure out which trade licence is right for your business you have to overview certain deciding factors such as the sector you are in, your business activity, the structure of your business, jurisdiction your company comes under, and so on. It is advisable to consult with a company formation expert to analyse your present and future business requirements before applying for a trade licence in Dubai to avoid costly mistakes and wastage of your time and endeavour.
Where can I apply for a trade licence in Dubai?
The rights to licence companies in Dubai are reserved with the Department of Economic Development (DED). Therefore, you as a commercial entity must apply for a trade licence with the DED to do business in Dubai onshore or mainland. The process of licensing involves enormous documentation and paperwork, that might engage other legislative authorities as well.
How long does it take to receive a trade licence in Dubai?
Usually, it takes three days’ time for a trade licence to be issued to an entity, provided all the documents furnished to the issuing authority are in place and correct. However, the time frame can stretch up to a few weeks as well because the time taken to acquire a trade licence is subject to your business activity, various approvals concerning your business from governmental and non-governmental bodies, etc.
How much a trading licence in Dubai costs?
Swinging between AED 10,000 – AED 50,000, the cost of a trade license in Dubai varies as per the business activities and requirements of the entity. Where activity fees range between AED 150 – AED 500 depending upon the type of business activity. The costs associated with additional registrations, visas, premises and more can easily add up to the sum. To top it all, activity class guide fees, license replacement, license translation fees, etc. are some other components that contribute to the Dubai business licence costs.
What are the licences issued by the Abu Dhabi Department of Economic Development?
Such licences are of six kinds:
- Commercial Licence: This type of trade licence is issued to limited liability companies that are willing to trade, import and export goods across the UAE. The garden-variety licence also allows the holder to sell some services.
- Agricultural Licence: Agricultural activity practice licence allows the entities to get engage in a vast range of agricultural activities. Aquaculture licence that permits the farming of fish and related animals and Livestock production farming permit that allows the farming of livestock are the two other generally held licences by the entities in the UAE. As far as farming sector business licences (issued by DED) are concerned, Trade in Fertilizers & Agricultural Conditioners, Agricultural Services and Agricultural Consulting are three of the most common licences requiring external approval through an online application with the UAE’s Ministry of Climate Change and Environment.
- Craftsmanship (or Occupational) Licence: Craftsmanship licences can be acquired by any individual who independently wants to practice a craft for profit, and is completely reliant on their physical skills, or use of tools and equipment, such as blacksmithing, printing, carpentry, painting, etc.
- Professional Licence: Professional licences are offered to persons who want to make income in Dubai using their intellectual abilities, mental or creative skills, academic accomplishments and scientific talents, such as lawyers, consultants, hair specialists, auditors.
- Industrial Licence: Industrial licences are granted to factory owners. With this licence they can manufacture any type of products and sell them further with a motive to make profits. For example, food factories, sugar manufacturing units, etc.
- Tourism Licence: A tourism licence is required by the owners of facilities that specialise in tourist activities, such as hotels, travel agencies, restaurants, cruise boat rental, tourist camps and floating restaurants.
The procedures and documents required to apply for a business licence vary as per the legal status of the firm and the economic activity it plans to carry out.
How frequently do I have to renew my trade licence in Dubai?
A trade license granted by DED comes with one-year validity, therefore it has to be renewed every year. The renewal process of the mainland licence is straightforward and completes in following steps:
- Seek approval or authorisation from the concerned governmental bodies: First and foremost, you can’t apply for the trade licence renewal until you have been authorised to do so by the exclusive governmental entity. Say, you are running a taxi service company or driving training institute, you need RTA’s go-ahead to renew your trade licence in the form of an authorisation letter. Similarly, for restaurant owners, it’s compulsory they have approvals from the Food Safety Department and municipality.
- Present the required documents: In addition to the authorisation letter, you need to gather several other documents to be eligible for trade licence renewal. The bunch of papers include the typed renewal form, the tenancy contract, attested tenancy contract (EJARI), photographs of all the business partners along with the payment voucher/transaction number (given by DED).
- Ensure your tenancy contract is still valid for more than three months from the date of application: Before you start the trade licence, double-check the EJARI of your commercial space. It must be valid for over three months at the time of application.
Adam Global: The best course of action to get your trade licence
The process of getting a trade licence in Dubai is straightforward, and you can obtain the licence as per your business nature under your own steam. However, you might have to undergo many potential administrative steps. Your business is your dream, and the vision of establishing a company in Dubai should not be blurred by any avoidable challenges. Engaging an experienced business setup consultant in Dubai can save you a great amount of time and money. With our experienced business advisors by your side, you will receive the appropriate advice to bring your dreams to life. Get in touch with Adam Global, Dubai Business Advisors to be 100% sure about licence you need for your business in Dubai, UAE. Your first consultancy is on us!