Dubai Trade License

Most people know Dubai as the key city in the United Arab Emirates famous for its recognizable skylines with astonishing views of iconic skyscrapers against the backdrop of desert sands and sea waters. And not everyone knows that in the first half (H1) of 2023, the UAE’s economy reached a record of AED 1.239 trillion in non-oil foreign trade.

Couple this with the fact that the number of newly registered businesses in Dubai in H1 of 2023 had increased by 23% with Dubai Chamber of Commerce issuing 357,000 certificates of origin over the same period - and it is no surprise that the UAE authorities are planning to double the economic growth of Dubai over the next decade. If you’re interested in becoming a part of this business wave by opening a company in Dubai, you will need a Trade License to get going, and we’re here to tell you all you need to know about it.

What is a Dubai Trade License?

A Dubai Trade License is one of several licensing options issued to an individual or entity as legal permission to engage in specific commercial activities within the Dubai Emirate. This official document is handed out to business owners by the UAE's Department of Economic Development (DED) or by the authority bodies of a particular Dubai free zone if that’s where you choose to start your business. Such licenses are essential for establishing and operating a company basically anywhere in the UAE.

As a rule, you need a separate Trade License for a certain type of business activity. However, you can also choose to get a General Trading License, which allows for engaging in several of them at the same time together with a number of other benefits. This will allow you to conduct commercial operations as well as the import/export of commodities.

Different Types of Trade License

There are several types of business licenses in Dubai, each designed to accommodate different business activities and legal structures. Here are some common types:

• Commercial (Trade) License. This is issued for businesses involved in trading activities allowing them to buy, sell, and distribute goods.
• Professional License. This type of license is for service-oriented businesses, such as consultancy firms, law firms, and medical practices.
• Industrial License. Businesses engaged in manufacturing or industrial activities require this license. It allows companies to produce goods.
• Tourism License. This is for businesses operating in the tourism and travel sector, including travel agencies and tour operators.
• Freelance Permit. This is designed for individual professionals who wish to conduct business activities on a freelance basis.
• E-Commerce License. Introduced in recent years, this license is for businesses engaged in online retail and e-commerce activities.
• Branch Office License. This allows foreign companies to open a branch office in Dubai to conduct business activities related to the parent company.

As you can see, some license types are for operations in certain industry sectors, while others reflect particular entrepreneurship methods and legal entities. For example, if you want to get engaged in the business of logistics or operations in the agriculture field, you’ll need a Logistics or Agriculture License, while a Representative Office License is for companies looking to establish a representative office in Dubai to promote their business interests without engaging in direct profit-making activities.

It should be noted that different license types are conditioned to different requirements, including paperwork, company structure, office size, warehouse access, etc. This needs to be kept in mind when applying for a particular license in order to avoid potential legal complications and delays. To ensure compliance with such requirements, it’s best to consult with Dubai-based experts in the corresponding fields.

Free Zone, Mainland or Offshore License

In Dubai, businesses can operate under three main licensing options: Mainland, Free Zone, and Offshore. Each of these options has distinct characteristics, benefits, and limitations. Here's an overview of each type of license:

1. Mainland License:

• Location. Mainland businesses operate within the mainland of Dubai or other emirates in the UAE.
• Ownership. Mainland companies typically require a local UAE-national sponsor or partner who holds at least 51% ownership in the company. However, there are exceptions in certain professional activities where 100% foreign ownership is permitted.
• Business flexibility. Mainland businesses have the freedom to conduct business activities anywhere in the UAE without restrictions.
• Regulation. They are subject to the regulations and laws of the UAE and the specific emirate in which they operate.
• Trade across the UAE. Mainland businesses can trade directly with other UAE mainland companies without intermediaries.
• Customs duties. Mainland companies may be subject to customs duties on goods imported and exported within the UAE.

2. Free Zone License:

• Location. Free zone businesses operate within specific economic or free trade zones in Dubai. Dubai has multiple free zones, each catering to specific industries.
• Ownership. Free zone businesses generally allow 100% foreign ownership without the need for a local sponsor or partner.
• Business flexibility. Free zone companies are restricted to operating within the respective free zone and are limited in conducting business activities outside the zone.
• Regulation. They are subject to the regulations of the respective free zone authority.
• Trade across the UAE. Free zone businesses can trade with mainland and other free zone companies, but they may need a local distributor or agent for mainland sales.
• Customs duties. Typically, goods imported into a free zone are exempt from customs duties, but if these commodities are transferred to the UAE mainland, customs duties may apply.

3. Offshore License:

• Location.Offshore companies are not physically located in Dubai but are registered in Dubai's offshore jurisdiction, which is Jebel Ali Offshore. They are not permitted to carry out business activities within the UAE.
• Ownership. Offshore companies often allow 100% foreign ownership, and there is no requirement for a local sponsor or partner since they are not conducting business activities within the UAE.
• Business flexibility. Offshore companies are primarily used for holding assets, investments, and international financial activities rather than local business operations.
• Regulation. They are regulated by the Jebel Ali Free Zone Authority (JAFZA) Offshore Companies Regulations.
• Trade across the UAE. Offshore companies are not permitted to conduct business within the UAE and cannot trade directly with UAE mainland or free zone companies.

The choice between a Mainland, Free Zone, or Offshore license depends on the specific business objectives, ownership structure, and the nature of the business activities you plan to undertake in Dubai and the UAE. Each option has its own advantages and limitations, so it's crucial to carefully consider your business needs and consult with legal and business advisors before making a decision.

Advantages of Having a Dubai Trade License

Having a Dubai Trade License offers several advantages for businesses seeking to run their operations in the Emirates. Dubai is internationally known for its business-friendly environment courtesy of governmental policies, the Emirate’s logistically outstanding location, and its advanced infrastructure. The combination of these and other factors, including cultural diversity and networking capabilities, make Dubai a very appealing destination lifestyle and business-wise, causing an influx of entrepreneurs and field professionals. Here are some key advantages of having a Dubai Trade License:

• Geographical benefits. Dubai's geographical location serves as a gateway to both the Middle East and international markets. It provides easy access to markets in Europe, Asia, Africa, and the rest of the Middle East, thus allowing for unparalleled logistical capabilities.
• Tax benefits. In Dubai, there is little to no personal income or corporate tax for most business activities, making it a tax-efficient destination for licensed businesses.
• 100% foreign ownership. Depending on the type of license and the business activity, Dubai offers options for 100% foreign ownership in certain free zones, eliminating the need for a local partner or sponsor.
• All-round flexibility. Dubai offers different types of licenses specific to location, business activities, industries, legal structures, and practices to suit various business needs, allowing companies to choose the most appropriate setup for their operations.
• Credibility factor. This aspect is easy to overlook, but if you’re a foreigner or an expat trying to set up a business in the UAE, a Trade License will be crucial to earning the trust of your future customers, business partners, and government bodies. Not to mention that a valid license will spare you from potential legal problems and other issues with the authorities.
• Access to free zones. Dubai has numerous free zones catering to specific industries, providing businesses with industry-focused environments, reduced regulations, and incentives like customs duty exemptions and full repatriation of profits. In addition, many free zones are based around transportation hubs like seaports and airports, which may be a key factor for certain business activities.
• Skilled workforce. Dubai provides a diverse and skilled labor force, with professionals from around the world contributing to the emirate's dynamic business environment.
• Setup convenience. In Dubai, the procedural part of business formation takes less time than in other emirates of the UAE, reducing the company set-up period to a few weeks. With the required paperwork prepared in advance, you’ll have your Trade License in no time and without hassle, whether you choose a free zone or mainland.
• No currency restrictions. Dubai allows free movement of capital, enabling businesses to conduct transactions in various world currencies with no restrictions.
• Supportive government initiatives. The Dubai government regularly introduces initiatives and incentives to attract foreign investments and facilitate the work of local businesses. Having a valid Trade License is key to being eligible for such programs and initiatives.
• Sponsoring. Opening a business in Dubai often causes company owners to bring their family, relatives, and even employees into the country along with them. With a Trade License, you can take care of your dependents by legally sponsoring them and helping them obtain residency visas.
• Financing and investment capabilities. Dubai has a well-developed banking and financial sector, providing access to various financing options for businesses, including loans and investment opportunities.

It's important to note that while Dubai offers many advantages, the regulatory and business environment can vary depending on the license type and other factors, and the conditions may change with time. This is why company owners should carefully assess their specific needs, seek legal and financial advice, and conduct thorough research, as staying informed about the latest developments is crucial.

Required Documents

In order to apply for a Trade License in Dubai, you must prepare the necessary paperwork, which usually includes:

• Residency visa copies
• Passport copies of partners or shareholders
• Emirate IDs
• Trade name reservation certificate
• No Objection Certificate (NOC) from the local sponsor or partner (if applicable)
• Memorandum of Association (MOA) for LLC structures
• Lease agreement for the office space
• Any additional documents requested by the DED

Free zones in Dubai, just as in other Emirates, may require you to provide other documents depending on the free zone’s specific regulations with regard to your chosen business activities, company’s legal entity, etc. For instance, you may need to turn in a business plan, a CV, or a bank statement or reference. Given that the paperwork requirements may vary, we strongly recommend seeking expert advice from experienced local consultants.

How Do I Get a Trade License?

Here are the key steps to obtain a Trade License in Dubai.

1. First, decide on the specific business activities you intend to conduct under your Trade License, as the license type will depend on the nature of your business.
2. Choose the legal entity for your business, such as a sole proprietorship, LLC, partnership, or company branch. The legal structure you select will affect your company’s liability, ownership, and other aspects.
3. Select a unique and appropriate name for your business. Ensure that the proposed name complies with naming conventions and does not infringe on any existing trademarks.
4. Depending on your business structure and activities, you may need a local sponsor or partner who is a UAE national or a UAE-based company. The local sponsor's involvement and share in the business will vary based on the structure.
5. Secure a physical office or commercial space for your business that meets the requirements set by the DED, as you will need to provide a lease agreement during the licensing process.
6. Prepare the paperwork necessary for the application.
7. Complete the license application form and submit it to the DED. Ensure that all required documents are attached to the application.
8. Pay the relevant charges, trade name registration fees, and any other government or regulatory fees as required.
9. Your application and documents will be assessed by the DED. This process may take some time, and you may be asked for additional information or clarification.
10. Once your application is approved, the DED will issue your Trade License.
11. If you plan to obtain residency visas for yourself, employees, or partners, you can initiate the visa application process, which includes medical examinations and other requirements.
12. After obtaining the Trade License, ensure that your business operations comply with the DED regulations. Trade licenses typically need to be renewed annually.

Dubai Trade License Costs

In Dubai, a Trade License can cost from AED 15,000 to 50,000 based on a number of factors, such as:

• Company location (particular free zone or mainland region)
• Company structure (sole proprietorship, LLC, Free Zone Establishment (FZE), offshore company, etc.)
• Business activity (different commodity types require different permits)
• Number of partners or shareholders
• Staff size (visa costs, medical checkups, etc.)
• Partnerships with local sponsors

Keep in mind that a mainland Trade License is typically more expensive than a free zone one, so if you’re looking for a more affordable option, you should consider the latter. Dubai’s free zones offer different setup configurations to choose from, such as package deals with a Trade License included along with an office space and employee visas. For example, at Jebel Ali Free Zone Authority (JAFZA), you can get a Trade License eligible for trading 7 categories of products for AED 5,500 as part of a setup package, while International Free Zone Authority (IFZA) offers a zero-visa package with a flexi-desk and a Trade/Service license for AED 12,900.

There are additional fees related to acquiring and renewing a Trade License that are typically tied to the company setup procedure and may vary accordingly, which is why it's important to check with the relevant authorities for up-to-date information. Such fees may include:

• Trade name reservation fee
• License application fee
• License issuance fee
• Commercial activity fees
• Local sponsorship fee (if applicable)
• Office space rent
• Renewal fees
• Visa fees (if applicable)
• Additional fees (safety inspections, environmental permits, and other regulatory compliance requirements)
• Third-party fees (legal advice, notary charges, etc.)

How Long Will the Process Take?

Once you’ve turned in your application for a Trade License, it’s time to wait for the application to be assessed by the corresponding authorities. This may take some time, but in Dubai, the processing of license applications is usually faster than in other Emirates.

Typically, the time period for you to secure your Trade License ranges from three workdays to four weeks. The time difference is based on your company’s business activities, associated permits, and other relevant documents. So if you want to reduce the waiting time as much as possible, come fully prepared with all the application paperwork in order to prevent possible delays.

Dubai Trade License Renewal

Renewing a Dubai Trade License is a standard procedure that businesses must follow to maintain their legal status and continue their operations in Dubai. It's essential to renew your Trade License in a timely manner to avoid penalties or disruptions to your business. Here are the general steps to renew a Trade License in Dubai.

Review the expiry date. Check the renewal date to ensure you have ample time to complete the renewal process. Trade licenses in Dubai typically need to be renewed annually.

Clear any outstanding fees. Before initiating the renewal process, make sure there are no outstanding fines, fees, or payments associated with your Trade License. Outstanding payments can delay the renewal.

Gather the required documents. Prepare the necessary documentation for the renewal process, which may include the following:

• Trade name reservation fee
• Current trade license copy
• Passport copies of partners or shareholders
• Passport copy of the manager or legal representative
• Valid tenancy contract for your business premises
• Rental contract registration certificate
• Receipts for payment of renewal fees.

Submit the renewal application. Depending on your jurisdiction (Mainland, Free Zone, or Offshore), you will need to submit the renewal application to the relevant authority. This may be the DED for mainland businesses, the respective free zone authority for free zone companies, or the relevant offshore authority for offshore companies.

Pay the renewal fees. Pay the required renewal fees to the appropriate authority. The fees can vary depending on the type of license, business activity, and the jurisdiction of your business.

Medical test and Emirates ID renewal (if applicable). Depending on your visa status, you may need to undergo a medical checkup and renew your Emirates ID. Ensure that these requirements are met before proceeding with the renewal.

Approvals and inspections (if applicable). In some cases, your renewal application may be subject to approvals or inspections by relevant government departments or authorities, especially if your business activities require specific permits or certifications.

Collect the renewed license. Once your renewal application is approved and all fees are paid, you will receive the renewed Trade License. Ensure that the information on the new license is accurate.

Update your business records. After receiving the renewed license, update your business records with banks, suppliers, customers, and relevant government agencies to reflect the new expiration date.

Maintain compliance. Continue to comply with all regulatory and legal requirements throughout the validity period of your renewed Trade License.

Summary

Dubai provides entrepreneurs and company owners with different Trade License types depending on their needs and means. Given the offered variety, you can always find an option ideal for your business. A Dubai Trade License comes with numerous advantages for business owners and is key to securing a legal position in the UAE market with access to all the opportunities this country can provide.

Emirabiz offers affordable and hassle-free trade license services in Dubai. Get in touch with our experts today to learn more about the process and requirements for obtaining a trade license in Dubai.