Dubai has a modern and cosmopolitan infrastructure, and businesses have a multitude of opportunities to succeed here. However, before you can proceed with your business setup in Dubai, it’s essential that you obtain a commercial licence.
In this article, we will go through what a commercial licence is, why you should open a business in UAE, the different types of commercial licences, and how to obtain your trade licence.
What Is A Commercial Licence In Dubai?
A commercial licence in Dubai or the UAE is a permit or trade licence that allows you to carry out commercial activities in the city. You can carry out a number of business activities with a commercial licence, including trading, manufacturing, contracting, as well as any other activity necessary for your businesses success. It’s apparent that the benefits of having a commercial licence are vast.
To obtain a commercial licence in the first place, you must first register your company with the Department of Economy & Tourism (DED) of Dubai. Once registered, you can apply for the appropriate licence.
Business Licence Types in Dubai
You must obtain the appropriate business licence to comply with legal requirements for your business. The type of licence that is required will depend on the nature of your business. Recently, DED has categorised all business types into three main categories and started issuing licences based on these categories as mentioned below:
A professional licence in Dubai is one of the most common types of licences able to be obtained and is required for businesses that provide professional or personal services. Examples of businesses that require a professional licence could include, but are not limited to, consultancies, accounting establishments, and architecture firms.
Previously the DED used to issue several other types of licences such as agricultural licences, craftsmanship licences and tourism licences. In an effort to simplify the process, many of these licence types have now been consolidated under the umbrella of the professional licence.
If you’re unsure whether your business requires a professional licence, here is a more comprehensive list of business activities that require a professional licence in Dubai:
- Agricultural activities: Growing vegetables, farming cows, producing eggs.
- Value-adding activities: Packaging and bottling of agro products, tailoring.
- Skill-based activities: Face mask sewing, carpentry, silver extraction from waste, wood cutting, sanitary works.
- Media activities: Media production, audio and video editing.
- Consulting activities: Legal works, accounting, business and management consulting, IT consulting, and all types of IT-enabled freelancing services.
- Educational institutions: Schools, colleges, universities, vocational training centres.
- Medical services: Hospital and various medical practices.
- Tourism and amusement services: Operating parks, zoos and aquariums, tourism consulting services, and all types of clubs.
If your business activity is related to manufacturing, assembling or processing, you must obtain an industrial licence in Dubai. The term ‘industrial’ refers to large-scale activity that uses machinery, equipment, and tools to produce or assemble products, materials or components.
The following are some examples of businesses that require an industrial licence in Dubai:
- Manufacturing of food and beverage products: Bottling of mineral water, producing juices and jams, and manufacturing pasta and cereals.
- Manufacturing of construction materials: Cement blocks, ceramic tiles, production of steel and aluminium products.
- Manufacturing of textile products: Carpet weaving, production of garments, textile printing.
- Assembling of electronics: Mobile phones, laptop computers, televisions.
Even though a professional licence in Dubai covers a wide range of business activities, you will still need a commercial licence when you want to carry out any business activities that are not included in the professional licence. Situations where you’ll need a commercial licence tend to come about when trading as a core business activity in a considerably large capacity.
Who Needs a Commercial Licence in Dubai?
Businesses that are required to have a commercial licence are widespread and diverse. Let’s delve deeper into some more specific examples of businesses that require a commercial licence, according to DED guidelines:
- Restaurants: Restaurants, cafes, food courts, food trucks, and mobile kitchens.
- Bakeries: Supermarkets, grocery stores, and convenience stores.
- Retail shops: All types of retail shops, including those that sell clothes, electronics, books, and more.
- Warehouses and storage facilities: All warehouses and storage facilities, including those that store food, clothes, and other items.
- All types of wholesale trading: Groceries, food products, textiles, and various products.
- Miscellaneous services: Tourism, real estate, rental, brokerage, export & import, logistics & transportation.
Hence, if your business is involved in any activities that require large-scale trading, it’s crucial that you obtain a commercial licence from the DED.
Why Should You Open A Business In The UAE?
As of today, it’s a common trope among investors to consider the UAE as one of the most attractive and sustainable business destinations worldwide. In addition to the country’s excellent strategic location, you will have many reasons to open and operate a business in the UAE.
- Business-friendly Environment
The UAE currently ranks 16th globally in the Ease of Doing Business Index, a highly impressive ranking that emphasises how business-friendly the country is. Furthermore the government has put in place many initiatives and policies to support your business setups and make it easier for you to operate effectively. For instance, the country has recently moved their weekdays from Sunday-Thursday, to now being Monday-Friday. This has made it significantly easier for businesses to remain connected with their global stakeholders and remain competitive in the international environment.
- Great Infrastructure
Having world-class business infrastructure is an essential component for businesses to operate successfully, and the UAE has delivered. The country has excellent transportation networks, reliable utilities, and top-notch telecommunications – including high-speed internet.
- Easy Taxation
With a straightforward and efficient taxation system, the UAE has saved businesses many hours calculating their tax returns. You won’t have to worry about paying any corporate or income tax. The only taxes businesses need to pay in the UAE are import duties and value-added tax (VAT).
- Investor-Friendly Policies
The UAE offers 100% foreign ownership for businesses in many sectors. Foreign investors can now send 100% of their business profit and investment outside the UAE. The country also has a desirable residency visa policy that allows business owners and their families to live in the UAE without hassle.
- All Available Facilities
When you set up a business in the UAE, you will have access to all the facilities you need to operate successfully. These facilities include office spaces, warehouses, retail spaces, and more. To set up an office space for your business, you will get plenty of facilities in the UAE free zones and the highly affordable shared workspaces.
Getting Your Commercial Licence: Step By Step
Now we will take you through the application process of obtaining a commercial licence in Dubai, in accordance with DED guidelines. It can be a very simple process when the steps are followed correctly. Here’s how to do just that:
Step 1: Making an Initial Approval Request for Commercial Licences
Prior to your application for a full-fledged commercial licence or trade licence in Dubai, you will need to obtain initial approval from the DED. Here you will also request for an approval from any of the third parties involved within your businesses industry, such as:
- Roads & Transports Authority,
- Health Authority,
- Telecommunications Authority, and others.
You can initiate an application for the approval from either the Invest in Dubai website (available 24/7), or by visiting one of the DED’s physical service centres located around Dubai during business hours.
It’s important to note you will need to provide a valid phone number and email address when signing up using the Invest in Dubai website.
After you open your account, the system will ask you to submit a valid identity document which can include either your Emirates ID, Passport, or Unified ID.
Once you sign up on the Invest in Dubai website and verify your identity using the appropriate documentation, you can start the initial approval request process.
Here you will need to indicate the following information on the system:
- Business name: This can be a new name, or an older one that already exists on the system.
- Activities: The system will ask you to indicate your businesses primary and secondary activities from the activities listed. Indicating the primary activities is a mandatory requirement so ensure that this is ticked off.
- Partnership details: Here, you will need to provide your business entity’s detailed partnership information, including ownership percentages and identity documents for all the partners.
- Licence type: This is one of the most essential parts of your entire commercial licence application process. The system will recommend you apply for a commercial licence based on your prior selection of business activities. You must ensure that it shows the information correctly and doesn’t refer to industrial or professional licences in Dubai.
- Submitting request: Once you’ve followed the above steps successfully and written up the information into the system, you are ready to submit your initial approval request.
The whole process, from requesting the certificate all the way to receiving it, takes approximately seven minutes. The certificate remains valid for six months.
Why Do You Need an Initial Approval?
The initial approval certificate is a prerequisite for the commercial licence application process. You will also need the system-approved certificate when renting a private or shared space for your business. Remember that you will have to provide the location details of your business in most cases when requesting a full commercial licence later on.
Step 2: Booking Your Trade Name
After you’ve made an initial approval request, you will need to book a trading or operating name for your business. The service will cost you approximately AED 600 and can be requested in the same way as the initial approval.
When requesting your trade name, make sure you comply with the trade name guidelines published by the DED.
Step 3: Applying For A Trade Licence in Dubai
You will have two options when requesting your trade licence in Dubai. You can either opt for a normal licence or an instant licence – depending on whether your business requires an external approval or not.
- Normal Licence: For a regular trading licence, you will need to provide your business’s Memorandum of Association (MoA), along with a lease or rental contract with the location or land owner. For this, you may require prior approval from the relevant external authorities.
- Instant Licence: For certain specific business types, you won’t need external approval to issue an MoA and lease agreement. If your business qualifies, you can digitally obtain your trade or commercial licence within five minutes – hence why this is referred to as an ‘instant’ licence!
When applying, you will need to provide the following information:
- Location: Various commercial licence types require you to provide location information of your business. If it is located with another business in a shared location, you will need to make this clear as well.
- Legal documents: You will need the MoA signed by all of the partners, along with all their relevant identity documents.
Once you submit the documents and pay the fees, it will take approximately seven minutes to get your trade licence or commercial licence from the system. The licence authorises you to commence your commercial venture in Dubai, as well as the entirety of the UAE.
Costs of Commercial Licences
The authorities within the UAE offer a transparent fee structure for the commercial licence application process. They have listed over 50 types of fee categories on their application website for your reference. However, the fees you will need to pay depend fully on your circumstances and specific business activities.
To give you an approximate idea, here are some of the fees that you may need to pay during the process:
- Initial approval request: AED 120
- Booking a trading name: AED 600
- Trade licence application: AED 600
- Business Centre Fees: AED 25,000
- DED trader licence: AED 1,070
The whole process of getting your commercial licence in Dubai for a typical business can cost approximately AED 10,000. If you’re looking to go one step further and leverage the online presence of your business, you may also apply for an e-trader licence in Dubai.
When your business wants to perform certain commercial activities and campaigns, you may require additional commercial permits which have their own set of fees. Some examples include:
- Promotional events and campaigns: AED 500 – 20,000
- Sales campaign: AED 2,500 – 13,500
- Banners in a public place: AED 100 – 2,000
- Setting up tents: AED 5,000 – 15,000
Commercial Licence Validity And Renewal Process
Your commercial licence in Dubai will remain valid for one year. The authority will notify you via text message when your licence’s validity approaches its expiry date. The SMS will guide you through the renewal process, which you can complete simply by paying the fees through the provided payment link.
Alternatively, you can simply log in to the Invest in Dubai portal or visit one of the service centres to renew it within ten minutes. The renewal process is an efficient one which can save your business time and money.
Summary: Commercial Licence in Dubai
Obtaining a commercial licence in Dubai is a legal requirement for businesses in the city. The licence will allow you to carry out a full range of approved business activities and keep you within the legal limits of the country. Fortunately, the authorities have made the process straightforward and transparent. Reach out to Virtuzone now to find all the legal and logistic help you need to jumpstart your business in the UAE.