Dubai is the most populous city in the UAE and the country’s business and trade hub. Its excellent strategic location, exceptionally business-friendly economic policies, and generous tax incentives have made the UAE one of the most desirable places to set up a company or open a new business. Today, we will tell you everything you need to know about getting a general trading license in Dubai, including an overview of the different types of trade licenses in Dubai, the steps involved in applying for a general trading license, and the costs associated with it.
What is a General Trading License in Dubai
A general trading license in Dubai allows businesses to engage in various commercial activities, including importing, exporting, and distributing products. The Department of Economy & Tourism in Dubai, also known as the Department of Dubai Economic Development (DED), is the approval and regulatory body for issuing and renewing general trade licenses.
A physical office location for your business is one of the prerequisites for obtaining a general trade license in Dubai. In addition, you may also require a solid business plan and appropriate permissions from other relevant authorities.
How Does a General Trading license Differ from a Regular Trade license
A general trading license is similar to a regular trade license, including the requirement, costs, application, and renewal process. However, a general trading license covers a broader range of activities than a regular trade license.
You can typically buy, sell, and trade specific products with a trade license or eCommerce license in Dubai. In contrast, a general trading license authorises you to import, export, buy, and sell any types of products that are not prohibited for trading. Due to this broader applicability and functions, the documentation requirements and costs to obtain a license for general trading are somewhat stricter than other license categories.
Types of General Trading licenses in Dubai
Depending on your preferred location to establish your business or company, you can typically obtain two general trading licenses in Dubai. One is for trading within the mainland of Dubai and the UAE, while the other is for trading in the free zones.
In most cases, applying for and obtaining a free zone general trading license is considerably less expensive and less complicated. Also, mainland general trading licenses may require you to bear additional costs and manage a local sponsor.
Why Get a General Trading license in Dubai
A general trading license in Dubai has many advantages and may open up new opportunities for you as an investor. Some benefits include
- Unrestricted business activities: You can conduct any business activity with a general trading license in Dubai, including importing, exporting, and distributing goods. This license allows you to engage in any legal business activity in Dubai.
- Streamlined application process: The application process for a general trading license in Dubai is simple. All you need to do is submit the relevant documents and fees to the DED. You can also avail of the online or e-services portal for the application.
- Various ownership structures: A general trading license in Dubai can be 100% foreign-owned if you opt for a free zone license, meaning you do not need to have a local partner to set up your business. Also, you can open sole proprietorship and partnership businesses.
- Available for both mainland and free zones: The general trading license lets you establish your business on the mainland or in one of the free zones. Both options have specific pros and cons, and you can always make an informed decision.
- Flexibility with partner inclusion: You can include or exclude a partner in your business with a general trading license in Dubai. You can also have a foreign national as a shareholder in your company.
- No minimum capital requirement: There is no minimum paid-up capital requirement for a general trading license in Dubai. However, you will still need to show that you have the necessary funds to support your business activities.
- Extended visa quota: A general trading license in Dubai allows you to apply for a long-term and renewable business visa.
- Office and warehouse facilities: You can avail of office and warehouse facilities with a general trading license in Dubai. These are essential for the smooth running of your business.
In addition to these benefits, investors also consider Dubai as one of the most attractive places to set up their business due to its:
- Excellent strategic location and global connectivity through major shipping lines and air transports
- Business-friendly governance
- Willingness of the policymakers to emphasise more on trading shifting from an oil-based economy
- Complete exemption from personal income tax
- Excellent tax incentives for businesses and commercial setups
- Streamlined import and export rules and tariff policies
- World-class infrastructure
- Ease of doing business
- 100% profit and principal repatriation
Now that you know about the benefits of running your business activities in the UAE with a general trading license, let’s find how to obtain one.
Required Documents for a General Trading license
Before exploring the step-by-step process of applying for a trading license, we will review the document requirements.
- Business plan for your planned trading activities
Your business plan should provide an overview of your trading activities, including products and services, target markets, and projected growth. The authorities use your business plan to assess your proposed business’s viability and determine the type of license you require.
Make sure you invest sufficient time and effort to make your business plan as detailed and rational as possible. Professional business formation consultants at Virtuzone can help you create the most optimal business plan considering your previous professional background and investment plan.
- No Objection Certificate (NOC) from relevant authorities
Depending on the type of business you want to set up, you may need to obtain a No Objection Certificate (NOC) from the Department of Economic Development (DED) or other relevant government authorities.
For example, if you want to set up a healthcare business, you need to obtain a NOC from the Ministry of Health and Prevention or the Dubai Health Authority. For several product categories, you may need permission from Dubai Municipality.
- Parent company’s trade license
If you want to set up a branch of an existing company in Dubai, you must submit a copy of the parent company’s trade license as part of your application.
- Trade name reservation certificate
One of the first steps in setting up any business in Dubai is reserving a trading name. The trade name is the name under which you will conduct your business.
- Photo and identity documents
You will need to submit passport-sized photographs of all company shareholders, the manager, and the authorised signatory, as well as copies of their passports or Emirates IDs.
- Valid residence permits
If you are not a UAE national, you must have a valid residence visa to apply for a trade license in Dubai. The type of residence visa you need depends on your nationality.
- Tenancy contract
The application requires you to submit a copy of the tenancy contract for the commercial space where your business will be located. You should also attest and validate the tenancy contract from the Dubai Land Department.
- Memorandum of Association
The Memorandum of Association (MoA) is a legal document that outlines the company’s and its shareholders’ relationship. A public notary in Dubai must notarise the Memorandum of Association.
You may typically have to submit these documents along with your general trading license application. It’s time to get familiar with the application process and relevant authorities in charge.
How To Get Your General Trading license in Dubai: Step by Step
The Department of Economy & Tourism Dubai (DED) oversees the licensing process through its self-serviced online portal, Invest in Dubai. Here’s a quick overview of the application process for your general trading license in Dubai.
Step 1: Decide Business Activity and Prepare Documents
Your first task is to decide the operational details of your trading business and prepare a business plan accordingly. In particular, you must decide on the following issues right at the beginning, because your application process may vary based on your business type.
- Free zone vs mainland
The government of the UAE has established over 60 free zones to ease the foreign investment process in Dubai and the UAE. Free zones offer plenty of facilities, including zero taxation, 100% ownership, and 100% profit and capital repatriation.
While the free zones offer many facilities related to ease of doing business, they also have specific pricing structures. Different free zones are suitable for different businesses. So, you must carefully evaluate whether you want to operate your business from one of the free zones. Business establishment costs in free zones start from AED 10,000 and can be as high as AED 50,000 or more.
Alternatively, if you choose to operate your business from the mainland Dubai through a mainland trade license. In that case, you may need to find a local sponsor who should be an Emirati citizen. Mainland license fees are also different from the free zones.
- Ownership structure
You can make your business a sole proprietorship type, a partnership one, or a limited liability company. Either way, you will require identification documents and consent from all shareholders.
Step 2: Apply for Initial Approval
For your business activities you will need to start your initial application for a general trade license for your new business location in Dubai mainland. Once you have identity documents and the business plan in hand, you can head over to the Invest in Dubai website to open an online account to start an application. You can also physically visit one of the DED service centres in Dubai during office hours.
After opening and verifying your account with your phone number, the system will ask you to book a trade name. To reserve a trading name, you must submit an application to the DED with the required fees. The DED will conduct a name search to ensure that the proposed name is not already used and does not violate any existing trademarks.
Here you must book a trade name, provide partnership details and initial contact person’s details, and indicate your business operation type before you can pay the fees online for initial approval.
The activity code for general trading business is 4690018 and it belongs to the commercial license type.
Step 3: Rent a Space
Once you pay the fees, the system will instantly prepare an initial approval certificate for your business, which you can use to lease or rent land or office space. If you operate in one of the free zones, you can use a shared or virtual office space or coworking space.
Both free zones and mainland also offer various office space, warehouse and land leasing options at various price ranges. Make sure you rent a place and secure a contract document for the lease.
Step 4: Obtain Additional NOCs and Prepare MoA
After renting the office space, you need to check whether you require additional permission or NOCs from any other authorities. Typically, the general trading license covers all legal trading activities, including import and export.
In a few cases, you might need NOCs from the Dubai Municipality or similar authorities. They usually require your business plan along with a photo of your rented premises before issuing an NOC.
Afterward, you will need to draft a formal MoA, which describes the basic structure of your company. Make sure to attest the MoA from DED by visiting one of their service centres.
Step 5: Pay the Fees and Apply for a license
Finally, deposit the licensing or business centre fees in one of the DED centres or by wire transfer. Then, you can submit your application and upload all the relevant documents to the portal. It usually takes less than ten minutes to get your general trading license application approved.
Your trading license will remain valid for a year. DED will notify you through SMS before the expiration date so that you can immediately pay the renewal fees and complete the renewal process online.
Costs of Getting Your General Trading license in Dubai
The cost of setting up your company and applying for a general trading license in Dubai will depend on several factors, including the type of business activity you wish to engage in, the size of your company, and the number of shareholders.
Here are some specific costs that you may have to consider:
- General trading activity: AED 15,000
- Business centre: AED 25,000
- Free zone: Starts from AED 10,000
- MoA agreement: AED 300 (for each party)
- license application and renewal: AED 600
- Trade name reservation or amendment: AED 600
- Initial approval: AED 100
Generally speaking, the costs associated with setting up a company in Dubai and applying for a general trading license can range anywhere from AED 15,000 to AED 50,000.
Wrap-Up: General Trading license in Dubai
A general trading license in Dubai is a great way to get your business up and running in one of the world’s most dynamic and business-friendly economies. The costs associated with setting up your company and applying for a general trading license are reasonable, and the process is pretty straightforward.
At Virtuzone, we specialise in assisting individuals, entrepreneurs, and businesses settling in Dubai and forming new businesses. If you have any further questions or need assistance setting up your company or applying for your general trading license, send us a note immediately.