Starting a Business in the UAE: The Different Types of Mainland Trade Licences Explained
The UAE requires entrepreneurs and companies to obtain a trade licence to conduct business in the country’s mainland and free zone jurisdictions. Having a trade licence ascertains your customers that you are a legitimate business that complies with local laws and regulations.
When starting a new business in the UAE, you need to acquire the right trade licence to ensure that your company is set up properly for the long-term. The type of business, company structure and jurisdiction where you will operate can affect the licence you need to acquire and the requirements applicable to you.
Below are the three types of trade licences that you need to consider as you start a mainland business in Dubai:
Professional trade licence
The UAE government requires businesses and entrepreneurs to obtain a professional licence from the Department of Economic Development (DED) before they can be authorised to provide their professional services to clients.
The purpose of professional licensing is to establish that the person or business is qualified to provide services in a certain profession. Issuance of these licences generally requires the applicant to show certain skills or training.
All professionals, specialists, craftsmen and artisans need to acquire a professional trade licence to set up a business in Dubai.
There are several company structures that can be formed with a professional licence: A Limited Liability Company where a local sponsor holds 51% of the company; and a Civil Company and a Sole Establishment where the foreign investor(s) have 100% ownership of their company.
However, in setting up a Civil Company or a Sole Establishment, a UAE national must be appointed as a local service agent (LSA) to complete the legal formalities.
Commercial trade licence
A company dealing with buying and selling of goods and commodities, or any kind of trade activities, requires a commercial trade licence to operate in the UAE. This licence can be used to form a limited liability company (LLC) or set up a sole establishment, and it can be used for both specialised trading and general trading activities in the UAE.
There are different types of commercial trade licences in the UAE. You must apply for the correct type of commercial trade licence that will permit you to carry out trading activities specific to your business.
Broadcast and communications companies, rental transportation services, retail companies, construction companies, healthcare businesses, real estate businesses, and other general trading entities also need to apply for a commercial trade licence.
Industrial trade licence
Businesses that want to conduct industrial or manufacturing-based activities in the UAE must acquire an industrial trade licence, which will allow them to engage in activities related to converting natural materials or incorporating natural resources into their end products.
This licence is issued by the DED but additional approvals might be required from the Ministry of Finance, the Ministry of Energy and Infrastructure and other authorities, depending on the industrial activity involved.
Requirements to obtain a UAE trade licence
Before opening any business, one must meet the following legal requirements to obtain a trade licence in the UAE:
- Determine the business category – whether it is professional, commercial, or industrial;
- Determine the type of business activity;
- Determine the legal structure of the business entity; and
- Determine the trade name of your business.
Get expert help in starting your new business in Dubai
It can be difficult to identify all of the licences and permits that apply to your business. Hence, it’s always best to consult a business setup specialist to make sure you comply with the licencing and regulatory requirements applicable to your venture.
As the leading corporate service provider in the UAE, Virtuzone can help you start your company with the right trade licence, ensuring you are positioned for future growth and success. Virtuzone also provides value-added business support services that can help your company start strong and thrive in a competitive market.
Do you need help in choosing a trade licence for your business? Contact us today so our team can assist you.