Dubai has always become one of the most significant foreign trading hubs due to its geographical position. A massive amount of growth has taken place in Dubai and the UAE due to the economic boom. Now there is enormous competition in Dubai for all different types of commodities.
Dubai is one of the most desired destinations among many investors and entrepreneurs for the intent of setting up a business. The choices are mainly due to its suitable location and evolving market climate. So it can be beneficial to have a trading company in Dubai. If any people want to set up a business in Dubai incorporating trade activities, the very first thing they need to accomplish is acquiring a Trading License.
A commercial license is a form of trade license given to businesses involved in the trade or the purchase and sale of products. The terms of buying and selling are called trading in the UAE. The Department of Economic Development (DED) generally issues three forms of licenses, these are:
Types of License
In Dubai there are usually three types of licenses, these are,
- Commercial license,
- Industrial license,
- Professional license.
Commercial licenses are those given to a retail firm, industrial permission is granted to a manufacturing or trading business, and professional support is provided to service providers.
Types of Activities Under Commercial License
The commercial license essentially serves the need for regulations and security of individual companies operating in trading activities. It is specified that tertiary operations cannot be more than 10 per license and the primary task. Some of the types of operations which fall under the Dubai commercial license are listed below:
- Importation and Exportation Activities;
- Sale of activities regarding electronic products;
- Supply of investment services;
- Real estate-related service provider
- Selling of construction materials;
- Automotive vehicle rental business;
- Transportation & tourism;
- Supermarkets and shops, etc.
After deciding all the operations that the company owner wants to conduct under a commercial license, the next move is to determine the company’s business name and then record it under the company’s register. The company is also advised to submit various documentation to the DED and UAE Federal Ministry of Economy regarding the commercial license to be granted.
Thing to know before Obtaining a Commercial License
- A business registered company may be set up as a Limited Liability Corporation by naming a UAE’s nationals sponsor. Whereby such national ownership will own 51 percent of its shares, and the remaining 49 percent is available to foreign ownership. It is advisable to implement these types of business setup in Dubai UAE, where the business intends to deal with the sale of products in Dubai and the UAE.
- A commercial license company can be formed in any free zones in Dubai, or even anywhere in the UAE. Such free zones have ownership of 100 percent of these businesses.
- Many free zones allow for the development of a limited liability corporation, and others provide us with a limited partnership. These free zones companies are excluded from the minimum shareholding requirement of 51% -49 %.
- Suppose you are planning to set up a company to sell products in such a free zone. In that case, you will need to appoint a distributor because you cannot invoice directly to your customers yourself, and therefore all invoices must be made via the distributor.
- You may also set up such a commercial license as a branch of a foreign corporation. And 100 percent control of such a business will be in the owner's own hands.
Who Should Apply for a Commercial License in Dubai?
Decide on the operations you will be doing under the same before registering for a commercial license in Dubai. Also, remember that tertiary activities cannot be more than 10 per permit and the primary process. The category of activities falling under the commercial license in Dubai is:
- Import and export operations
- Sale of electronic goods
- Real-estate Service
- Brokerage service provision [the Department of Economic Development (DED) also provides commercial brokerage licenses for these services in Dubai]
- Selling of construction material
- Auto rental company
- Travel & Leisure
- Shops and retail shops
The next step is to determine its trade name and file it under the Register of Companies. After this, you need to submit the documents to the DED and UAE Federal Ministry of Economy and grant the commercial license.
Documents Needed for a Commercial License in Dubai
- An application type, where the name of the business should be listed in Arabic and English
- The initial leasing arrangement for the registered address of the company
- Association Memorandum (MOA) with Partner/client
- The license provided by the Dubai Municipality Building Department to approve the company's use of office space as its business address
- Evidence of the fee charged for obtaining a trade license
The DED must issue a commercial license for your Dubai business based on those documents. The permit is legitimate for one year and can be extended afterward. To apply for commercial license renewal in Dubai, you must provide another set of documents.
Documents Required for Commercial License Renewal in Dubai
- The authentic or a copy of the business permits
- A replica of the office space lease agreement
- Approval by the concerned authorities where applicable
- Accommodation information for staff, for businesses with a foreign shareholder
The renewal of the business license will then be valid for another five years.
The Dubai Company Registration and Licensing (BRL) sector initiated a program called "Instant License" in July 2017. It allows businessman and investors to acquire their commercial licenses within five minutes in one phase, without having the company’s contract or location – only in the first year. This effort has decreased 90 percent of the time needed to register and grant a trade license in Dubai. Except for public and private shareholding firms, all the other corporate operations have benefitted from this initiative. In general trading operations, it is compulsory to apply via e-service and select LLC.
Procedure to Acquire an Instant Commercial License in Dubai
- Choose a business entity for your organization.
- Decide which business activity you are doing.
- Connect the partners according to the government body, and identify the following items:
- Shareholder’s share in the capital
- Distribution of profits and losses among the clients
- Trade name registration in one of the following areas:
- Arranging a trade agreement designation through the Business Register
- Use of an auto-generated trade name consisting of reservation number for the registered trademark
- Transfer the value of the capital to the firm's trade register data; the rest of the fields will manually be filled in
- There will be an alternative to submit an electronic Memorandum of Association (MOA) in the electronic service available; you can opt for this option or entirely skip it.
- A voucher to pay is supplied.
- Pay the service charge.
The estimated value of a Dubai instant commercial license comprising initial approval, trade name, and license authorization is AED 10,000, which is guaranteed. Once issued, the retail license has benefits such as visa application, receiving labor licenses, translation service, no corporation taxes, no income tax, and a streamlined financial reporting system.
The few reasons why obtaining a general business license simplifies the business process are listed above. If you plan to register for a commercial license, it is best to recommend a licensing specialist because you may never know when you overlook a significant legal aspect. At Commitbiz, we help our customers in Business Setup Services, including every moment of decorum we deal with, forming a business license company. For any business-related queries or license related information, you can contact us – we’d be happy to help.