E-commerce Business License - 10 Simple Steps That You Must Know

by Zaara 18, Feb 2021

E-commerce Business License - 10 Simple Steps That You Must Know

Online shopping has become a substantial part of our daily lives. Over recent years or so, the way we buy things has changed significantly. It is no longer necessary to visit a brick and mortar shop as everything from kitchen appliances to clothes can be purchased with just a few clicks. This change has found numerous tremendous opportunities in the nationwide e-commerce sector. In this race, the United Arab Emirates isn't behind. Nearly a third of citizens in the UAE say they shop online every month.

E-Commerce Business in Dubai

In addition to the increasing use of smartphones, easy accessibility of internet facility has helped accelerate the growth of the e-commerce industry. These days shopping for clothing, furniture, and other accessories online is a trend. That the e-commerce market is flourishing in every corner of the world should not come as a surprise. E-commerce makes it simpler for a user, as it's not time-consuming, and you can buy something online with a simple press of a button with internet access. With this, the company can reach a broader audience. If you want to create an e-commerce business in Dubai, you need to go through a series of procedures, i.e., from selecting a website layout to approving your license.

About E-commerce License in Dubai

Incorporating an e-commerce business in Dubai is easy, but you can’t violate the rules and regulations. The authorities in Dubai do not enable any random person to launch an e-commerce store and start selling products. If you wish to set up an online business in Dubai, you must apply for an e-commerce license. It is provided by the Department of Economic Development (DED) in Dubai. Your business is not legally considered if you do not have a permit for it. There is a procedure you must follow while applying for this license.

Types of E-commerce Business License in Dubai

Dubai is currently a significant e-commerce center. The Department of Economic Development in Dubai (DED) has incorporated several E-Trading License activities to support this. But first, let us understand the different types of eCommerce License available in Dubai.

1. E-trader License

Those who wish to provide services or sell products online are given this permit. The E-traders license in Dubai is regulated by the Economic Development Department and can only be acquired by nationals of the UAE and GCC located in Dubai. An e-commerce license can only be obtained under sole ownership. You cannot have a physical office space or open a store with this license.

2. Portal License

Portal license is yet another Dubai e-commerce license that non-EAU nationals can acquire. You can start an online business in Dubai by obtaining this license – to integrate buyers and sellers. Also, a portal permit is best for website listing products, services, or reservations.

3. Virtual Company License

The Dubai Economy and DIFC recently introduced a virtual company license. The virtual company license allows UAE investors and non-residents from overseas to undertake business activities in the area. However, this license is limited to just three sectors – computer programming and related activities, designing actions, printing, and advertising-related services.

Benefits of Obtaining an E-Commerce License in Dubai

  • Autonomy to repatriate revenue and capital
  • No currency restraints
  • Free-zone ownership of 100 percent
  • Corporate and personal taxes 0 percent
  • Cost of operation low
  • No duties on e-commerce licenses
  • 3 Year Resident Visa approved

Documents Needed to Acquire E-Commerce License in Dubai

  • Copies of shareholders' passports/visas
  • Passport copy of partner / Emirates ID
  • Local service contract / Civil work contract
  • NOC by the authority concerned
  • An MOA drawing up

Procedure to Obtain the E-Commerce License in Dubai

Dubai facilitates online or e-business through the provision of a Dubai e-commerce license. It is also called Dubai Online Business License and plays an essential part in promoting your business online. Here are the steps to obtain an e-commerce license in Dubai.

1. Decide which legal framework for your company

2. Choose a suitable location

3. Register your trade name

4.Apply for a license

5. Apply for an initial approval certificate

6. Draft an MOA and a local service agent agreement

7. Register a virtual office in Dubai

8. Final authorization of the license

9. Export/Import requirement

10. Opening a corporate bank account

1. Decide Which Legal Framework for Your Company

The first step towards obtaining an e-commerce license in Dubai is deciding on your business' legal framework. In simple words, whether to establish an LLC (Limited Liability Company), one-person enterprise, branch of a parent group, branch offices, etc. In Dubai, LLC establishment and branch offices are most common, as they come with an innate set of benefits.

2. Choose a Suitable Location

The destination here does not mean the place you are trying to establish a store or an office, but the area you want to get your license. There are two types of locations in Dubai: (1) Free Zone, and (2) Mainland. A free zone allows you to own your business 100 percent. In the mainland case, you need a local sponsor whose possession in the company should be at least 51 percent, and your contribution would be remaining. Similarly, all regions have their share of benefits and inconveniences. You need to consider all the factors and decide where you want to start your own business online.

3. Register Your Trade Name

Since your company has no physical presence, choose a name that people could easily recall. The business name can be used as your domain name to find your business online efficiently. Ensure your domain name is not the same as any other existing business, as it may result in legal issues.

4. Apply for a License

You can apply for an e-commerce license once you have decided on the location. The Department of Economic Development provides this license; therefore, it is necessary to approach them first. You have to pay around AED 10,000 to the DED for trade name registration, initial authorization, and license allocation for a company established in the mainland. The license will also have to be obtained from the relevant free zone authorities if you are looking to develop within a free zone. The license category that is received depends on the level of your online business.

5. Apply for Initial Approval Certificate

A Certificate of Initial Approval is a NOC from the authority to start your e-commerce business in Dubai. It will be applicable for six months and cannot be renewed. One can apply for an initial certificate of approval while submitting applications for support of their trade name.

6. Draft an MOA and Local Service Agent Agreement

You can draft an Association Memorandum (MOA) with the client and submit it to the DED. If you choose your company's location on the mainland, then you need to take this step. Any legal firm may form the memorandum, which must specify the special provisions and ownership percentage among all partners. Companies trying to establish themselves in free zones can skip this step.

7. Register a Virtual Office in Dubai

The next process will be to create a visual office in Dubai, as the Dubai authority made it mandatory for a business to have an office to declare it a legal entity.

8. Final Authorization of the License

Once you finalize all of the above actions, you will be given a business license within 1-7 days, depending on the authority.

9. Import/Export Requirement

Your company must be registered with one of the ports and customs authorities to obtain the importer’s code. UAE imposes customs duties of 5 percent on imported goods. Companies entering the free zone would have no import duties because they will have to market their product/services inside the free zones.

10. Opening a Corporate Bank Account

Once you successfully apply for an e-commerce trade license and have set up your business, you can set up your corporate bank account. Since the registration process is quick and straightforward, you need to look into which bank suits your needs.

Conclusion

E-commerce business has become a necessity because people communicate globally via the internet. Dubai has seen steady growth in the online retail industry over the last few years. The e-commerce market will be contributing more income to the economy in the upcoming years. So if you think you're willing to take the step and take your small business or proposal into the cloud, then an e-commerce company may be an excellent choice to consider.

We at Commitbiz will help you choose the right kind, structure, and jurisdiction for your business operation. There are several kinds of processes that you can do online, and we will guide you on all the opportunities that you have in the online business industry. It is an expanding industry, and with the best business set up supervision, you can build your empire online. We have solutions for all your concerns relating to online business licensing provisions in the UAE. Using online platforms, we will help you set up your company completely. Stay in touch with us today!