E-Commerce License in Dubai - 10 Simple Steps that you must know

by Zaara 31, Dec 2020

E-Commerce License in Dubai - 10 Simple Steps that you must know

The convenient usability of internet facilities and the increasing use of smartphones have enabled the growth of the e-commerce industry. Shopping for clothes, furniture, and other apparel online is a trend these days.

E-commerce business in Dubai

It should make it clear that the e-commerce sector is rapidly expanding in every corner of the world. E-commerce makes it simpler for a user, because it's not time-consuming, and you can buy something online with a simple single touch of a button with internet connectivity. Through this, the company can reach a broader audience. For instance, if you set up a shop at a local market in your nation, the target group for your company is limited. In the case of e-commerce, due to a broader target market, the organization can reach a prolonged pool of users with no hurdles.

In terms of the business environment, the Dubai government is exceptionally flexible in absorbing the current trends in the global market and catching up with industry standards. The creation of comprehensive rules and regulations that encourage cutting-edge industries, start-ups, and companies working in such sectors (i.e., e-commerce, blockchain, artificial intelligence, and machine learning).

By enabling the latest, flexible and modern industrial sectors to operate with customized enterprise-friendly regulations, minimum standards, and low tax rates, Dubai is becoming a desirable worldwide location for business leaders, companies to establish their legal business entity.

In Dubai's case, the market is as profitable as any other. It is estimated that the e-commerce industry in the UAE will be valued at $10 billion by the end of 2018. If you want to establish up an e-commerce company in Dubai, you need to go through a series of processes, that is, from deciding on a website layout to authorizing your license.

About E-commerce License in Dubai

It's easy to incorporate an e-commerce company in Dubai, but you can't violate the rules and regulations. The authorities in Dubai do not allow any new user to start an ecommerce store and begin selling products. You must apply for an e-commerce license if you wish to set up an online company in Dubai. It is approved in Dubai by the Department of Economic Development (DED). If you do not have authorization for it, your industry is not considered legal. There is one process that you must follow when applying for this authorization.

How to Obtain an E-Commerce License in Dubai?

Google research shows that 91.9 percent of the UAE population has internet connectivity. Factors such as the increasing use of the internet, attractive tax environment, etc. show that it can be financially beneficial to have an e-commerce business in Dubai. Steps to obtain e-commerce license in Dubai, you must go through the following steps:

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 where you are trying to establish a store or an office, but the place 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 case of the mainland, you need a local sponsor whose possession in the business 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 issues 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 freezone authorities if you are looking to set up within a freezone zone. The license category that is obtained 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 approval 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 the percentage of ownership 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 compulsory for a business to have an office to declare it a legal entity.

8. Final Authorisation of the License

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

9. Import/Export Requirement

Your company must be registered with one of the ports and customs authorities to obtain the code from an importer. 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.

Advantages 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
  •  Low operating cost
  • No restrictions on e-commerce licenses
  • Resident Visa issued for three years

Best Location to Start your E-Commerce Company in Dubai

As you can set up your e-commerce business in Dubai mainland, setting up your operational activities in the free zones. It offers you the full advantages as the regions provide tax advantages, purpose-built infrastructural facilities, and special laws and regulations allowing a hundred percent foreign ownership.

By recognizing your business objectives, we at Commitbiz will help you choose the right location to establish your company in Dubai.

E-commerce business has become a precondition because people communicate globally via the internet. Dubai’s online shopping market has been gradually growing from the last couple of years. The e-commerce market will, in the coming years, be contributing more income to economic structure. So if you think you are prepared for the next step and take your small business or business to the cloud, then an e-commerce company may be an excellent choice.

We at Commitbiz can guide you with the business setup in Dubai with all the support you need in terms of its market research, company formation, license, and legal assistance. Notably, our e-commerce service provides you a complete solution for your business. It includes right from visa application & processing, UAE e-commerce licensing, getting office flex-spaces for rent, recognized e-commerce payment interface partner, logistics, and warehouse management, partner. These services can help you operate your business conveniently.

Our expert team in the UAE can lead you to take care of your business needs professionally and suggest solutions to survive your company in UAE effectively. We are also collaborating with well-established organizations to extend their operations in the UAE globally, as we can provide professional services that are important for the business. Contact us to know more about obtaining an e-commerce license in Dubai.