The E-Commerce market has been making a mark worldwide and is continuously expanding at a tremendous growth. With the availability of almost all goods and services online, everything is now a click away. A lot of E-commerce giants are now moving to the Middle East because of the immense potential the market portrays.
Dubai being one of the commercial hubs is the main target for these E-Commerce enterprises. With the introduction of smartphones, shopping has never been more convenient. Any service can be availed on the go and the need for laptops or computers for shopping has drastically reduced. Online shopping has grown almost 15 times than what it was a decade ago. A report stated that over 90 per cent of the population of the UAE has access to the internet. This is good news for potential E-Commerce Enterprises.
The introduction of Free-zones has only improved the working conditions for those looking to start an E-Commerce Company in Dubai Free-zones. With various benefits attached to starting a business in the Free-Zone. A few of them being
- Freedom to repatriate all profits and capital
- No restrictions on currency
- 100 percent single ownership ( No need for a sponsor)
- No corporate tax nor personal tax
- Minimal operating costs
- Exemption of import duties with respect to E-Commerce licenses
- Resident Visa granted for a period of 3 years
For an E-Commerce company, the place of operation is irrelevant as long as there is a good internet connection. This means that the initial costs of setting up the E-Commerce company are minimal because of no tax and very minimal fixed costs. The requirement of a sponsor is not a must.
However, one cannot set up shop without any restrictions. There are various procedures that need to be followed before setting up the company. The first and foremost step would be to get an E-commerce license which is vital for setting up the company without which any sort of E-Commerce activity would be termed illegal.
Steps to be Taken to Start the Enterprise
- The initial step to be taken before is to decide the structural framework of the company. There are only two types of frameworks that are allowed to be established. Them being
- Free Zone Company (FZ Co.) or Free Zone LLC (Limited Liability Company).
- Free Zone Establishment (FZE)
- Some Free Zones restrict registering of both types and may allow any one of the two.
- The differences are based on the number of shareholders and whether such shareholders are natural or legal persons. Each Free Zone has an authority that is the apex body for the Free Zone.
- The next step would be to decide a location to set up the company. There are over 24 Free-Zones in Dubai and it would be wise to choose a free zone that is well connected to other parts of the UAE as well as ones with good infrastructure. A list of the pros and cons would help greatly in finalising a place
- The next step is to come up with a trading name. A catchy and simple name would be ideal, but keep in mind that the same name has to be associated with the domain name failing which, traffic would be diverted elsewhere cause of the mismatch between the trade name and domain name.
- The next step is to apply for an E-commerce License. There has been a surge in the issuance of these licenses as there has been a boom in this sector. For a Free-zone license, an application has to be made to the Free-zone authority.
- The next step involves applying for an initial approval whereby one would be required to submit documents such as
- application form
- A complete Business plan with all details
- Passport copies of Shareholders
- Letter of Intent
- Title Deed
- RIC ( Registry Identification Code) form for Manager or Director ( It should be an original and notarized)
- Any other documents requested by the said authorities
Dubai has banned virtual offices and therefore it is mandatory to have a physical office with a valid address for registration purposes.
Once all formalities and documentation processes are completed an E-Commerce license is issued and business activities can take place right after.
If you’re looking to start an E-commerce Business and need help with all the processes such documentation, office space, tax, legal or any such formality or activity, our team at Commitbiz are experts in the field of incorporation of any type of business enterprises. Feel free to contact us anytime and we’d be more than happy to take care of all your needs.