The global online business is snowballing, and Middle-East and the UAE, in particular, have substantial unopened e-commerce potential. The E-Commerce sector in the UAE is still at the stage of development here, and it is the best time to occupy your niche in the UAE’s online market.
In the current time, the world is hit with COVID-19 pandemic. When many physical industries are suffering from closures and uncertainty, we are now entering a new era whereby online industries like eCommerce, e-logistics sectors, and internet services see a rise in demand. So, if you are wondering how to register your e-commerce store virtually, then we at Commitbiz are here to assist you.
Benefits of Setting up an E-Commerce Company in the UAE
- Only VAT of 5% is taxable
- Zero restrictions on repatriation of capital and profit
- 100% foreign ownership if you choose any of the free zones
- Operating expenses are lower in a few jurisdictions
- No import/export duties with e-commerce license
- The likelihood of obtaining a resident visa of the UAE for three years with renewal
Procedure to Start an Online Business in the UAE
There are many factors that must be considered before setting up your eCommerce business in the UAE. Right from choosing the jurisdiction to office space among many.
1.Choose a Jurisdiction
The first decision to be made is choosing the right jurisdiction. There are advantages and disadvantages to choosing either UAE Mainland or UAE free zones. Most people prefer online business company registration through free zones. Here are the free zones that have a dedicated license with e-commerce activity:
- UAQ free trade zone
- Ajman free zone
- Ajman Media City free zone
- Fujairah Creative City
There is, however, one significant disadvantage to this type of business setup, in that a Free Zone company is not allowed to trade outside of that Free Zone. It must appoint a local distributor to provide products or services on-shore.
2.Decide on a Trade Name
Establishing a trading name that people will remember is essential regardless of the nature of your business. Still, it is arguably even more critical for e-commerce businesses that do not have a physical presence in the UAE. Once you have decided on a trading name, using this as your domain name will make your business easier to find online.
3.Obtain the License
To set up your eCommerce business in the UAE, you will have to obtain an eCommerce license from the Department of Economic Development of the Emirates of your choice. The type of license will be determined by on the nature of your business activities, and if you choose to set up in a Free Zone, the license will be provided from the relevant free zone authority.
4.Office Space Option
If you decide to trade solely online, leasing an office might not have even crossed your mind. However, it is not possible to register a business without it. Wherever you choose to establish your business, it is essential to check the minimum office space requirements. For example, in Abu Dhabi, this is 14sqm, and in Dubai, the minimum requirement for office space is 200sqft. If you choose to open your business in a Free Zone, there may be virtual or Flexi-desk rental options. Though these frequently appear to be a cheaper alternative at first, it is vital to consider that the size of your office directly dictates the number of visas accessible under your license, therefore possibly limiting your number of employees.
5.Online Payment Gateway
If you are marketing anything online, whether tangible products or intangible services, you will need to set up a secure online payment gateway to receive a safe debit card, credit card, and PayPal payments through your website, While this is a significant outlay of expense for any new e-commerce business, getting this wrong will be harmful to the success of your business. With an increasing number of suppliers and online payment options in the Emirates, it is essential to take the time to research this and consider how these will suit your business and your budget.
If you are importing products from outside the UAE and selling them online to the UAE market, the business has to be registered with the relevant emirate’s ports and customs authority and receive an importer’s code. A customs duty (often 5%) applies to goods being imported.
Businesses established within a free zone are exempt from customs duties if they are selling their products/services within the free zone or outside the country. On the other hand, if you are selling to the UAE market (outside the free zone), the customs duty has to be paid, and a local commercial agent has to be appointed.
If you are interested to know more about the eCommerce sector in the UAE or have decided to start your online business, then we at Commitbiz can help you with it. Our business setup consultants have years of experience in this field and can make the process hassle-free. Contact us today for more information.