Dubai is one of the most preferred destinations among many entrepreneurs and investors for the purpose of setting up a business. The preferences are mainly due to its apt location and developing business environment. Hence having a trading business in Dubai can be really beneficial. If an individual wants to set up a business in Dubai involving trade activities, the very first aspect that they need to fulfil is to obtain a Trading License.
A commercial license is a type of trade license, which is issued to companies engaged in trading or buying and selling of goods. The words buying and selling are referred to as trading in UAE. The Department of Economic Development (DED) issues mainly three types of license, these are:
Types of License
Generally, there are three types of license prevailing In Dubai, these are,
- Commercial license,
- Industrial license,
- Professional license.
Commercial licenses are those which are issued to a company which is engaged in trading
activities, an industrial license is issued to a company engaged under manufacturing or
trading activates whereas, a professional license is issued to service providers.
Types of Activities Under Commercial License
The commercial license basically serves the requirement in relation to regulations and protection for such companies involved in trading activities. It’s provided that the tertiary activities along with the main activities cannot be more than 10 per license. Below mentioned are some of the types of activities that fall under the commercial license in Dubai:
- Import and export activities;
- Sale of electronic goods activities;
- Supply of brokerage services;
- Real estate-related services;
- Sale of construction materials;
- Auto vehicle rental business;
- Travel & tourism;
- General store and shops, etc.
After deciding all the activities that the business owner wants to carry out under a commercial license. The very next step is to decide the trade name of the company and then registering it under the company’s register. The business owner is also required to submit various documents to the DED and UAE Federal Ministry of Economy in relation to the commercial license to be issued.
Commercial License Setup
- A company with a commercial license can be set up as Limited Liability Company, by appointing a UAE national as its sponsor. Whereby, 51% of its shares would be owned by such national and the remaining 49% is open for foreign ownership. Such type of business setup is advisable to incorporate in Dubai UAE, wherein the company is planning to deal in the selling of goods in Dubai and in the UAE.
- A company with a commercial license can also be formed in any free zones in Dubai or even anywhere in UAE. These free zones provide for 100% ownership in such companies.
- Most of the free zones provide for setting up a limited liability company some others provide for limited liability partnership. Such free zones companies are exempt from 51%-49% minimum shareholding rule.
- If you plan to set up a business for selling goods in such free zone then, you need to appoint a distributor as you yourself cannot invoice directly with your clients and thus all invoicing will be done through the distributor.
- Such commercial license can also be set up as a Branch of a foreign company. And such a company’s 100% ownership would be in the hands of the owner itself.
Documents Required for a Commercial License in Dubai
- An application form, containing the company's name both in English as well as Arabic.
- The lease contract (original) for the company’s registered address
- Memorandum of Association (MOA)
- Permit issued by Dubai Municipality Building Department, clearing the use of the office space as a business address for the company
- A Proof providing that the business license fee has been paid.
On submission of the above-given documents, the DED will issue a commercial license for the company set up in Dubai. The said License has a validity of one year. On the expiration of such license, the owner can apply for the renewal of such a License.
Renewal of Commercial License
As mentioned a commercial License has a validity of one year after which the business owner can renew the said license. A renewed license has the Validity of four years. For the purpose of applying to renew the said License, the following documents are to be submitted:
- Original or copy of the trade license,
- Copy of the office space lease contract,
- Approval of the relevant authorities, if required,
- Details of all employees’ accommodation with a foreign shareholder.
At Commitbiz, we aid our clients in Business setup services which include every minute formality that we deal with including forming commercial license company as well. If you have any queries feel free to contact us.