The Ultimate Guide to Commercial License in Dubai

Dubai is one of the most preferred destinations among many entrepreneurs and investors to set 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 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 issued to companies engaged in trading or buying and selling 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 Available in Dubai

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 that 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 serves the requirement for 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;

• Logistics;

• 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 next step is to decide the company's trade name and then register it under the company's register. The business owner must also submit various documents to the DED and UAE Federal Ministry of Economy about the commercial license to be issued.

Advantages of Obtaining a Commercial License in Dubai

Obtaining a commercial license in Dubai is comparatively easier than many of the other types of business license. Moreover, the commercial license possesses several advantages. The business firm issued with a commercial license is permitted to carry out varying activities.

The advantages of Dubai commercial license are:

• It allows the company to trade more than one product.
• The business entity can undertake trading in any region in the UAE. Thus making optimum use of the markets across the country.
• Auditing is not mandatory for the renewal of a commercial license.
• The company can seek employment visas for recruiting foreign employees.
• The business organization with a commercial license is allowed for foreign commercial activities and trading.
• The commercial license permits companies to choose their location anywhere in Dubai.
• The reporting of financial transactions, turnover, profit and losses is easier than another type of licenses.
• Opening a corporate bank account is unfussy when the firm has a commercial license in Dubai.
• Companies in the Free Zone, having a commercial license, can repatriate 100% profit. Those are exempted from taxes too.

How to Obtain a Commercial License in Dubai

Before obtaining a commercial license in Dubai, here are a few things to know -

• A company with a commercial license can be set up as a Limited Liability Company by appointing a UAE national sponsor. 51% of its shares would be owned by such national, and the remaining 49% is open for foreign ownership. Such a 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 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 free zones provide for setting up a limited liability company; some others provide limited liability partnerships. Such free zones companies are exempt from the 51%-49% minimum shareholding rule.

• If you plan to set up a business for selling goods in such a free zone, you need to appoint a distributor as you 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.

The steps to get a Commercial permit in Dubai are –

1. Choose the type and product of business you want to start in the UAE. Additional approvals may be necessary according to the type of business activity.
2. The Dubai Economic Department (DED) issues initial approval for commercial license. Apply for initial approval along with the requisite documents.
3. Find a local sponsor for your business
4. Prepare Memorandum and Articles of Association in both English and Arabic
5. Select a trade name for your business
6. Rent office space in Dubai. However, a few types of business firms can have virtual office or Flexi-desks. You must complete the registration at Ejari if you are renting or leasing an office space.
7. You must rent a commercial space for the business. The officials will inspect the commercial space for confirming the dimensions and completeness of legal formalities. Ejari formalities also must be completed for the space you are hiring.
8. The additional approval may not be required urgently. You can commence the business and obtain the approvals in due course 

Documents Required for a Commercial License in Dubai

• An application form is 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

• Proof providing that the business license fee has been paid.

The DED will issue a commercial license for the company set up in Dubai on submission of the above-given documents. 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. Therefore, a renewed license has a Validity of four years. Therefore, to apply 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.

Conclusion

At Commitbiz, we aid our clients in Business setup services that include every minute formality that we deal with, including forming commercial license companies if you have any queries feel free to contact us.