We are familiar with the fact that to start any type of business in Dubai, one needs to have a valid license. The Department of Economic Development (DED) issues 3 types of license for different businesses. They are:
- Commercial License
- Industrial License
- Professional License
Dubai has an advantage of being in a geographically strategic location, in the sense that many goods are imported to and exported from Dubai. So having a trading business in Dubai can be beneficial for a businessman. If an individual wants to set up a business in Dubai which involves trading activities or buying and selling of goods, they have to obtain a commercial license from the respective authorities. One is left with the choice of obtaining the license from any of the three jurisdictions. After deciding the location one wants to start a business in, the next ideal step is to obtain a license. Now, how to go about it?
Who Should Apply for a Commercial License in Dubai?
Before applying for a commercial license in Dubai, decide upon the activities you would be conducted under the same. Also, remember that the tertiary activities along with the main activity cannot be more than 10 per license. The type of activities that fall under the commercial license in Dubai are:
- Import and export activities
- Sale of electronic products
- Real estate service
- Supply of brokerage service [the Department of Economic Development (DED) also provides commercial brokerage license in Dubai for these services]
- Sale of construction material
- Auto vehicle rental business
- Travel & tourism
- General stores and shops, etc.
The next step is deciding the trade name of the company and registering it under the Companies Register. After this, you have to submit a set of documents to the DED and the UAE Federal Ministry of Economy for the commercial license to be issued.
Documents Required for a Commercial License in Dubai
- An application form, where the company name should be mentioned in English and Arabic
- The original lease contract for the company’s registered address
- Memorandum of Association (MOA) with the partner or sponsor
- The permit issued by the Dubai Municipality Building Department, clearing the use of the office space as a business address for the company
- Proof of the fee paid for the issuance of the trade license
Based on these documents, the DED will release a commercial license for your company in Dubai. The license is valid for 1 year, after which it can be renewed. You have to submit another set of documents to apply for commercial license renewal in Dubai.
Documents Required for Commercial License Renewal in Dubai
- The original or a copy of the trade license
- A copy of the office space lease contract
- Approval from the relevant authorities, if required
- Details of employees’ accommodation, for companies with a foreign shareholder
The renewed commercial license is then valid for another 5 years.
In July 2017, the Business Registration and Licensing (BRL) sector in Dubai launched an initiative named “Instant License”. It enables businessmen and investors to obtain their commercial licenses in one step within five minutes without having a company’s lease or location – for the first year only. This initiative is said to have reduced 90% of the time required for registering and issuing a trade license in Dubai. Except for public and private shareholding companies, all the other business activities have benefitted from this initiative. In the case of general trading activity, applying through e-service and choosing LLC is mandatory.
Procedure to Obtain an Instant Commercial License in Dubai
- Select a legal entity for your business
- Decide upon your business activity
- Add the partners according to the legal entity, and identify the following points:
- Partners’ share in the capital
- Distribution of profits and losses between the partners
- Reserve of the trade name through one of the following ways:
- Reservation of a new trade name through the Companies Register
- Using an automatically generated trade name, which consists of the trade name reservation number
- Add the value of the capital in the Commercial Register data of the company; the rest of the fields will be filled automatically
- An option to issue an electronic Memorandum of Association (MOA) within the available electronic service will be shown; you may opt for this option or just skip it
- A payment voucher shall be issued
- Pay the fee
The total cost of an instant commercial license in Dubai, including initial approval, trade name, and issuance of the license, is AED 10,000, which is fixed. Once obtained, the commercial license has advantages like the application of visas, obtaining labor quotas, translation service, no corporate taxes, no income tax, and simplified financial reporting system.
If you are planning to start a trading activity or import/export business, Commitbiz business setup in Dubai can help you with the legalities involved, and the different ways you can go about it. For any business-related queries or license related information, you can contact us – we’d be happy help.