Convenient accessibility to the Internet, in addition to the growing use of smartphones, has helped drive the growth of the e-commerce sector. Online shopping for clothes, furniture and other accessories is a trend these days. It should come as no surprise that the e-commerce industry is booming in every corner of the world. E-commerce makes things easier for an individual as it does not require time and with access to the internet, one can purchase anything online with just a click. With it, your business can reach a wider range of audiences. For example, if you open a store in a local market in your country, the target audience for your business is limited but in the case of e-commerce, the organization can reach an extensive pool of users due to a market of wider destination without barriers.
In the case of Dubai, the market is as profitable as any other. The e-commerce sector in the UAE is estimated to be valued at $10 billion (Dh 36.7 billion) by the end of 2018. But if you want to start an e-commerce business in Dubai, you need to go through a series of processes, for example, from deciding on the website layout to obtaining license approval.
Dubai e-commerce license information
Incorporating an e-commerce company in Dubai is easy, but you cannot break the laws and regulations while doing so. Dubai authorities do not allow any random person to start an e-commerce store and start selling products. If you want to start an online business in Dubai, you need to apply for an e-commerce license. It is issued by the Department of Economic Development (DED) in Dubai. Your business is not considered legal if you do not have a license for it. There is a procedure to follow while applying for this license.
How to get an e-commerce license in Dubai?
Research conducted by Google reveals that 91.9% of the population in the UAE has access to the Internet. Hence, factors such as growing Internet usage, a favorable tax environment, etc. They prove that having an e-commerce business in the UAE can be profitable. You need to follow the following steps to get an e-commerce license in Dubai:
1. Decide on the legal structure for your business
The first step to obtaining an e-commerce license in Dubai is to decide on the legal structure of your business. In simple words, whether to establish an limilted liability company in Dubai, sole proprietorship, branch of a parent company, representative office, etc.
LLC formation and subsidiaries are the most common in Dubai as they come with an innate set of advantages.
2. Choose a location
Location here does not mean the place where you will set up a shop or office, but the place from where you want to get the license. Dubai has two types of zones, namely (1) Free Zone and (2) Mainland .
A Dubai Freezone allows you to have 100% ownership of your company. In case of Mainland, you need to have a local sponsor whose stake in the company should be at least 51% and the remaining share would be yours.
Similarly, both areas have their share of advantages and disadvantages. You need to consider all the factors and decide where you want to start your online business.
3. Register a business name
Since your business has no physical presence, choose a name that people will easily remember. The business name can be used as a domain name so people can easily find your company online. Make sure your domain name does not resemble that of other existing companies as it could lead to legal complications.
4. Apply for a license
Once you have decided on the location, you need to apply for an e-commerce license. The Department of Economic Development (DED) is the one that issues it; so it is important to contact them first. For a company incorporated in the Mainland, you need to pay around AED 10,000 to the DED for business name registration, initial approval and licensing.
In case you are trying to install yourself within a Free Zone, the license will need to be acquired from the competent authorities of the Free Zone. The type of license issued depends on the nature of your online business.
5. Request the initial approval certificate
An initial approval certificate is an NOC from the authority to start your e-commerce business in Dubai. It will be valid for 6 months and is not renewable. You can request the initial approval certificate at the same time as submitting your business name approval application.
6. Draft an MOA and contract with the local service agent
You must draft a Memorandum of Association (MOA) with the sponsor and submit it to the DED. If you choose to locate your business in the Mainland, you must follow this step. Any law firm can type the memorandum which must specify the special provisions and percentage of ownership between all partners. Companies setting up in Free Zone can skip this step.
7. Register a physical office in Dubai
The next step would be to set up a physical office in Dubai as the Dubai authorities have made it mandatory for a company to have an office to consider it a legal entity.
8. Final approval of the license
Once all the above actions are completed; you will receive a business license within 1-7 days, depending on the authority.
9. Import/ Export Requirements
Your business must be registered with one of the ports and customs authorities in order to receive the importer code. The United Arab Emirates imposes a 5% customs duty on imported goods. Companies that fall under the Free Zones will not have import duties as they have to sell their products/services within the Free Zones.
10. Opening a business bank account
After you have successfully applied for an ecommerce business license and established your business, you will be able to set up your company bank account in Dubai. Since the application process is quick and easy, you just need to look into which bank suits your needs.
E-commerce license cost in UAE
The exact cost of e-commerce license in Dubai will depend on many factors. These include the size of the company, the number of visas required, whether office space is required as part of the package and your choice of Free Zone or Mainland. However, to give an idea of the cost, you can expect to pay between AED 15,000 and AED 50,000 depending on your requirements.
If you're looking to keep start-up costs low, setting up in a Free Zone is often the best solution.
Benefits of getting an e-commerce license in Dubai
Here are the advantages of obtaining an e-commerce license in Dubai:
- Autonomy for the repatriation of capital and income.
- No import duties on e-commerce license.
- 100% foreign ownership in Free Zones.
- Residence visa granted for 3 years.
- 0% corporate and personal tax.
- No currency restrictions.
- Low running costs.
Conclusion
E-commerce business has become a necessity as people connect globally via the Internet. Dubai has seen a gradual increase in online retail in recent years. In the coming years, the e-commerce sector will add more revenue to the economy. So, if you think you're ready to take the plunge and take your small business or idea to the cloud, then an e-commerce business might be a good option to consider.
We at Commitbiz can help you get a business license online in UAE and guide you throughout the process. Our consultants have years of experience in this field and can make the process hassle-free.
Get in touch with us today.