Commercial License in Dubai: Requirements and Differences
The ecommerce market in the United Arab Emirates (UAE) has experienced remarkable growth in recent years. Industry experts believe that this trend is only the beginning, as they forecast the ecommerce sector to reach a value of USD 8 billion by 2025, indicating a doubling of its current worth in just four years!
This growth has caught the attention of aspiring entrepreneurs who are seeking to capitalize on the UAE’s lucrative market. As such, there is an increasing demand for ecommerce licenses in Dubai, as the city serves as a hub for many online businesses operating in the emirate.
The rapid growth of ecommerce in the UAE can be attributed to a range of factors, including the government’s initiatives to promote digital transformation, a young and tech-savvy population, and the increasing adoption of mobile and internet usage.
Jump To What Interests You the Most:
- What is an Ecommerce License?
- Why Do You Need an Ecommerce License in Dubai?
- Why Start an Ecommerce Business in Dubai?
- How Can You get an Ecommerce License in Dubai?
- Ecommerce License in Dubai: Deciding a Company Name
- Ecommerce License in Dubai: Corporate Bank Account Opening
- Why Should You Setup an Ecommerce Business in a Dubai Free Zone?
- What’s the Difference between E-Trader and Ecommerce License in Dubai?
- What Can You Sell with an Ecommerce License in Dubai?
- Can An Ecommerce License Permit Selling to The Entire UAE or Just Within the Free Zone of Registration?
- What Are the Consequences of Setting Up an Ecommerce Shop Without a License?
- Is Renting Office Space Mandatory for Obtaining an Ecommerce License in Dubai?
What Is an Ecommerce License?
An ecommerce license is a legal permit that allows individuals or companies to conduct ecommerce activities in a specific jurisdiction, typically a country or region. It is often required by law to operate an ecommerce business or sell goods and services online.
An ecommerce license in Dubai is required when a business conducts trade solely through digital channels. If your business holds physical inventory but does not conduct sales in person or at a physical location, you may still require an ecommerce license in Dubai. However, if your business needs to conduct sales in retail outlets or showrooms in addition to using digital channels, you can opt to apply for a trading license along with an ecommerce license.
The specific requirements and procedures for obtaining an ecommerce license in Dubai can vary depending on the jurisdiction in which the license is being sought.
Why Do You Need an Ecommerce License in Dubai?
Obtaining a Dubai ecommerce license is important for the following reasons:
An ecommerce license is often a legal requirement in many jurisdictions. By obtaining a license, ecommerce businesses can ensure that they are legally compliant and avoid any penalties or fines for operating without a license.
An ecommerce license in Dubai can help build consumer trust and confidence in the business. It shows that the business is authorized to conduct ecommerce activities and is committed to maintaining legal compliance.
An ecommerce license in Dubai can also improve the credibility of the business, particularly when dealing with suppliers or other businesses. It demonstrates that the business is serious about operating legally and is committed to following ethical business practices.
Benefits Of Ecommerce Business in Dubai
Dubai offers numerous business opportunities for ecommerce businesses due to its remarkable position in the region and easy access to the markets of three continents.
Setting up an ecommerce business in Dubai comes with several advantages, including:
- Minimal taxation on capital investment and income.
- Low operating costs.
- A growing business environment.
- Inspiring and supporting government laws and regulations.
Steps To Get a Dubai Ecommerce License
- Step1: Understand the UAE MarketContrary to popular belief, this is not just for large corporations with extensive research and development budgets. Market research will help you gain a deep understanding of your customer’s needs and expectations.Your smartphone and a Wi-Fi connection are all you’ll need to conduct effective market research without breaking the bank. For instance, you can examine online forums to see what questions UAE residents are asking and what problems they are facing which will help identify gaps in the market.Many entrepreneurs make the mistake of looking for a product first and a market second, but by understanding the market potential, you can also determine which business model is right for you, whether it be business-to-business (B2B), business-to-client (B2C), or client-to-business (C2B).
- Step 2: Choose the Right JurisdictionIf you’re planning to obtain an ecommerce license in Dubai, the first step is to decide whether you want to set up your business in a Free Zone or on the Mainland.Choosing the Mainland option allows you to trade with the local UAE market directly without the need for a local agent.On the other hand, setting up in an international Free Zone like IFZA offers various advantages such as a low tax rate, full customs tax exemption, no currency restrictions, and the ability to repatriate 100% of capital and profit. Although Free Zone companies may not be able to directly trade with the local UAE market, there are several options available if this capability is needed.
- Step 3: Follow Company Naming RulesThe following step in obtaining your ecommerce license in Dubai is to choose a company name. This must adhere to the country’s naming regulations.
- Step 4: Submit Your ApplicationThe type of application you need to submit will vary depending on whether you have opted for a Free Zone or a Mainland setup.If you plan to set up your business on the Mainland, you should apply to the municipality or Department of Economy and Tourism (DET) in the area where you wish to set up. However, if you are planning to establish a business in a Free Zone, you can apply directly to the Free Zone of your choice.Whether you choose a Mainland or Free Zone setup, it is important to ensure that your ecommerce license application is complete and error-free. This will help avoid chances of rejections or delays.
- Step 5: Apply for a VisaAfter submitting your ecommerce license application, you can proceed with applying for your UAE residence visa.You can also apply for visas for your employees, family members, or domestic staff if applicable. The number of visas you can apply for depends on the size of your business and the location you have selected for your setup.
- Step 6: Open A Bank AccountTo start your business in the UAE, it’s essential to have a corporate bank account.The process to open a bank account in the UAE can be tricky, it’s always recommended to seek professional assistance from a reputable business formation company in Dubai to ensure compliance with all formalities.Our global network of Professional Partners assisted by the experts at IFZA will guide you through each step of the process.
How to Ensure the Company’s Name Meets UAE Guidelines?
Before applying for an ecommerce license in Dubai, it’s important to ensure that your company’s name meets the guidelines set by the UAE government. Here are some key points to keep in mind:
- The trade name you choose will not be translated but transliterated into Arabic or English.
- The trade name can include alphabets and numbers, but special characters or icons are not allowed.
- Including the partner/owner’s first and last name is permissible, but only using the last name is not allowed. (e.g. “Ahmed Al-Ghamdi Properties” is acceptable, but “Al-Ghamdi Properties” is not)
- Trade names cannot contain offensive or blasphemous language or the names of registered brands and establishments.
- Words like Allah’s name, its synonyms, countries, regions, areas, sects, and organizations cannot be included in trade names.
- Names starting with words such as “Universal,” “Middle East,” and “International,” and their Arabic translations are not allowed.
- The trade name database is based on pronunciation, and it is essential to identify duplicate names in both English and Arabic.
- The trade name can be categorized into two premium categories, A and B, depending on the inclusion of specific words such as gulf, abbreviations, foreign words, trademarks, Arabized names, or regions.
- The primary activity name can be added to the trade name, but it cannot be the same as the activity name.
- The trade name should not contain obscene words or offend modesty or contradict public decency.
- It is not permitted to use names of countries, capitals, or governments unless approved by the relevant embassy.
- The trade name is valid for six months, it must be renewed, and all fees must be paid to reserve it again.
- Trademarks are not reserved in the Department of Economic Development and can be registered in the Trademarks Department of the Ministry of Economy.
- A company has the right to use a trade name granted by another company for franchise purposes if they submit the franchise contract to the Department of Economic Development.
- The trade name will be cancelled automatically if the holder does not obtain a trade license before the expiration of the reservation period.
- The Department of Economic Development has the right to cancel or change a trading name if it is similar to an existing trade name or does not comply with the established terms and conditions.
- If there are trade name violations, the Department has the right to calculate the difference in fees from previous years.
- The trade name reservation fee must be paid within 72 hours of the payment authorization issuance.
What Are the Required Documents for an Ecommerce License in Dubai?
IFZA has streamlined the process and requirements to open an ecommerce company in Dubai.
In the case that you would like to set up an ecommerce company with individual shareholders, you will need to submit the following:
- Passport copy
- Digital passport photo
- Application Form with UBO information (provided by IFZA)
- Emirates ID and Visa Copy for UAE residents
If you would like to set up an ecommerce company with corporate shareholders, the following documents are required:
- Passport copy of every shareholder and General Manager of the corporate shareholder
- Digital passport photo of every shareholder and General Manager of the corporate shareholder
- Application form with UBO information (provided by IFZA)
- Emirates ID and Visa Copy of a shareholder who is a UAE resident
- Board Resolution
- Memorandum & Articles of Association of the corporate shareholder (or its equivalent)
- Valid Trade License (or its equivalent)
- Certificate of Incorporation or Formation of the corporate shareholder
Additional documents may be required (inquire with PP)
What Documents Do You Need to Open a Corporate Bank Account in Dubai?
If you’re applying for an ecommerce license in Dubai, it’s important to note that this license can help you open a corporate bank account in the country. However, there are specific documents required to complete the bank account opening process. Here’s a list:
- Company registration certificate
- Trade license
- Shareholders’ details and certificates
- Details of buyers/clients/suppliers (3 each)
- Passport copies of the owner and stakeholders
- Estimated turnover data for a fiscal year.
- Company declaration authorizing the person to open a corporate bank account.
Having a corporate bank account in Dubai offers various benefits, including:
- Easy Funds Transfer
- Access To Mobile and Online Banking
- High-Level Confidentiality
- Zero Taxation
- Easy International Access
- Flexible Investment Periods
- Non-Restrictive Banking Options
- A Dedicated Regional Manager
- And Asset Management Services
Why Should You Set up an Ecommerce Business in a Dubai Free Zone?
Dubai’s strategic geographic location, global reputation, robust infrastructure and excellent government support have made it an attractive place to conduct business around the world. Along with this, Dubai Free Zone also offers the following benefits:
- 100% ownership of commercial enterprises
- 100% repatriation of capital and profit
- Tax-free import and export of goods in and out of the Free Zone
- Low tax environment
- Incorporation of FZCOs or the registration of branch offices
- No paid-up share capital requirement
Difference Between E-Trader and Ecommerce License
There are two types of licenses issued by the department of economy and transportation (DET) in Dubai:
1. e-Trader License
2. ecommerce License
Although they are both issued by the same entity, they have different implications and purposes.
The main difference between these two licenses lies in the size of the business. An ecommerce license is suitable for a full-scale online business that operates via a website, social media platforms, and deals with international clients.
Conversely, an e-Trader license is appropriate for small-scale businesses that operate from home and deal with a minimal supply of goods. As the business grows, an e-Trader license may no longer be suitable, and an ecommerce license or another similar license may be necessary.
What Can You Sell with an Ecommerce License in Dubai?
An ecommerce license in Dubai permits the selling of sports goods, gadgets, electronics, clothes, accessories, jewelry, precious stones, household items, home improvement items, interior goods, transportation goods, machine parts and spare parts.
Can An Ecommerce License Permit Selling to The Entire UAE or Just Within the Free Zone of Registration?
With an ecommerce license, one can sell to the entire UAE, but a distributor in the mainland is required.
What Are the Consequences of Setting Up an Ecommerce Shop Without a License?
Those found to be trading illegally may face fines of up to AED 50,000 per transaction.
Is Renting Office Space Mandatory for Obtaining an Ecommerce License in Dubai?
The requirement for office space depends on the Free Zone where one is setting up, but most do not mandate it.
Get Your Ecommerce License in Dubai with IFZA
IFZA is a renowned name for obtaining an ecommerce license in Dubai. Our streamlined processes and international network of Professional Partners make it easy for you to apply for an ecommerce license without the need to physically be present in the UAE.
Our focus is on providing entrepreneurs like you with a hassle-free process of setting up your business in Dubai. With an IFZA ecommerce license in Dubai, you can choose from thousands of business activities and combine Commercial and Professional activities under a single license. Our Free Zone ecosystem provides ongoing support for your business, including assistance with corporate bank account opening and medical insurance coverage.
Take the first step towards success in launching your ecommerce business in Dubai today. Contact an IFZA Professional Partner to learn more about obtaining an ecommerce license in Dubai with IFZA.