It is no secret that Dubai’s economy has been growing non-stop in this last decade. The region is the epicenter of entrepreneurs and investors. Everyone wants to invest in properties here and build their businesses due to the perfect conditions that Dubai offers. Therefore, foreigners are on a constant lookout to start trading in the area.
As a result, the government is implementing new guidelines to help immigrants remain compliant. Before they start a business, foreign investors have to apply for a commercial license in Dubai. The entity in charge of providing this certification is the Department of Economic Development or DED, and managers usually do it through an immigration agency.
The commercial license is the most common type of license in the region. Its main function is to provide businesses with a legitimate identity, clearing their legal status to operate in a particular location. Moreover, it also helps to make sure that the organization takes full accountability for its operations.
To know if this type of license is right for you, you must be sure of what your business practices will be. Having a commercial license in the UAE will allow investors and entrepreneurs to trade, import, and export products, goods, and services.
Any business involved in commercial trading activities must issue a commercial license. When having one you will be contributing to Dubai’s economy and benefiting from its strategic location. Trading of products and services is an important business activity in the region and it had been growing exponentially through the years.
The UAE’s role as an international trader is stronger than ever, so obtaining a commercial license to benefit from the market is a great idea. With the help of a business consultancy agency, you can obtain a UAE commercial license and start trading in no time.
Requirements for a Commercial License in Dubai
Foreign investors and entrepreneurs need to meet certain conditions before they apply for a commercial trade license in Dubai.
Identify your Business
Firstly, they need to be able to identify the primary form of operations that their organization will engage in. Plus, classify any related business activities that can total up to ten per license.
Choosing your type of activity can seem difficult, but with the right kind of help, it can become an easy task. It is important for you to not misclassify your operations, as the business license may not be right for every type of trading. Secondly, business owners must define which type of company they want to register in the UAE. As it must be registered in the Companies Registry so they can obtain a Dubai Trade License.
Obtain Initial Approval from the Dubai Economic Department
Thirdly, once they have all the required paperwork, business owners need to present it to the Dubai Economic Department for initial approval. Investors need to compile the following documents:
· A copy of the investor’s valid passport and two passport size pictures.
· An application form, including the business names in Arabic and English.
· The business’ registered address initial lease contract.
· Provide a permit from the Dubai Municipality Building Department letting the company utilize a certain office space as a business address.
· And proof of payment of the commercial license fees.
Obtaining all of these documents can be a hassle, especially for individuals who do not speak the regional language and those who are not currently in the region. Nonetheless, there are many agencies, such as Connect Zone, who help investors with their establishing process.
These companies serve as bridges between foreigners and local authorities. Ultimately, their goal is to guide investors through their path to company formation. Streamlining their processes and offering other services once their company is established. Thus, helping them remain compliant under local laws.
Find a Reliable Sponsor in the United Arab Emirates
Local Laws demand that you must have an Emirati as your sponsor if you are Company Formation in Mainland Dubai and obtaining a commercial license. The local sponsor will be holding 51% of the shares in the company. However, foreigners and other shareholders will be having 49% of the company.
All of the legal formalities and commercial license in Abu Dhabi approvals will be in the name of your local sponsor. In consequence, you must get a reliable guarantor to support your organization.
Formulation of Legal Structure of your Business
Fifthly, you should acquire the Memorandum of Association and Articles of Association to constitute your business entity. These documents will provide the regulations, rules, and policies that the whole company will follow. They are generally required in Arabic and English.
Application for Approval for Trade Name
Then, investors should present their chosen names to the respective local authorities. This name needs to be original and respectful.
Obtain Office Space
Finally, entrepreneurs have to find a proper office space or commercial space to conduct their businesses. If you have a small company of one member you can rent a virtual office or flexible desk. Or, if you are opening a big store, you must rent a big commercial space for your business.
In addition, foreigners must remain respectful of the United Arab Emirates culture and people. Once they have a DED commercial license, they need to respect and support diversity in their workplace. A company formation agency will provide you with consultancy to ensure that you are following the right steps.
Types of Activities That Can Be Carried Out Under a Commercial Trade License in Dubai
Many business activities can be carried out under a commercial broker license in Dubai. All commercial activities have to be approved by the Department of Economic Development so they can remain legal. Permitted business activities include:
· Pharmacy, perfumes, jewelry, and cosmetics.
· Vegetables, fruits, spices, and other food items.
· Sale of electronics, furniture, and appliances.
· Real estate and construction goods.
· Rental business such as car and property rentals.
· Bags and packaging material trading.
· Amusement equipment and other supplies trading.
· Trading of oil, gas, gold, precious metals, and other natural recourses.
· Surveillance, building maintenance, and cleaning services.
· Sale of clothing and other garments.
Additionally, tourism companies operating in the United Arab Emirates, as well as branches of foreign companies, have to procure a commercial license. In the same way, corporations providing healthcare solutions in Dubai also need to have their commercial license in place.
This type of license is commonly granted to Limited Liability Companies that provide shareholders with limited liabilities and debts. Businesses under this license can conduct operations in Mainland by founding an LLC or a branch office of a foreign company in the United Arab Emirates. Branches can benefit from holding 100% shares of the business.
On the other hand, companies operating in the Free Zones have different specifications to acquire a commercial license according to the Free Zone they are in. However, these are the best places to form an organization that deals with importing and exporting products. Also, free zone companies can only use their commercial license for trading activities inside their own Dubai Free Zone.
Renewal Process of a Commercial License in Dubai
Commercial licenses in Dubai only last for one year from the date of issuance. After that, investors can apply for a Dubai or Abu Dhabi commercial license renewal, depending on the region they are located in. To renew their commercial licenses, investors need to present:
· Original copy of their commercial trading license.
· One copy of the lease contract of your office space.
· And approval of the necessary authorities.
Going through a commercial license renewal process can be overwhelming. There are too many things to do on top of taking care of your company’s processes. This is why acquiring the services of a consultancy agency can be truly beneficial. By contracting these agents, you can forget about the hassle of dealing with commercial license renewal in Dubai. After renewing your commercial license, it can be valid for up to four years.
Importance of Obtaining a Commercial License in Dubai
Most companies do not know how important it is to obtain a commercial license. Especially when they are new, business owners tend to forget the rewards that it can bring. For example:
Receiving a commercial license means that your company checks every requirement that the Government of Dubai asks to grant it. Applying for a commercial trade license means that your new business plans, policies, and infrastructure are in line with the local regulations. The United Arab Emirates requires companies to have a license so they can be protected from being shut down or any other problem.
Having a commercial license for your business provides credibility. When you have credentials customers can make sure that they are buying items from a reliable source. Especially if they are acquiring products from an online shop. Showcasing your commercial license in your physical store or your website can help reassure clients that they are dealing with a proper entity.
Some government entities and private companies often offer a certain amount of capital to fund new companies, so it is important that businesses are licensed to opt for this perk. Once they have a certain license, companies can demonstrate that Dubai approves of this business venture.
Business licenses are relevant because they help companies remain compliant with any regulations. Furthermore, they provide the region with a record of all tax-paying companies in the United Arab Emirates. Many regions require companies to pay taxes on their sold products to keep their licenses current. In summary, having a commercial license is equally important for businesses and the authorities.
Operating under a commercial license protects your information from the public. When a business is not tied to your name you can protect your personal address, finances, and phone number. Something that you cannot do if you operate your business under your name without a license.
Access to Information
With a commercial license, businesses can easily have access to certain information that is not accessible to common individuals. Once you have a Sharjah commercial license or a certification from any other location, you will be able to get in touch with certain bureaus and organizations that may have not been accessible before.
Advantages of a Commercial License in Dubai
Sometimes, foreign investors do not know that acquiring a commercial license in Dubai will offer them many advantages to their businesses. Some of the benefits of owning a commercial license in Dubai are:
· Tax exemptions and free repatriation of the capital to the country of the foreign investor when having a Free Zone business.
· The possibility of contributing and taking advantage of a booming economy in a Middle Eastern region.
· The prospect of having their companies’ headquarters in any location in The United Arab Emirates due to a local commercial license.
· Having a Dubai commercial license will allow you to sell and buy several products and provide services.
· It helps simplify the way of obtaining work visas for foreigners.
· Organizations with UAE commercial license do not have to endure audits to extend their business licenses.
In the same vein, there is a limit of ten business activities permitted on a sole commercial trade license. Individuals who have this certification can freely open corporate bank accounts in the United Arab Emirates. With a business license, various companies can be incorporated.
Likewise, after they acquire a commercial license, business owners can easily apply for family residence visas, employment visas, and many other types of visas. In short, having any type of business license in Dubai can open many doors for your growth and development.
With the support of a business consultancy, you will be able to establish your business and find ways to extend operations into any location. Once you have your commercial license, you can acquire workforce sufficing services from these agencies and they will help you find the right employees and freelancers to fill any available position.
In the end, they will support you through any difficulty you may have and offer their tailored variety of services that adjust to your necessities.
We can help you with the processes in the following government departments.