Differences between the professional license and the commercial license
Starting a business in the United Arab Emirates is a fairly simple process. However, it is necessary that you comply all the regulations that the country has. Depending on the activity you want to carry out in the UAE, you must choose between several types of licenses to be able to operate legally, these can be: Professional, commercial, industrial, or a tourism license. Today, we will talk about the difference between the professional license and the commercial license.
In this article, you will find information about what these licenses are, who can acquire them, what is the difference between the professional license and the commercial license, and more. Let us see:
- What is the DED professional license?
- Who can acquire this license?
- Benefits of the DED professional license
- What is a UAE commercial license?
- Who can acquire a UAE commercial license?
- Benefits of the commercial license
- How to obtain these licenses?
- Differences between the professional license and the commercial license
- How can we help you obtain a license in the UAE?
1. What is the DED professional license?
A professional license is an official document of the United Arab Emirates and is authorized by the Department of Economic Development (DED). It was created for those individuals interested in offering a professional service based on some physical or mental ability that allows them to generate an income.
Some of the industries where you can generate income with this license are the following:
- Engineering consultancy
- Business setup consultancy services
- Medical and educational services
- Crafting and designing of products
2. Who can acquire this license?
Those professionals who offer services such as designing, tourism guidance, research, or any other service based on experience, talent, or ability, must apply for one of these licenses at the Department of Economic Development (DED).
By having a professional license, you can legally operate and offer your services to anyone in the UAE. And also, you have the power to undertake the activities depending on your qualifications or your area of expertise.
Take into account that dedicating yourself to a professional service requires skills, intellectual abilities, talent, and experience to carry out certain projects and tasks. And meet the expectations and quality margins of the country’s authorities and your customers.
It must be remembered that even if the professional license allows you to run a large number of services, certain tasks will require authorization or approval from other authorities. These authorities are established in each Emirate of the country and their objective is to maintain security, reinforce rules, manage industry standards and ensure that services are only offered by authorized professionals who are governed by the laws defined by the corresponding Ministry.
3. Benefits of the DED professional license
3.1 Diversity of activities
This type of license is not exclusive to a group of companies or businesses. On the contrary, it offers great diversity when choosing which activity you want to do. The list of activities offered by the DED increases every day, which is why more people are inclined to acquire a professional license.
If you are a new entrepreneur and you have an idea to form a company, it is most likely that your idea is on the list of activities accepted by the authorities. You should keep in mind that even if the authority accepts an activity, you still need to go through the approval process.
For example, if you want to offer training services, your company must have the necessary materials, such as whiteboards, screens, projectors, among others. And enough space to carry out the training process.
3.2 Cost-effective approach
Purchasing a professional license will be very helpful if you want to save money in the long run. This license will allow you to establish your company in any area of Dubai and the United Arab Emirates, which means zero ties to any special authority. Basically, you will have the freedom of a Limited Liability Company.
In addition to this, many businesses that are just starting see co-working spaces as a viable option. This will allow them to have an efficient work area while minimizing the costs of running a company. Currently, the market fee when renting an office is 2.5 percent, which makes this option the cheapest.
3.3 Adaptable market
This license allows entrepreneurs to maintain 100% ownership of their company when carrying out commercial activities in the UAE. Also, you can carry out your daily operations without needing the presence of a local shareholding party.
In addition to this, with this license, you can do business with different clients, in different markets. You will be able to offer your services and to make contract with other companies as well (this includes educational institutions and government-related agencies)
4. What is a UAE commercial license?
Basically, a commercial license is an official document that allows you to trade almost any product you can imagine. From toys and jewelry to electronics, food, and packaging. Also, you can trade services under a commercial license, for example, brokerage and real estate services.
This license is issued by the Department of Economic Development and the products you trade may be exported for sale outside the UAE, imported and sold in the country, or traded solely within the United Arab Emirates.
5. Who can acquire a UAE commercial license?
Obtaining this license means being able to work in different sectors of the economy, for example:
- Auto trading
- Self storage services
- General store
- Rental services
- General warehousing
- Restaurant management
- Tv station, radio, cinema theater equipment installation and maintenance
- Shoe trading
- Plumbing and sanitary contracting
These are some of the activities that individuals in the United Arab Emirates can do. However, you can see the full list of permitted activities at the Department of Economic Development, or you can check with a company setup specialist, such as Connect Zone.
6. Benefits of the commercial license
Some entrepreneurs are unaware that having a commercial license can bring multiple personal and corporate benefits. Some of these are the following:
- If you decide to establish a company in a free zone and acquire this license, you will be able to enjoy unique incentives from that zone. For example, tax exemptions and free repatriation of income to the entrepreneur’s home country.
- Companies applying for this license are free to establish their headquarters in any part of Dubai.
- With the commerce license you can import and export a wide variety of products.
- Having this document makes it easier to obtain work visas for foreign nationals.
- Companies that have this license will not have to carry out audits to extend their licenses.
Commercial licenses allow entrepreneurs who established their company in the United Arab Emirates to carry out their operations and sell services and products throughout the country as well as internationally. One of the lesser-known aspects of this document is that it facilitates international employee visa admission. In this way, businesses can recruit a greater number of foreign workers.
7. How to obtain these licenses?
The process to acquire these licenses is quite simple and consists of the following steps:
7.1 Mainland or Free Zone
One of the most important decisions you have to make is the location of your company. Both options offer incentives unique to the area. For example, at Fujairah Creative Zone you can enjoy a quick incorporation setup and zero currency restrictions.
There are several types of licenses in the free zones, for example, industrial, commercial, professional, and e-commerce services. On the other hand, you will also find a wide variety of licenses on the Mainland. Companies established here can do business directly with the UAE market and enter into lucrative contracts with the government.
The right setup for you will depend on the nature of your company. A business formation expert, like Connect Zone, can help you make this decision.
7.2 Your company name
Choosing the name of your company is extremely important when registering a UAE business. For this reason, there are certain conditions that you must take into account before choosing the name. Firstly, the name must be governed by the moral values of the United Arab Emirates society, secondly, it cannot be registered by another company or organization and thirdly, it cannot have any type of relationship with any government entity or religious deity.
7.3 License application
Once you have chosen the place, the name, and the type of productive activity of your company, it is time to apply for your license. To do so you must submit some documents and deliver them to the Department of Economic Development on the Mainland. On the other hand, if you decided to establish your company in a free zone, then you should approach the relevant authority in that zone.
In any case, it is always a good idea to have the services of a company formation specialist at this stage to ensure a successful outcome.
7.4 Required documents
Whether you are carrying out the application process on your own or through a company formation agent, the documents that you must deliver to the authorities are the following:
- Memorandum of Association (MoA)
- Duly filled application form.
- Permit from Dubai Municipality’s Building Department allowing the business to use the office space as a business address.
- Passport copies of the shareholders
- Original lease contract of the company’s register address
8. Differences between the professional license and the commercial license
8.1 Commercial license
As shown above, the commercial license allows a company to carry out trading activities. It is the most basic license available and covers a wide variety of tangible and available commodities such as real estate, hardware, general trading, clothes, construction, etc.
A commercial license is used by those companies that want to have more than ten commercial activities in a single license. Foreign entrepreneurs who have this license can only own 49% of the shares of the company on the Mainland. Also, the company has limited liability, which means that it obtains the suffix LLC.
From a strategic point of view, this license has multiple benefits, including tax benefits (low VAT, zero corporate and income tax), visa allocation for employees and their dependents, and also a supportive business ecosystem and international trading scene.
In Dubai, the minimum paid-up capital for a commercial license is AED 300,000
8.2 Professional license
Meanwhile, the professional license is more aimed at those individuals whose goal is certain special practices that fit into their educational attainment and craftsmanship. This license is service-oriented, which means that the same individuals provide the service. Customers pay for their craft because they have the experience to do it or because they have a license.
Contrary to a commercial license, foreign entrepreneurs can maintain 100% ownership of their company under a professional license. Also, the owner or professional has unlimited liability on the company. This is a main difference between the professional license and the commercial license.
If an entrepreneur wants to engage in consultancy activities, they must acquire a professional license. However, if a professional want to trade products or goods that they have made, they must then obtain a commercial license.
By having this type of license, the professional must pay a fixed annual fee for their license. Also, the official regulations of the United Arab Emirates require that the entrepreneur be completely transparent when dealing with clients. Moreover, they are eligible to apply for a residence visa in the UAE.
The minimum paid-up capital for a professional license is AED 150,000.
Although the difference between the professional license and the commercial license is notorious, both are very effective when it comes to establishing a business. If you want to succeed in this country, choosing a license that suits the essence of your company is the most important thing.
9. How can we help you obtain a license in the UAE?
With more than twenty years of experience, we have helped hundreds of clients to successfully establish their companies. We are the ideal partner to guide you through each step of this process.
At Connect Zone, we will take care of applying for the perfect license for your business model. Also, with us, your visa processing will be easy and safe. Additionally, we help you choose a place for your office in one of the best business centers.
Are you interested in learning more about us and the services we offer? You can contact us at the following number +971 43 316 688 or by writing an email to firstname.lastname@example.org. Where one of our representatives will assist you shortly.
If you want to work with us or apply for a wide range of job opportunities, you can start sending applications through thetalentpoint.com. You can also send an email with your resume attached to email@example.com. You do not have to worry; we will not save or share your information.