Dubai and the United Arab Emirates have been one of the major business locations for entrepreneurs and start-ups investors. The country is perfectly located joining the markets of both East and West. That is to say, opening a general trading company in Dubai is the perfect option for businessmen looking for beneficial investment.
In this article, you will learn how to open a general trading company in Dubai and why it is important for companies. In addition, you will understand every step of the procedure when you are opening a general trading company in Dubai. To sum up, in this article you will understand why Dubai is the perfect place to open your company. Let’s observe:
- 5 Steps to Start a General Trading Company in Dubai
- STEP 1: Develop a Business Plan
- STEP 2: Choose the Jurisdiction
- STEP 3: Find a Sponsor
- STEP 4: Legal Formalities
- STEP 5: Documents required
- Why Dubai is the perfect place for general trading?
- Who issues Trade Licenses in Dubai?
- Advantages of owning a Trade License
- Annual costs of having a trading company
- Benefits of setting up a business in Dubai
- How can ConnectZone help you to start a trade business in Dubai?
5 Steps for Starting a General Trading Company in Dubai
Dubai is a member of the World Trade organization; the country offers the perfect market space for entrepreneurs and investors. Let’s take a look at the 5 steps to general trading company license in Dubai:
STEP 1 : Develop a Business Plan
One of the most important step when you are in the process of starting up a company is to plan the type of business you want. Similarly, it’s good to start your company with a good plan. Likewise, it is mandatory in Dubai and all the UAE to have a properly formulated plan. A good plan must have the following information:
- Products and activities.
- Total number of employees.
- Office space requirement.
- Investors and financing.
- Initial investment.
- SWOT analysis.
- Marketing tactics.
The businessman must study the parameters to formulate them properly. Moreover, this plan must be chosen wisely: the market, the activities, and the initial investments.
STEP 2 : Choose the Jurisdiction
Free Zones: there are currently 48 free zones. Free zones normally give 100% ownership and 100% tax exemptions to investors.
Offshore: offshore organization is a company set up in a different country from the residence of the investor.
Mainland: mainland the investors of the organization must find a sponsor to establish their company, 51% of shares approximately.
Choose the jurisdiction according to the requirements of the company. However, some investors think is better to invest in the mainland because there is more exposure to customers, there is no issuance limitations of work visas, and you can trade with other companies.
STEP 3 : Find a Sponsor
If the owner decides to set the company in the mainland, the company must meet some requirements. In addition, one of the most important requirements the company must fulfil is to find a sponsor. This sponsor will get a 51% share of the company. To sum up, there are 3 types of sponsors in Dubai.
- Firstly, the sponsor will sign documents and will take care of the business’ problems. Moreover, sponsors charge the lowest fees.
- Secondly, this type of sponsor is middle-level government-related investors who have big connections. The fee for this type of sponsors is higher.
- The last type is to the high-level brands that are connected to senior levels. Their fee is the highest.
STEP 4 : Legal Formalities
The process of obtaining a trade license for your company is crucial as it makes your business legal. When you are opening a general trading company in Dubai you will need a trade license, in addition, you will need it for many activities, when trading products are imported and exported, etc.
However, these licenses cover several aspects such as, clothing, accessories, fixtures and furniture, electronic appliances and pieces of equipment. The next list contains the steps for obtaining a trade license:
- Choose an appropriate trade name for the organization.
- Plan the business activities.
- Fill the application and submit it for approval.
- Get the external approvals if it is required.
- Present the required documents; the memorandum of association and the government-accepted documents.
- Choose a business location and obtain the tenancy contract by the Ejari.
- Submit the application to the DED.
- Pay the fee of the license.
Moreover, If the company is in need of an offshore or free zone license, it is required to submit the original documents to the commercial registration department. Therefore, when you are of opening a general trading company in Dubai and the process of obtaining a license is done, the DED will issue the license.
This license is valid for one year. a general trade license Dubai Cost is AED 28,000 TO AED 42,000 approximately.
STEP 5 : Documents Required
- A license application signed by; managers and legal representatives.
- Certified company name approval letter from DED.
- Passport copy of the company partners.
Company officials must verify and check the documents once they are submitted. After that, the name of the company will appear in the commercial registry. Therefore, the DED sends the documents to the Federal Ministry of Economy. When the publication is successful, the ministry will issue the approval.
7. Why Dubai is the perfect place for general trading?
- Dubai geography: companies operating in Dubai are connected with Africa, Asia, and Europe. However, easy access and good administration are the key to a successful importing and exporting process. That is to say, the location contributes to set up an efficient trading company.
- The ecosystem of Dubai: Dubai’s economical system suits plenty of companies. Company formations are guided through DED and directed through supportive laws taken by judicial procedures. An efficient way to grow in Dubai is by trading.
- Trading policies: the UAE’s government has set trade policies for general trading companies in Dubai. The country offers plenty tax advantages and the lowest duty on import and exports. Likewise, companies in Dubai have the liberty to develop trade policies that ensures their growth.
- Tax advantage: companies in Dubai and in the UAE enjoy tax policies that include double taxation agreements and international trading partners. However, the government created a beneficial tax scheme that benefit all types of investors.
Read More About : How to Start a Business in Dubai UAE : Complete Steps [2021 – Guide]
8. Who issues Trade License Dubai?
The Department of Economic Development (DED) is in charge of issuing trade license Dubai. That is to say, if your organization is established in one of the Free Zones, the certified jurisdiction will provide the business license. Therefore, if your company is located onshore or on the mainland you must apply for a trade authorization.
Moreover, the process of opening a general trading company in Dubai requires paperwork and documentation, it could also involve other documents for other government bodies. However, the process could take from three days to several weeks.
Your business determines the length of the process, all the permission documents you need, and other factors. That is to say, if you have all the required paperwork at hand, it will not take more than a week.
To sum up, normally trade licenses may cost +12,000 AED. In addition, activity fees start from AED 150 to 500 depending on the business activity.
9. Advantages of owning a Trade License
The UAE government is always aiming towards more foreign investment and economic growth; however, the trade licenses have crucial advantages to investors and business owners:
- Low rate of importation Import duty is low
- Paid-up capital is not mandatory.
- No repatriation profits.
- Tax-free country.
- Provides a safe space for local and international trading.
- Several banking benefits.
10. Annual costs of having a trading company
There are ONLY four annual costs when you are opening a general trading company in Dubai. One of the costs is corporate sponsorship fees contracted to your local sponsor; in addition, the license renewal fees are paid to the DED. The company must pay the immigration card fee to the Immigration Department.
Likewise, you will pay the rent each year according to your rent or lease agreement for your warehouse, office or commercial space.
The company also needs to renew its investors visas. Subsequently, all the investor visas are valid for a three-year period.
Read More About : How to Get an E-commerce License Dubai in 2021
11. Benefits of setting up a business in Dubai
Dubai is attracting many entrepreneurs that want to leave their mark in the UAE. The country has a potential to reach worldwide customers. Therefore, setting up a company in the UAE is a good decision; the cost effective, innovative, and flexible rules to create a business in Dubai is one option which anyone can consider.
Low investment required.
- Flexible options to the business.
- Low risk.
- Market connectivity.
- Taxation Benefits
- Government support
- Expansion opportunities
How can ConnectZone help you to start a trade business in Dubai?
Now that you know everything need to know regarding the opening a general trading company in Dubai, all the requirements and the step-by-step procedure. ConnectZone can set your company in the best location in the UAE:
- Free Zone.
We specialize in working with companies by providing them with the best business setup services. However, we have a qualified and experienced team that will help make your VAT registration.
Moreover, we offer you our Local Partner Services in case your business requires someone you can totally trust. Depending on the kind of business you want to establish, we will find the most favorable location for you.
On the other hand, you will have the opportunity to select one of the many packages we offer to boost your setup process. We also have other services including payroll, HR management systems, and WPS.
With more than 20 years of experience and our main goal is to help your company grow and provide it with the most efficient business services and solutions.
Would you like to contact ConnectZone to obtain tips and more useful information about the process of opening a general trading company in Dubai?
If you have any inquiries, you can email us at email@example.com or If you want call us on +971 4331 6688 and you will talk to one of our representatives who will kindly answer all of your questions.