The advent of the internet facility and the popularity of smartphones helped in the growth of the e-commerce industry. These days consumers shop online for consumer goods and services from clothes to cars. It is not a surprise why e-commerce has developed in all corners of the globe. E-commerce makes shopping easy, convenient, and time-saving.
Through e-commerce your business will have a global reach. In Dubai, the e-commerce market is as lucrative as any around the globe. Its value is estimated at $10 billion. There are processes for you to undergo when you get into e-commerce in Dubai, from website design down to getting your license.
It is easy to incorporate an e-commerce company in Dubai, but you have to follow all the rules and regulations. The Dubai government would not easily allow any individual to put up an e-commerce business in Dubai and start selling items. It is required of them to acquire an e-commerce license from the Department of Economic Development. Any business whether online or offline is not legal when there is no license. There is a procedure to follow in acquiring this license.
Steps in Acquiring an E-commerce License in Dubai:
According to Google, 91 percent of the UAE is connected to the net. With internet connectivity and a favorable tax system, it is obvious that e-commerce will certainly prosper within Dubai. But for you to get started on your e-commerce business in Dubai, you have to follow these steps:
1. Decide on the legal structure of the business
This is the first step to setting up an e-commerce business. The options you have for an e-commerce business in Dubai are the limited liability company (LLC), sole proprietorship, a representative office, branch office of a parent company, or a representative office. The most common ones are LLC and the branch offices due to some inherent advantages.
2. Choose a location
By location, it means whether you are setting up your shop in a free zone or the mainland. A free zone allows 100 percent foreign ownership while the mainland business requires a local sponsor who must own at least 51 percent of the shares. Both types have their own advantages and disadvantages. You have to weigh your options properly before you decide.
3. You need to register a trade name
Remember that your business has no physical structure. It’s important for you to come up with a name that is easy to recall. The trade name you choose must also be your domain name so it will be easy for people to locate your online shop. Make sure that your trade name and the domain name is unique and is not taken by another company as it may result in any complication.
4. You have to apply for a license.
The e-commerce license has to be applied at the Department of Economic Development. If you intend to set up a company in the free zone, the license will be acquired from the free zone authorities. For a company in the mainland, on the other hand, the amount of AED 10,000 will be paid to the DED which will cover for trade name registration, license issuance, and initial approval of the business.
5. It is necessary to apply for the initial approval certificate.
The Initial Approval Certificate is an NOC from the designated authority for any entrepreneur to start a business in Dubai. It is valid for 6 months and it can’t be renewed. This can be applied same time when you apply for the trade name registration.
6. You must draft a MOA and a local service agent agreement.
It is necessary for you to draft a Memorandum of Association (MOA) with the local sponsor and submit this to the DED. When you select your company in the mainland, it is important for you to follow the step. This memorandum can be requested from any legal firm and it must specify all the arrangements and percentage of ownership among all of the partners.
7. You need to register a physical office in Dubai.
The next step is to arrange for a physical office in Dubai since this is mandated by the authorities in Dubai. A business won’t become a legal entity unless it has a physical office.
When all these are done, your business license will be ready from 1 to 7 days depending on the authority in charge of it.
Requirements on Export and Import
It is important for the business to be registered with one of the ports or customs authorities for you to acquire an importer’s code. Five percent is imposed on imported goods in the UAE as customs duty. Those under the free zones don’t have to pay this.
You can open a corporate bank account.
After you have acquired the e-commerce trade license and established the business, the next step is to set up a corporate bank account. The application is simple and quick. The trick is to look for a bank that suits all your business needs.
The following are the advantages of obtaining a license of e-commerce in Dubai: 0 percent corporate and personal tax, low operating costs, resident visa is valid for 3 years, no restrictions on currency, 100 percent foreign ownership within the free zones, autonomy to repatriate income and capital, and having no import duties on e-commerce license.
E-commerce business is important in every economy since people are now connecting worldwide through the net. If you are ready for this type of business, it’s always the right time to start. If you’re in doubt, Contact HBS Dubai for questions and clarifications anytime!