It is a known fact that for anyone to start any type of business in Dubai, a commercial license is necessary. There are three types of licenses that the Department of Economic Development (DED) require for businesses. These are the professional license, commercial license, and industrial license.
Dubai is a common hub for the export of import of goods due to its strategic location. That is why it is beneficial for any businessman to put up a business in Dubai. For a businessman to be able to do trading activities in Dubai, a commercial license has to be obtained first from the right authorities.
Who Is Required to Obtain the Commercial License?
Before you obtain the license, it is crucial to decide first on the specific activities that will be performed under the license. There is a limit of 10 activities including the main activity for every license. The following are the types of activities that fall under the commercial license:
- Selling electronic products
- Travel and tourism
- Selling of construction materials
- Transportation rental business
- Supply of brokerage service (DED also provides commercial brokerage service in Dubai)
- Import and export activities
- General shops, stores, and retail outlets.
- Real estate
It is also required to come up with a business name beforehand and to register it under the Companies Register. After this step, you must submit several documents to the DED and the UAE Federal Ministry of Economy for the issuance of the commercial license.
Documents Required for the Commercial License
- Proof of payment of the commercial license application fee
- MOA or Memorandum of Association with the local sponsor or partner
- Dubai Municipality Building Department permit for the use of the office space as a business address
- Original lease contract for the use of the registered business address
- Filled out application form with the stated business name in English and Arabic
Dubai commercial license is valid for 1 year and can be renewed.
Documents Required for Renewal of the License
The following are the requirements for the renewal of the commercial license. A renewed license is valid for 5 years.
- Approval from the designated authorities (if required)
- Original or copy of the trade license
- Details of employee accommodations for those companies with foreign shareholders
- A copy of the business location lease contract
In July 2017, the BRL or Business Registration and Licensing sector in Dubai launched the program “Instant License.” Businessmen and investors will be able to obtain their commercial licenses in just five minutes without the need for any lease or location for the first year only. This initiative lessened the time required for the registration and issuance of trade license. For general trading activities, it is mandatory to apply through e-service and to choose LLC.
The Steps to Obtaining a Commercial License
- Choose a legal entity for the business.
- Decide on business activities to conduct.
- Based on the legal entity, decide on the following points: the partner’s share in the business and the distribution of business profits and losses among the partners.
- Reserve a trade name for the business using any of these means: reservation of a trade name with the Companies Register or using an automated name which has the trade name reservation number.
- Add the capital value in the Companies Register data of the business. All the remaining fields will be filled automatically with information.
- An option is offered for an electronic MOA (Memorandum of Association). You may accept or skip it.
- A voucher will be issued.
- Payment of fee.
A fixed rate of AED 10,000 is the total cost of obtaining an instant commercial license in Dubai. This amount already includes the registration of the trade name, initial approval, and license issuance. A commercial license offers several advantages such as the absence of corporate taxes and income taxes, simplified financial reporting method, ease of visa application, provision of translation services, and obtaining labor quotas.
For more information on the legalities regarding obtaining a commercial license, contact HBS Dubai now.