We all know that Dubai is one of the largest business hubs and it always stretches its hands to welcome new businesses. In order to start a new business in Dubai, the Business license also referred to as Trade license is one of the most important aspects. Trade license in Dubai is issued by the Department of Economic Development.
It can be segregated into Professional Trade license, Commercial trade license and Industrial trade license all depending upon the activities involved in the business that you are about to begin.
Go through: Best business ideas for expats in Dubai
Here is the entire procedure involved in getting a trade license in Dubai
Procedure and steps involved in getting a trade license in Dubai
Getting a local sponsor
A local sponsor plays a key role in setting up a business in Dubai to tackle the fluctuations that your business might face in the future. The local sponsor you choose for your business should be a UAE resident and choosing a government employee as a local sponsor helps you in your business.
The local sponsor is mandatory in the Dubai mainland but not in the free zones of Dubai.
Application form for trade name and activity approval
The next step in availing the trade license is to get the trade name and activity approval and this is taken care by The Department of Dubai Economy. The activity approval certificate embodies the partners, legal type and activities of the trade license. It is valid for 6 months and can not be renewed.
You can fill the application of trade name approval online and you can also find the rules and regulations related to the trade name along with this application form.
The application of trade name can also be submitted directly to the DED and once the application gets filled and submitted, a date would be given where you can get the approval. The fees required for the trade name approval should be paid before the trade name approval certificated gets released.
The initial approval and trade name approval applications can be submitted at the same time and the documentation of those may vary depending upon the business you are going to set up.
The process of getting a trade name differs when it comes to the free zone. Acquiring a trade name in a free zone entirely taken care by the free zone authority and the application process varies for each free zone authority.
Business premises and tenancy certificate
This is one of the essential steps to be followed to get a trade license in Dubai. You should select a location in the mainland or in the free zone to start your business and a tenancy contract has to be made with your landlord who is going to provide you the location for your business.
If you are choosing a free zone to begin your business, then you need to consult the respective free zone authority to know if your business is allowed and permitted in that zone.
If you are going to start your business in a freehold development, then you need to submit the NOC (No Objection Certificate) from the owner of the freehold development to the DED( Dubai Economic Department) when you apply to get a trade license.
Also, as a trade license is issued only with valid trade premises make sure that you provide the same.
MOA with the sponsor
MOA( Memorandum Of Association)
Memorandum Of Association is a contract that has to be made with the sponsor you choose to start your business. The MOA consists of all the rules and the structure of the company or business that you are going to start.
This MOA has to be submitted at DED along with the tenancy contract, license application, initial approval application and other documents required.
Documentation required to get trade license
Following are the documents that need to be submitted to the Trade License and Commercial Registration Department to obtain a trade license
- Original and a copy of the company’s statutory documents
- DED letter approving the name of the company
- Attestation letter by DED for the approval of the company
- Tenancy agreement
- Passports and details of the shareholders
The above-mentioned documents are to be submitted at the Trade License And Commercial Registration in DED.
After submission of the documents and payment of the relevant fees AED 15000 to AED 50000, you can expect the trade license within a week.
Also, the requirements for trade license may vary depending upon the business you choose to begin.
Professional trade license
Professional trade license issues sole proprietorship by allowing 100% ownership of foreign investors. The firms that need professional trade license might include Artisans, Craftsmen, and Professionals.
Requirements for Professional trade license
The documentation of professional trade license consists of
- Filled form
- Passport copies of the partners involved in the business
- No Objection Letter from the sponsor to the expat partner
Commercial trade license
Commercial trade license will be issued to the businesses that are involved in trading i.e., buying and selling of goods. Before planning to get a commercial trade license, decide the activities that will be included in your business and note the fact that the main activity along with the adjacent activities should not exceed ten per trade license.
Requirements of Commercial trade license
- Application form with the name of the company mentioned in English or Arabic
- Issued permit by the Dubai Economic Department clearing the use of office space as the official address of the business
- Original lease contract for the company’s address
- Proof of the paid fees for the issuance of trade license
- MOA with the business partner or the sponsor
Industrial trade license
Industrial license in Dubai will be usually issued to the businesses that are involved in the manufacturing and semi manufacturing activities like manufacturing motorcycles, spare parts etc.,
Requirements for industrial trade license
- Location of the industry or the factory
- Local sponsor having 51% of the shares and foreign sponsor having remaining shares of 49%
Why is trade license important in Dubai?
Trade license is a must in Dubai if you are on the mission to start your own business. You are under a chance of getting imposed by several fines by DED (Dubai Economic Department) if you violate any rules with respect to your trade license.
- If you start or run a business without having a trade license you can be imposed with a fine of AED 5000.
- If you open an additional company with the already existing license, a fine of AED 2000 can be imposed.
- If your trade license is not renewed within the specified period of time, AED 250 is imposed as a penalty.
Also, there is a possibility that the company can be blacklisted with all its operations and transactions seized if the company is not having a trade license or have not renewed its trade license within the required period of time.
Trade license always stands as an important entity to start any kind of business in Dubai and lets you have your business in a regulated way by all means.