Requirements for obtaining a business license in the UAE
The UAE has become a hub for settled businesses and entrepreneurs alike. The first step of setting up a business in the UAE is knowing how to get a trade license. Thankfully, company formation in the UAE is easier than in other countries due to their lenient commercial laws. This is what makes the UAE so attractive to businesses and startups around the world.
Even if the laws are lenient, you need to have a good idea about them if you are looking to establish your company in the UAE. The Company Law dictates all the steps and requirements you need to complete in order to form a startup in the UAE. That is why, as a foreign investor, it is crucial you know all about the Company Law. One of the most important steps of company formation in the UAE is obtaining a trade license.
Steps for obtaining the trade license
The Department of Economic Development, or DED for short, in Dubai, is responsible for issuing the trade license for your business. To obtain your trade license from the DED, you need to complete the following steps first:
- Determine the business activities your business will perform.
- Determine if those activities fall under the commercial, industrial, professional, or tourism category.
- Determine the legal structure of your company (Sole proprietorship, partnership, corporation, LLC, etc.).
- Reserve a trading name for your business.
- Submit an application with all this information to the DED.
- Register the trading name you reserved.
- Lease office premises for the business.
- Prepare all the required documents, which we will explain later.
- Submit the final application to the DED with the required documents.
Documents required for the trade license
These are the documents that need to be submitted to the Trade License and Commercial Registration Department in the DED for the trade license:
- A form that needs to be filled out, which will be provided by the DED.
- The statutory documents of the company.
- A memorandum of association should you have a partner.
- Copies of passports of all the shareholders.
- Copy of the office tenancy agreement.
- Approval letter of the trading name from the DED.
- Attested approval of the initial agreement from the DED.
Types of Trade Licenses in the UAE
The trade license you opt for will decide the activities your business will be able to perform. Even if the authorities have listed thousands of business activities. All of those activities fall under four trade licenses. Here is a brief explanation of the four types of trade license available in the UAE:
1.) Commercial Trade License
Commercial trade licenses are for businesses that trade goods, commodities, or services. To be involved in any kind of commercial trade activity, a company needs a commercial trade license in the UAE. Companies formed in both mainland and free zones need a commercial trade license. The purpose of this license is to regulate and protect companies performing trade activities in the UAE.
The general businesses that fall under this category are retail companies, real state companies, transportation companies, construction companies, distribution companies, car rental companies, and other similar types of companies that engage in trading goods, commodities, or services.
2.) Industrial Trade License
Industrial trade licenses are for businesses that perform industrial and manufacturing activities in the UAE. One extra requirement for the industrial trade license is that you need to have a physical office space in the country to be eligible. The other licenses do not have this requirement. It also comes with other conditions that you need to comply with after receiving the license for it to remain valid. For example, the license obligates the business to have a physical warehouse in the UAE.
The businesses that require an industrial trade license are companies affiliated with production, accumulation, packaging, segregating, and similar activities. Their aim can be to convert natural resources or raw materials to produce new products, semi-manufactured products, or even fully manufactured products.
3.) Professional Trade License
Professional trade licenses are mandatory for all service-oriented businesses setup in the UAE. This license is for specialists and professionals looking to sell their skills in the UAE. This license is granted based on the educational background and area of expertise of the specialist. Unlike other licenses, businesses with a professional license benefit from being a sole proprietorship. Even before the amendments, the UAE allowed foreigners with a professional license to own 100% of their business. However, businesses with a professional trade license need a local service agent to complete some of the formalities.
Businesses that require a professional trade license include service providers like law firms, healthcare institutions, educational institutions, information technology companies, consultancies, accountancy firms, and related specialized businesses. Businesses by craftsmen and artisans also require a professional trade license in the UAE.
4.) Tourism Trade License
As the UAE is a top tourism destination for tourists from all around the water. The authorities have started the Tourism Trade License in order to regulate the tourism industry in the UAE.
Businesses like restaurants, hotels, car rental companies, travel companies, tourism companies, hospitality companies, and similar accommodation companies all require the tourism trade license to operate in the UAE.
Steps for renewing trade license
All businesses in the UAE need to renew their trade license every year. As the government is always amending, changing, adding, or removing laws, the renewal will have to agree to the new license requirements. While renewal you may change or amend any information that you have previously provided to the DED. Here are the few requirements for the renewal of trade licenses in the UAE:
- Provide application for the license renewal to the DED.
- Have an office leased left for at least one month.
- Provide all the necessary documents needed at the DED,
- Receive the approved license.
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These processes may seem complicated, or even if it seems simple. It is recommended that you seek the help of professionals who have experience obtaining trade licenses. Any error in the steps will only complicate the company formation process even more. Consultancy firms in Dubai will help streamline the process for you.