In recent years, the UAE has become a major destination for international business and investment, making it a leading business hub in the region. A business license plays a pivotal role in facilitating business activities and ensuring compliance with local laws and regulations. Obtaining a commercial license in the Emirates is not only limited to granting the right to conduct business, but also opens wide doors to benefit from an investment environment that is stimulating and supportive of growth and expansion. In this article, we will review the importance of a commercial license , the steps to obtain it, and its benefits for investors and entrepreneurs.
Steps to establish a company in the Emirates
Establishing a company in the UAE requires following a set of steps and procedures to ensure compliance with local laws and achieve success in a dynamic business environment. Here is an overview of the basic steps to establish a company in the UAE:
- Determine the type of business activity: The first step is to determine the type of business activity you want to practice, as the type of activity determines the required commercial license and the procedures associated with it.
- Choosing a legal entity: You must choose the legal form of the company, such as a limited liability company (LLC), joint stock company, or sole proprietorship. The choice depends on the size and type of activity.
- Determine the company name: Choose an appropriate name for the company that complies with local laws. The name must be unique and contain no objectionable language or religious expressions.
- Registration with the Department of Economic Development: Submit an application to register the company with the Department of Economic Development in the relevant emirate. This procedure requires submitting a set of documents such as a copy of the passport and residence permit (if applicable).
- Obtaining initial approvals: After submitting the application, initial approvals must be obtained from the competent authorities such as the Ministry of Economy, municipalities, and other regulatory bodies.
- Preparing the Memorandum of Association and Articles of Association: Preparing and documenting the Memorandum of Association and Articles of Association of the company with a notary public. This contract defines the rights and obligations of the partners and the nature of business activities.
- Identifying a business location: Identifying and renting a suitable location to conduct business, and the location must comply with the requirements specified by regulatory authorities.
- Obtaining a commercial license: After completing all requirements and approvals, you can obtain a commercial license from the Department of Economic Development, which allows you to start practicing commercial activity.
- Registration with the Chamber of Commerce: After obtaining the commercial license, you must register with the Chamber of Commerce in the relevant emirate to ensure compliance with local laws.
- Opening a bank account: Opening a bank account in the name of the company to conduct daily financial transactions.
- Obtaining additional permits: Depending on the type of business activity, you may need to obtain additional permits from the relevant authorities such as the Ministry of Health or the Roads and Transport Authority.
Following these steps carefully ensures that the company is established in a legal and smooth manner in the UAE, which contributes to business success and sustainable growth.
Documents required to establish companies in Dubai
Establishing a company in Dubai requires submitting a set of papers and documents to obtain the necessary approvals and a trade license. These requirements vary based on the type of company and business activity, but there are a set of basic documents that are usually required:
- A copy of the valid passport of the founders, partners and directors must be provided.
- Recent personal photos of the founders and partners.
- If the founders or partners are residents of the UAE, a copy of the residence visa must be submitted.
- For founders or partners residing in the Emirates.
- A document explaining the company structure and the rights and obligations of the partners. This document must be notarized by a notary.
- Submit a business plan detailing the business activity, business model, and future plans of the company.
- If one of the founders or partners is an employee of another company in the UAE, a no-objection certificate from their current employer may be required.
- A copy of the lease contract must be submitted to the company’s headquarters. The headquarters must comply with the requirements specified by the Department of Economic Development. May be required to open a company bank account.
- In some cases, an appraisal report may be required for the property leased to the company’s headquarters.
- Depending on the type of business activity, additional permits may be required from certain authorities such as the Ministry of Health, Roads and Transport Authority, or other regulatory authorities.
- Submit a completely filled out and signed company registration application form.
Completing all these requirements accurately and quickly helps facilitate the company establishment process in Dubai and ensure compliance with local laws and regulations. It is always recommended to obtain professional advice from dedicated company establishment consultants such as Itqan Company to ensure that there is no deficiency in the required papers.
Types of business licenses in Dubai
| License type | Description |
|---|---|
| Commercial license | It is awarded to companies carrying out commercial activities such as wholesale, retail, import and export. |
| Industrial license | It is awarded to companies carrying out manufacturing, production, assembly and packaging activities. |
| Professional license | It is awarded to individuals or companies that provide professional or consulting services such as legal and engineering consulting. |
| Tourist licence | It is awarded to companies operating in the tourism and travel sector, including travel agencies and tour companies. |
| Agricultural license | It is awarded to companies working in the field of agriculture, fishing and agricultural production. |
| Free business license | It is granted to individuals who work independently and provide their services independently in various fields. |
| Civil business license | It is awarded to companies operating in the fields of building, construction and civil engineering services. |
The importance of a commercial license for establishing companies in the Emirates
The commercial license is considered one of the basic elements for establishing companies in the Emirates , and it is of great importance in several ways. Here are some points that highlight the importance of a commercial license:
Legal Compliance:
- A business license ensures that a company is operating legally and in compliance with local laws and regulations.
- Avoid penalties and fines that may be imposed on unlicensed companies.
Official recognition:
- A business license provides formal recognition of the company by the government and regulators.
- Enhances trust between the company, customers, investors and business partners.
Ability to do business:
- A business license grants the legal right to carry out specified business activities.
- It allows the company to sign contracts, open bank accounts, and deal with government and private agencies.
Obtaining financing:
- A commercial license facilitates the process of obtaining financing from banks and financial institutions.
- Enables companies to benefit from credit facilities and loans.
Expansion and growth:
- A trade license gives companies the opportunity to expand into local and international markets.
- It contributes to the sustainable growth of the company by enabling it to interact with various economic sectors.
Protection of property rights
- A commercial license contributes to protecting the company’s intellectual property rights and trademarks.
- Help prevent illegal use of a company’s name or trademarks.
Recruitment:
- It enables companies to legally employ workers and provide visas to foreign employees.
- Ensures compliance with local labor and employment laws.
Participation in government tenders:
- It allows licensed companies to participate in government tenders and projects.
- It opens opportunities to contract with government agencies and implement large projects.
Access to government services:
A commercial license facilitates access to various government services such as electricity, water, and postal services.
Enables companies to benefit from government programs and initiatives that support businesses.
Controlling business activities:
- A business license defines the scope of business activities a company can undertake.
- Ensures compliance with standards and regulations for each activity.
- In short, a trade license is the legal basis that enables companies to operate effectively and legally in the UAE, which enhances the chances of success and growth in the competitive business environment.
Costs of establishing a company in the UAE
As for the costs of establishing a company in the Emirates, they are divided according to whether the company is subject to the local law system, or the Dubai Free Zone system. There are costs called the cost of a commercial license in the Dubai Free Zone, which differ from the commercial license to operate in the local market, and the fees for establishing companies are displayed. In the Emirates as follows:
- Commercial license costs: The costs of obtaining a commercial license vary depending on the emirate and type of activity. These costs can include registration fees, issuance fees, and annual renewal fees.
- Office or commercial space costs: The company must have a physical address, whether it is an office or commercial space. Costs vary depending on location and size of space.
- Registration fees with the Department of Economic Development: Includes registration fees for obtaining initial approvals and final registration of the company.
- Notary fees: Includes fees for documenting the company’s articles of incorporation and articles of association.
- Chamber of Commerce fees: The company must be registered with the Chamber of Commerce in the relevant emirate, and fees vary depending on the type of activity and the size of the company.
- Costs of opening a bank account: These costs vary depending on the bank and the type of account you wish to open.
- Agency fees and special permits: Depending on the type of activity, you may need to obtain additional permits from certain entities, such as the Ministry of Health or the Roads and Transport Authority, and costs vary depending on the entity.
- Insurance costs: include employee health insurance and professional liability insurance, the costs of which vary based on the number of employees and type of activity.
- Legal and accounting consulting costs: You may need consulting services to prepare legal and financial documents.
- Translation and notarization fees: You may need to translate and notarize some documents if they are in a language other than Arabic.
These costs can vary significantly depending on the specific factors of each company, so it is recommended that you obtain professional advice to estimate the exact costs and make appropriate financial planning.
What is an instant license in Dubai?
As we talked about in the previous paragraph, certain steps must be followed to obtain a license or commercial license to practice a specific commercial activity in the Emirates, but the instant license in Dubai summarizes these steps in one step without the need to make an incorporation contract and a lease contract, in order to save time and effort.
However, there is a condition for obtaining an instant license in Dubai, which is that it is only issued once, which is the first year of practicing the commercial activity in Dubai, after which the articles of incorporation and the rest of the documents required to practice or establish a commercial activity in the Emirates are attached upon renewal.
As for the fees for issuing the instant license in Dubai, it is done by issuing one payment paper, which includes the fees for registering the trade name, the initial approval, and the fees for obtaining the commercial license.
Establishing foreign companies in the Emirates
Most foreigners come to the Emirates not only to reside in Dubai, but to reside and invest in Dubai as well. As we mentioned before, Dubai is one of the most important global markets, and it also has many free zones in which one can invest inside and outside the Emirates. To facilitate the establishment of a company in Dubai for foreigners, I organized The UAE has a special law regarding residency and investment in Dubai for foreigners, to facilitate their work within Dubai.
Among these laws is the federal law authorized to operate in seven emirates, which replaces the local laws of each emirate. In addition, each emirate has a free zone that has its own laws and legislation.
To establish a company in Dubai for foreigners, you must know that there are some activities that are permitted for foreigners to practice in Dubai and others that are not permitted.
Among the activities that foreigners are allowed to practice in the Emirates are as follows:
- Activities and investments related to business management.
- Obtaining shares in other companies in the Emirates or abroad.
- Among the laws and conditions for residence and investment in Dubai is the possibility of owning property, whether for residence in Dubai only, or for residence and investment.
Among the activities that are not permitted to be practiced within the Emirates for foreign companies are as follows:
- Activities related to petroleum, mining and gas.
- Media activities.
- Aviation activities.
In conclusion, a trade license in the UAE is a solid foundation for any business seeking success and sustainability in one of the fastest growing economic environments in the world. By complying with local laws and regulations, a business license provides companies with formal recognition and the legal right to conduct business, opening wide doors for expansion and growth. Obtaining a business license is not only limited to achieving legitimacy, but also includes many practical benefits such as facilitating access to financing, protecting property rights, participating in government projects, and employing labor legally. Therefore, a trade license is an essential key to success in the business world in the UAE, making it an indispensable element in the journey of establishing companies and achieving business goals.
Frequently asked questions about the commercial license in the UAE
What is a trade license?
A commercial license is an official permit issued by government authorities in the Emirates that allows companies to carry out commercial activities legally within the borders of the country.
What types of business licenses are available in the UAE?
Types of business licenses in the UAE include: commercial license, industrial license, professional license, tourist license, agricultural license, self-employment license, and civil business license.
How long does it take to obtain a commercial license in the UAE?
The process of obtaining a business license can take from several days to several weeks, depending on the type of business activity and the procedures required.
Can foreigners obtain a business license in the UAE?
Yes, foreigners can obtain a business license in the UAE, and there are many options available to them including free zones that allow full foreign ownership.
What is the cost of obtaining a business license in the UAE?
The cost of obtaining a business license varies based on several factors, such as the type of business, company size, and location. Costs include registration fees, issuance fees, rental fees, and legal consultation costs.
