Each and every business across the Emirate is running on some sort of legal boundaries related to business activities. The start of the company requires certain dignified steps which are to be followed such as choosing the business, preparation of required documents, business licenses, and so on. Since company formation in Dubai is considered to be a highly organized process in which each step has its own importance. Also, for a business to run legally, having a trade license is mandatory. A business license allows the entity to run its operations lawfully and also it ensures the customers, clients, suppliers, and vendors that the specific business is a legitimate company that abides by the rules and regulations. Additionally, over the years Dubai has come up as one of the most attractive business locations in UAE due to its economic diversity and strong government support towards businesses. This in turn as also skyrocketed the number of FDIs across the nation since easy regulations have further pumped up Investments by foreign market players over the coming years. Several businesses ranging from tourism, entertainment, f&b, real estate, and IT among others have seen significant growth in the Emirate during the past years.
The Department of Economic Development (DED) is the license issuing authority in Dubai that issues licenses to organizations and businessmen to run their business in the mainland. However, on the other hand, there are Freezone authorities the issue licenses to those entities who wish to set up their business in the respective free zones. Thus, the DED issues trade licenses to entities depending on the type of the business thereby having a separate type of license for different types of businesses across the numerous industry verticals.
Types of Trade Licenses in Dubai
Majorly there are three types of licenses available for business types in the Dubai Multi Commodities Centre(DMCC). DMCC was established in 2002 by the Government of Dubai primarily with an aim to provide the physical, market, and financial infrastructure required to establish a hub for global commodities trade. The three types of licenses have been discussed in detail below:
1.Commercial License
Those businesses that have their operations in trading and supplying of goods require a commercial license. Goods such as garments, consumer goods, and others fall under the category of the commercial license. Also, given below is the list of businesses that fall under the category of commercial licenses:
- Trading of spare parts (machinery, automotive, and others)
- Trading of second-hand furniture
- Trading of precious metals (gold, copper, etc.)
- Automobile Trading
- Trading of Oil and Gas
- Commercial Furniture Trading
- Telecom Equipment Trading
- Chemical Trading
2.Industrial License
The businesses engaged in manufacturing activities and converting raw materials into finished goods required an industrial license to perform its activities. All the manufacturing companies ranging from medical equipment, f&b, metals, and another fall under the category of an industrial license. Below is the list of some of the major industries that require industrial licenses to run their entities:
- Fabric manufacturing
- Textiles
- Food and beverages
- Bakery and Confectionery
- Plastics
- Packaging products
- Animal Feed
- Aerospace
- Medical Equipment
- Pharmaceuticals
- Ceramic
3.Service License
The businesses offering any type of services need to have a service license such as salons, medical services, artisans, and others. These businesses offer their expertise as a service. Some of the businesses that require a service license are mentioned below:
- Consulting (IT, Insurance, Tax, Marketing, and Legal, etc.)
- Medical Services
- Accounting
- Waste Management
- Engineering
- Advertisement
Why is a Trade License necessary in Dubai?
Having a Trade License in Dubai is a legal obligation of all businesses irrespective of their type. Here are some of the key reasons to have a trade license in Dubai:
- A trade license is considered to be a type of identity of a business and its owner.
- When a company has its trade license it is eligible to participate in any profitable measure taken by the government for business growth.
- A trade license holds the accountability of the commercial activities of the company.
- Moreover, a trade license helps in protecting public interests.
Read More: How to get a Trade License in Mainland
Things to keep in mind to obtain a trade license in Dubai
1.Categorization of the business
The first step to obtain a business license is to outline the business operations before filing the business license application. Also, it may be possible to specify more than one activity on the basis of application, depending on the license you choose.
2.Choosing the name of the company
Due to the government's strict naming standards, choosing a company name in Dubai may take some extra effort. It is strictly illegal to use a business name that contradicts your company's activities, is viewed as disrespectful to religion, or references to political groupings.
3.Cost to be incurred to obtain the business license
The cost of a license strongly depends on the tentative amount that is being invested in the business. The cost of a trading license mainly depends on the following factors:
- Nature of the business
- Size of the business
- Area of business, etc.
However, the licensing costs are recurring expenses and roughly cost between AED 10,000 to AED 50,000 per year (Approx). Since these licenses require annual renewal the licensing costs are often taken under recurring expenses. On the other hand, the delay in license renewal may lead to a penalty, freeze in business activities, and ban on the license as well.
Conclusion
Obtaining a trade license in Dubai is often considered a complicated task since paperwork and several other documentation are considered time-consuming. Dhanguard helps its clients to attain trade licenses by offering assistance in paperwork through its team of experts and a wide network of professionals. If you require any services regarding any types of trade licenses in Dubai, please contact us and we will gladly assist you.