Difference between Commercial License and Trade License
The UAE is the land where business ideas prosper, and startups make a name for themselves. New-age investors, budding entrepreneurs, and established business owners – all find a home for their business in the Emirates. However, you need to have a legal license to start your business in the UAE, be it a free trade zone or the mainland. It also allocates your company under the legal governance of the Commercial Companies Act of the UAE.
The commercial trade license and the professional business license are issued by the Department of Economic Development (DED). The UAE government aims to develop the country as a premier business hub, so you’ll get adequate legal support from them. Therefore, this blog differentiates the two legal licenses for you to know the type of license you need to secure for your business.
What is a commercial trade license?
If you aim to sell tangible products, you need to acquire a commercial trade license in Dubai. The scope of activity can be anything from general trading, selling commodities, electronic trading, real estate, etc.
The foreign trader can have the legal ownership of 49% of total shares under a business trade license. The proprietorship of the remaining 51% goes to a local service agent or a UAE national. The shareholders have limited debts and liabilities as they partner with a UAE national to form a Limited Liability Company (LLC).
Benefits of acquiring a commercial license
- Enjoy tax exemptions and free repatriation of capital gains (applicable in certain free trade zones)
- Renewal of trade license without any audit
- Legal permission to carry out ten different business activities (including the primary activity) under the same license
- Reliable engagement with DED
- Opportunity to engage in various international trading activities
How to get a commercial license?
The mainland companies need to apply for a trade license with the DED. For an establishment under any of the free zones, the respective Free Zone Authorities handle business licensing.
To apply for a commercial license in Dubai, select your business category from the list provided by DED or Free Zone Authority. Legalise the business structure, which includes the list of shareholders and the jurisdiction under which you want to run your business.
Finalize a trading name for your venture adhering to the government guidelines. Wait for the initial approval from the concerned authority.
If all submitted documents are correct, you can get your business trade license within three days in Dubai. If there’s an issue with the documentation, the process might extend to a few weeks. To secure the license in one go, hire a legal advisor in Dubai.
Documents required to get a commercial license
- Application form
- Copies of passport of each shareholder associated legally with your business
- Detailed description of your business plan and activity
- Reference certificate of financial statement (minimum 2 years)
- NOC (No Objection Certificate) from the sponsor
- Letter of intent
- Notarized copy of Registry Identification Form
- Latest photograph (passport-size) of either the business director or the manager
- Details of shared capital
What is a professional business license?
To launch a professional business in Dubai (service-based business), you need to acquire a professional business license. It includes various consultancy services, software ventures, accounting services, medical representatives, beauty salons, etc.
This legal license encompasses any exchange or a transaction that involves a service based on a specific skill set or experience. The expat will enjoy 100 percent of license ownership and would be considered the sole establishment.
Benefits of acquiring a professional license
- 100% foreign ownership
- Business is authorized to apply UAE visa for employees, obtaining labor quotas, translation services, and more
- Best for professionals, SMEs, and MNCs as it assists them in opening corporate bank account
- No additional taxes (income or corporate) on your profits
- Smooth and secure business functioning under the governance of the DED
- Renewal of the license is easy and done at nominal costs
How to get a professional license?
To apply for a professional license in the UAE, present a detailed description of the operations performed in your company.
You need a Wakeel e Khidmat (a local service agent/citizen) who will help you acquire the license without having any legal liability in your business. Get the initial acceptance from the DED after applying for the professional License.
You must also reserve a name for the company (pay a charge for the same) and then send all required documentation to the DED for clearance.
Legal consultants in Dubai help you secure the license by taking care of all the paperwork and concerning documentation.
Documents required to get a professional license
- Application form to obtain the professional license
- Copies of passports (owner and all other partners)
- Copy of the Naturalization Book of Local Partners (Jinsiya)
- No Objection Certificate from international partners’ sponsors if the expatriate is already on a work visa. If the shareholder is on a visit visa, the UID number of the shareholder is requested
- Primary approval by the competent authority, depending on the form of business operation to be conducted
- Ejari registration, rental contract, and name registration certificate
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Shuraa has already helped 35,000+ companies establish in the Dubai marketplace. So, are you ready to transform your business vision into reality? Connect with Shuraa, and we’ll do it together.