Every Business License in UAE needs to be renewed every year, in order to renew your business license in Dubai you will be required to provide Ejari in other words its office lease agreement but recent Dubai Govt changed the law and allowed old companies to renew their license through co working agreement issued by business centers in Dubai.
Dubai is gaining reputation for being business center of the UAE. Over the past two decades or so, Dubai has seen development in the financial, business, trade logistics sectors etc. and this growth has been on a massive scale, due to which Dubai and UAE has contributed extraordinarily towards the world economy.
Since Dubai draws attentions from International trade and investors from the world over on a large scale, it has enhanced the investor’s interest in bringing their businesses to Dubai. Before beginning trade in Dubai a foreign investor must acquire an suitable license from the Department of Economic development.
The DED is accountable for supervising and regulating the economic activities outside the free zones. They have the authority to issue licenses, trade permits and classifying the business activities allowed within the Dubai mainland.
Among a variety of business trade license options in the UAE, it can be fairly tricky for new entrepreneurs to figure which license they should acquire in order to set up business in Dubai. That depends wholly on the nature of your business activities.
If you are willing to import, trade and export goods and products such as furniture, food, clothes or electronics it is safe to assume that investor will apply for a general trading license. This permits businesses to trade with markets around the world not specifically in the UAE. Apart from that a general trading license will allow your company to trade in various goods. So, with this license a business could import, export and trade any number of products i.e. Toys, Cosmetics and Building materials etc. all under the same license.
What Is A General Trade License:
A company can apply for a general trade license if they are going to import, export or trade items like accessories, clothes, electronics, furniture etc. Foreign investors who seek opportunities in import and export market in the UAE should attain general trade license. If you cover numerous trading activities in the same or different category then a general trade license is important for the company. Acquiring a general trade license has many advantages. But there are numerous products, like cars, guns, alcohol and medical products that are not permitted to be traded through general trade license. These products involve approval from higher authorities or UAE municipality’s clearance. Though, these products can be traded by acquiring a commercial trade license after gaining several approvals.
Why Is It Essential To Apply For A General Trading License In Dubai:
It is necessary to obtain general trading license for any company to commence business in Dubai. Following is a list of things why you require a license to start your business in Dubai.
Setting Up Process Is Simple:
Obtaining a general trading license in Dubai and the UAE is a clear-cut process. In many cases, attaining a general trading license is deemed to be comparatively easier than setting up in a free zone. Provided that you meet the qualification criteria for a general trade license, latest initiatives have made the whole process simplified. You will be required to register with the Dubai Department of Economic Development (DED) and the complete process is done within just 90 minutes without committing to a rent agreement.
Reasonably Priced Setup Costs:
The general opinion that pertains in the UAE is that starting up business with a general trading license is very expensive. Although, incomparison to a free zone company set up cost, the price of applying for trading licenses is initiated at around AED 17,000 and depending on the activity of your business; the total expenditure will not go beyond AED 100,000 which is comparable to popular free zones such as Dubai Multi Commodities Centre.
Set Up Selection:
Setting up a business with a general trading license permits shareholders to engage both office space and warehouse anywhere they wish in the UAE in comparison to some other techniques of company setup.
Apply for numerous visas easily:
General trading licenses are fairly favored choice to go about with businesses that has huge number of employees as they permit you with an choice of limitless visas when starting up business on the mainland, but remember when it comes to acquiring a large number of visas, understand that you will be needed to enhance the amount of office space consequently. So that makes it 100 sq ft of warehouse space or office space for each visa which is the general rule in Dubai but you don’t have to worry as it is fairly negotiable with the DED. For example, if you run a domestic cleaning company, you may be required around 500 plus employees working out door then it can agreed with the DED that the company might not be need to take such a huge office space. Apart from the above mentioned you can also set up business with multiple shareholders, also it is simpler to sponsor dependents and finally there are fewer barriers to entry in Dubai.
Various Types of Trade License in Dubai:
There are mainly three different types of business licenses issued relying on the business operation you aim to undertake.
Commercial license is required by companies engaging in multiple trading activities. If you plan to commence trading in Dubai under commercial license then establishing a Mainland Limited Liability Company is the best possible option to fulfill your requirements. This will require you to include a local sponsor. That business is not permitted to undertake any activity outside the range of the Trade License. If you wish to undertake trading outside UAE you can acquire commercial license by starting a company in UAE free zone. You will not need local sponsor and can acquire 100% of your business in such situation. Free Zone companies can trade products within UAE by partnering with UAE mainland distributors. All the necessary documents for getting a commercial license need to be submitted with the Department of Economic Development in Dubai and with the UAE Federal Ministry of Economy.
Businesses carried out under commercial trade license contains, Import and export, Electronics trading, Brokerage firms, Logistics firms, Car rental services and Trading of building material.
Manufacturing companies are given Industrial license. You need to posses a physical office in Dubai to acquire industrial license. Industrial License is given to those businesses or ventures that are related to manufacturing, semi-manufacturing activities such as manufacture of motor cars, motor bikes and its essential spare parts, appliances, Metal casing , Packaging and machinery manufacturing. Such licenses are issued by Department of Economic Development and require special approvals from Dubai Municipality and Planning department. Also civil defense and other government offices approval are needed based on the industrial license operations.
This license is mainly needed by professionals, service providers, crafts men and artisans. You will require assistance of a local service agent for this license but complete ownership of your business and the profits from the business rest with you. Professional License will be given on the basis of your educational qualifications and expertise. Numerous factors are involved to obtain this license and can require several approvals from the Chamber of Commerce, municipality, public notaries and protection agreements and so on. Operations involved under this license are Management and marketing consultancy, Law firms, Auditing and accounting companies, Information technology companies, Educational institutions and pharmaceutical businesses
Process to Obtain Business Trade License in Dubai:
- You are required to select your local partner as sponsor for your company. Also, it is compulsory to define the extent of services you need from local sponsor. Apart from this it is crucial to create a good working relationship with your sponsor to evade future disagreements.
- Application form is required to be submitted to Department of Economic Development for approval of trade name and activity.
- You will need an office space for business, so it is vital to look out for office location and make a rental agreement.
- A Memorandum of Association (MOA) should be arranged with a local sponsor.
- A comprehensive filled application form needs to be approved and signed by company’s legal agent.
- Original and copies of company’s legal documents are required.
- DED letter approving company name is a prerequisite.
- DED attestation letter which approves the company arrangement.
- Rental agreement
- Comprehensive details of Shareholder and their passport copies is required.
Finally, you have to pay all charges and fees. Generally processing time for your application is a week after effectively submitting the documents and payment of fees.
HOW TO RENEW TRADE LICENCE IN DUBAI
Documents required for trade license renewal:
You have to present the following documents to complete your trade license renewal in Dubai:
- Typed (BR/1) Form
- Tenancy Contract copy and copy of EJARI Registration Certificate Or Co working space
- Current Business/Trade License Copy
- Copies of Passports of all Partners in the Business
The renewal process:
You can renew your company’s trade license in three steps by choosing between the DED’s online and offline options.
Initially, you must make sure that tenancy contract of your company is valid for a period of at least one month from the date of application. Be certain to process renewal of tenancy contract of your company before submitting trade license renewal application to the DED.
Put forward your application with all requisite documents at a DED service centre.
Collect your payment voucher from the DED and process your fee.
Once the payment is complete, the renewed license will be printed and ready for you to collect. If the accurate documentation is given, you will get your payment voucher within three to four working days.
Can trade license be renewed online?
The DED has lately launched online portals for renewal of trade license; although, prior to using the portal the company’s owner is required to setup an account. The owner is required to submit personal documentation to the DED in order to start the online account and exercise the system. The portal also offers owners to make online payments, but the registered payment account have to be under the original owner’s name.
However, the license renewal process may look clear-cut, if there has been any modification to the trade e.g. different local sponsor, latest shareholders, change of building etc. the process will appear more complex.
Possible Penalties of Not Renewing your Business License:
Trade License renewal is compulsory for trade owners in the UAE and should be done yearly. It is extremely crucial to meet the deadlines of renewing your license and to have your documents prepared or set and attend to your payments on time to the authority. Failing to renew your license are not only limited to financial penalties but failing to renew your license can have many other displeasing consequences, some of which may end up in conclusion of your business activities.
It is pointless to say that managing a business in the UAE without a trade license is considered unlawful. According to the Department of Dubai Economy (DED) there are a number of fines that are imposed for many reasons connected to trade license and trade license renewal. For example, managing a business in Dubai with no trade license can result in a 5000 AED penalty. Another 250 AED penalty is imposed on failure to renew a trade license. Operating a business activity in a non listed area may also result in a 1000 AED fine.
Failing to renew your trade license may also result in other penalties apart from the financial ones. Even the slightest delay can cause a negative impact on your business proceedings which may limit your business growth in the future. Your company can also be deemed blacklisted if you do not renew your license. That could result in termination of all your employees’ visas and sponsorships, the discontinuing of your transactions and the cancellation of your resident visa.
So, you will be required to prepare your paper work and submit all the necessary documents and payments required for renewal of your license in time.
In order to avoid any setback and penalties concerning your trade license, it is always recommended to hire a professional agency that will assist you with the process and save you a lot of time and hassle.
So, that was your guide on how to renew your trade license on time to avoid penalties and other possible mishaps regarding your business.