The UAE keeps attracting traders in all types of goods from clothing, and car parts, to timber and textiles. This place has an outstanding strategic location, making it home to many warehouse and industrial facilities. Therefore, there is an increased interest in obtaining a warehouse license in the UAE to get started in this business.
In this article, we will make sure you learn the step-by-step process to obtain the warehouse license. The eCommerce sector is also driving the warehousing industry forward in the country. Demand for this type of license is rising more and more in the past years. Let us observe:
- Overview of the e-commerce sector in Dubai
- How much are the e-commerce and warehouse sectors growing?
- What is the cost of a warehouse license in the UAE?
- What is the right jurisdiction for your business?
- How many benefits will you obtain with this license?
- How can we help you obtain a warehouse license in the UAE?
1. Overview of the e-commerce sector in Dubai
The UAE is the e-commerce leader among the GCC (Gulf Cooperation Council) countries; the market improved by 53% in 2020 with more than $3.9 billion in e-commerce sales. This was a record that constituted 10% of total retail sales. Most importantly, the Dubai Chamber of Commerce forecasts the industry to generate $8 billion in sales by 2025.
In 2021, the e-commerce sector reached more than $5 billion. In addition, research shows that more consumers in the country made more digital purchases in 2021 compared to 2020. Similarly, warehousing, home furnishing, and homewares are expected to be the fastest-growing sectors from 2021 to 2025.
While the MENA is a cash-based economy, after COVID-19, consumers changed their practices rapidly to adopt debit and credit cards. Research showed that credit and debit cards are the preferred method of payment in the UAE.
Though much of the growth in e-commerce was a reaction to the pandemic, consumers reported increased trust in purchasing products online. As a result, the logistics and warehousing sectors have been reporting massive growth since 2020.
Government initiatives such as the introduction of drones for deliveries, the UAE national AI program, Dubai IoT strategy, Dubai BlockChain strategy, and Dubai data initiatives will revolutionize and transform the logistics and warehousing market of the UAE. For this reason, obtaining a warehouse license in the UAE will always be a profitable option.
The UAE government is also developing a rail network of more than 1200 km to connect major transportation hubs, free zones, seaports, freight terminals, and warehousing areas. Subsequently, this is expected to accelerate the growth of the logistics and warehousing industries due to better connectivity.
2. How much are the e-commerce and warehouse sectors growing?
The popularity of global trading and e-commerce are adding more warehousing requirements to the UAE market. Therefore, carrying a warehouse license in the UAE guarantees plenty of room for growth in the UAE.
The high purchasing power per capita, large consumer spending, and high internet penetration are creating a perfect environment for e-commerce companies and, subsequently, warehousing businesses. Further, the e-commerce sector power is making a growing requirement for the right distribution network, logistics support, and warehouse for storing deliveries efficiently.
3. What is the cost of a warehouse license in the UAE?
Carrying a warehouse license in the UAE is an integral and crucial part of the Mainland and Free Zone business environment. Likewise, this is an important requirement for all organizations requiring storage space or assembling and light manufacturing units.
The cost for this type of license depends on certain factors such as power consumption, customization for cold storage, assembling, size, and manufacturing unit, among others.
For example, a warehouse in the Sharjah Airport Free Zone of about 125 sq.m costs around AED 48,000 per year. On the other hand, the SAIF Zone has a massive variety of warehouses for lease starting from 80 sq.m, 120 sq.m, 400 sq.m as well as other tailored offers available for you.
The warehouse rental cost is made on a yearly payment basis in order to continue operating for the next working year. In the same vein, the warehouse license in Dubai and the trade license of your organization are renewed on a yearly basis.
4. What is the right jurisdiction for your business?
In the UAE, the warehouse license is available for two major business jurisdictions:
- Mainland area.
- Free Zones.
On the other hand, the rates for warehouse facilities have been reasonably competitive in the UAE with a comprehensive range of options available for investors and entrepreneurs. Most free zones in the country have warehouse facilities at the free zone premise itself. This provides the right storage infrastructure for trading companies and manufacturing processes.
There are warehouses available in the Mainland area operated by private companies that you can rent on a monthly basis. As it is evident, if you apply for a warehouse license in the UAE, you will obtain a wide range of benefits.
The UAE also provides first-class storage, transport, logistics, and warehouse services for companies operating in the specific region. In this way, they can easily conduct their trade operations normally both locally and internationally.
4.1. Choosing the right jurisdiction for your warehouse business
Investors and entrepreneurs can apply for a trading license from any of the Free Zones or Mainland areas of the UAE if they open a Limited Liability Company (LLC). In the same vein, free zones in Dubai and the UAE offer tailored warehouses for investors at cost-effective prices and various benefits.
Similarly, for LLC businesses, there are private warehouses across the UAE where you can store and manage your goods accordingly.
However, all goods and services imported to the country must abide by the guidelines and clear the required checks. One of the first steps is to obtain a warehouse license in Dubai, this way you can legally distribute and sell the goods in the UAE.
For goods stored in the free trade zones, there are in-house customs checkpoints in most of the specific gated free zones you are working in. Therefore, any exchange of goods from and to the free zone facility must go through the customs checkpoint.
4.2. Free Zones with warehousing facilities
Free Zones in the UAE with warehousing facilities provide companies with the right infrastructure to facilitate exporting and imports, store the goods and distribute in the GCC region and across the country.
Most importantly, among the free zones with custom build warehouse facilities; we have made a list of the top-leading in the nation:
- Sharjah Airport International Free Zone.
- Jebel Ali Free Zone.
- Hamriyah Free Zone.
- Dubai Airport Free Zone.
- Dubai South.
5. How many benefits will you obtain with this license?
Investors and entrepreneurs can easily get into long-term contracts while using the warehouse for distribution, packaging, assembling, and storage. In addition, if you apply for a warehouse license in the UAE, you will obtain personalized warehouse facilities. Moreover, you will be able to use them as light manufacturing units for the creation of certain products.
To obtain more information about warehouse license in Dubai and light manufacturing units offered by some free zones; you can contact us whenever you wish.
Let us now observe other benefits of setting up a logistics business and obtaining this type of license in the UAE:
5.1. Enjoy a tax-free environment
The UAE has a zero-taxation policy for most businesses operating in the country. For instance, you will only experience a 5% of value-added tax. On the other hand, in the free trade zones; you will experience a 0% percent import duty on imports to the free zones.
However, exported goods of the free zone to the mainland area are subjected to normal VAT. Foreign investors setting up a trading or an exporting company may benefit from the Double Taxation Avoidance Agreement (DTAA) and save taxes in their home country.
A tax residence certificate is applied in the UAE acting as residence proof for tax savings in the home country of the investor or entrepreneur.
5.2. Ease of doing business
The United Arab Emirates has massive e-governance and simplified business setup options across the mainland and free zone areas of the country. Therefore, compared to other Asian and European countries; the UAE has one of the most rapid and streamlined business formation and ease of doing business policies.
And to support business growth across the UAE; the government is working hard to provide the necessary infrastructure and support to new companies.
However, a common practice in the UAE is to look for a business consultant like us who can assist you to prepare the required documents. Further, in Connect Free Zone, we will guide you through the entire business formation process ensuring you rapidly obtain the warehouse license in Dubai and a hassle-free setup.
5.3. Enormous market opportunities
Setting up a logistics business in the UAE opens up a massive market opportunity for investors and entrepreneurs. And as we mentioned earlier, the perfect location of the UAE makes it an ideal location for international and local trade.
For instance, the transport and logistic infrastructure (shipping network, air transport, road transport, etc.) connects the UAE with more than 195 countries. Moreover, it includes the entire GCC countries and the rest of the African and Middle East region.
As a result, there are massive expansion opportunities for business investors and local traders in the UAE to global markets; targeting more customers for their businesses if they apply for a warehouse license in the UAE.
5.4. Low cost and high-revenue businesses
The business setup cost in the UAE is lower than in other European countries. In the same vein, it provides a top-quality infrastructure to support your business. Further, UAE businesses have more potential to scale up and grow by generating higher profits due to the trade ecosystem and expanding market.
5.5. Flexible warehouse options
There is the availability of customized warehouses that makes the country a perfect location for obtaining a warehouse license in the UAE for trading companies and exporting businesses. Likewise, trading entities can set up their distribution units and subsidiaries in the UAE; this way they facilitate global trade operations making the UAE a central warehouse location.
On the other hand, the well-established storage spaces and logistics connectivity for special purposes (cold storage, medical products, food storage, etc.) as well as storage facilities for wide purposes allow the investors to easily export and import from and to the UAE.
6. How can we help you obtain a warehouse license in the UAE?
With a warehousing license, you can offer a high-demanded solution to UAE businesses. In a country with such massive levels of export and import; these types of solutions are always in demand. Besides, there are a lot of benefits when you apply for a license. For instance, you will take advantage of an easy setup process, a friendly business environment, etc.
At Connect FZ, one of our main objectives is to guarantee an excellent incorporation process for your business. In this way, you can establish easily in the Emirates. We offer you outstanding pricing, discounts, and packages.
Another advantage of working with us is enjoying our sponsorship solutions. We understand the difficulties you can face when you are entering an unknown market; especially if you are on your own. Therefore, we will work hard to ensure you can easily set up in the UAE.
With us, you will access outstanding locations for your business; meanwhile, we will ensure you obtain all the benefits the Mainland and free zones can offer you. Thus, we also compare rules, pricing, and regulations, in addition to our PRO services.
Would you like to receive assistance to obtain a warehouse license in the UAE? If you want to start working side-by-side with the best team in the country or if you have any inquiries; you can call us at +971 43 316 688. To contact us via email, write all your questions to contact@connectfz.com.
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