The UAE´s market is one of the most lucrative ones around the world, with entrepreneurs being able to make a profit in various ways. And thanks to the internet´s easy accessibility, this statement becomes truer every day. Shopping online for clothes, furniture, etc. makes the e-commerce sector one of the most alluring ones for entrepreneurs. That´s why many business owners are interested in obtaining an ecommerce license Dubai

Nevertheless, to get an ecommerce license Dubai there´s a number of steps you need to follow. Following them might seem like a hard task; however, it couldn´t be easier. With an ecommerce license Dubai, you´ll be able to set up an online shop and gain profit from it 24/7, selling to people from all around the world.

In this article, we´ll talk about the basics of an ecommerce license Dubai and the process to get one. We´ll cover:

1-What is an E-commerce license?

2-Types of E-commerce licenses

3-Types of E-commerce

4-How to get an E-commerce license in Dubai

5-Benefits of obtaining an E-commerce license in Dubai

6-How can Connect Free Zone help you obtain an E-commerce license in Dubai?

1-What is an Ecommerce license?

Before starting to talk about getting the ecommerce license Dubai, you´ll need to learn the basics of E-commerce. E-commerce is a term used to refer to a business model. This model allows companies to buy and sell goods and services over the internet and it´s operated in four major markets. You can conduct e-commerce through various electronic devices, for example, computers, phones, or tablets.

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Essentially, thanks to E-commerce, every service and product can be made available online. Books, furniture, clothes, financial services, etc. everything can be sold on the internet. Nevertheless, you need to take into account that E-commerce involves more than one party. In addition to this, it also involves the exchange of data and a currency to do the transaction.

Furthermore, E-commerce allows businesses to gain access to a wider market. This fact is especially helpful to small companies since they can establish a better presence on the global market. This is done by E-commerce providing cheap and efficient channels that allow them to distribute their products or services globally.

However, if you want to set up an online business in Dubai you´ll need an e-commerce license. An ecommerce license Dubai is a license obtained from the DED (Department of Economic Development). This license lets you add online trade activities to your existing licenses. In addition to this, you can conduct business through the internet and social media networks with this license.

2-Types of E-commerce licenses

There are many types of E-commerce licenses to choose from, so you need to know which one you will get. There are 3 main types of ecommerce license Dubai you can get.

2.1 E-trader license

An E-trader license is a license monitored by the DED and given only to UAE and GCC nationals that reside in Dubai. This license is meant for home-based businesses that sell products or services via social media platforms. This license was introduced to regulate online commodities sales on social media websites.

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If you plan to work from home using social media but you don´t want to hire an office, then this license is ideal for you.

2.2 Portal license

A portal license is another e-commerce license like the E-trader license, but with the difference of being obtainable by non-UAE nationals. If you are in the UAE and want to establish an E-business, the portal license allows you to do so. This type of license is also ideal if you want to list a website that includes products, services, or reservations.

If you´re interested in obtaining one, the cost for a portal license starts from AED 12.000 if you´re applying in the Mainland. However, you need to take into account that the price varies depending on your business requirements.

2.3 Virtual company license

Last but not least, there´s the virtual company license. The virtual company license is a license recently launched by the DED. This license enables overseas to digitally establish an online business in Dubai without acquiring a residence in the city. However, this license is only applicable to 3 sectors:

• Computed programming and related activities.
• Designing activities in fields of fashion, jewelry, interiors, etc.
• Services related to printing and advertising.

Apart from needing the business´ activity to be one of these 3, applicants for this license can´t be residents of the UAE. In addition to this, owners of virtual companies in Dubai must be national or tax residents from any of the 101 approved countries. Furthermore, virtual company owners in Dubai must remember that they´re subject to taxation based on the country they are in.

Lastly, if the virtual company´s revenue is more than $100k, per year they´ll become subject to 5% VAT (Value Added Tax). This means that a Dubai virtual company license holder needs to register the company with the Federal Tax Authority of UAE.

3-Types of E-commerce

Once you´ve chosen your e-commerce license type, you´ll need to choose which type of e-commerce will your business do. There are many types of e-commerce business models, the main ones are:

3.1 Business-to-Business (B2B)

Firstly, we have the B2B business model. Two businesses or companies trade between them in this type of model. Furthermore, the trades that they do usually involve conventional wholesalers or producers that deal with retailers.

3.2 Business-to-Consumer (B2C)

Secondly, we have the B2C business model. This model deals with the retail aspects of E-commerce. For example, a business that applies this type of model sells goods and services to the consumer through the internet. The customer sees in detail their proposed procurements, they place their order and the business delivers it.

3.3 Consumer-to-Consumer (C2C)

Thirdly, we have the C2C business model. In this model type, consumers sell used goods/services to another consumer, they do this through online means, like a website. The transactions are provided by a 3rd party.

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3.4 Consumer-to-Business (C2B)

Following C2C we have the C2B business model. As its name implies, this model is the opposite of the B2C business model. In this model, a consumer sells their products or services to a business or company.

3.5 Business-to-Administration (B2A)

Second-to-last, we have the B2A business model. This model allows businesses to negotiate with public administration, for example, the government. They allow information exchange through a central website. A business can get offered a platform to bid on government opportunities such as auctions, tenders, application submission, etc.

3.6 Consumer-to-Administration (C2A)

Lastly, we have the C2A business model. Consumers use a C2A platform to request information or post feedbacks concerning public sectors. The requests and feedbacks posted are sent directly to the government authorities/administration. The areas consumers can apply are:

• Remittance of statutory payments.
• Distance learning.
• Information dissemination.
• Appointments seeking, information about illnesses, payment of health services, etc.
• Tax returns filing.

4-How to get an E-commerce license in Dubai

Now you know what an e-commerce license is and the types of e-commerce you can apply for. However, to set up an e-commerce business, there´s a certain number of steps you need to do. Here we will mention the necessary steps to get an ecommerce license Dubai:

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4.1 Decide the legal structure of your company

Firstly, you´ll need to choose the legal structure of your company. Simply put, choose if your business will be an LLC, a one-person company, representative office, branch company, etc. The most common legal structures in Dubai are LLC (Limited Liability Company) and branch offices.

4.2 Choose a location

When we say “choose a location” we don´t mean to choose the exact location to do it. With this, we refer to you choosing the jurisdiction in which your company will be. Dubai has two main choices to choose from, the Mainland and the Free zone. Both of them have advantages and disadvantages you´ll need to take into account before choosing.

Firstly, there is the Mainland which allows you to do business within and outside the UAE market. On the other hand, in a Free zone, you´ll only be able to do business within other free zones and within UAE´s market.

4.3 Register your trade name

Once you´ve chosen your company´s legal structure and the jurisdiction it will be built in, you´ll need to register your trade name. Your business gains physical presence with a registered trade name, so you need to ensure that people will be able to remember it easily. In addition to this, your name can be used to find your company online. However, make sure your name doesn´t resemble another company´s name to avoid legal complications.

4.4 Apply for your license

The next step to apply for an ecommerce license Dubai is to apply for the license itself. The DED (Department of Economic Development) issues it, so you need to approach them first. You´ll pay approximately AED 10.000 to set up a company in the Mainland. On the other hand, if you want to apply for a license in a Free zone, you´ll need to communicate with the respective authorities. The type of license issued depends upon your business´ nature.

4.5 Apply for an IAC

IAC (Initial Approval Certificate) is a NOC you need to apply for issued by the respective authorities. This NOC will let you start your e-commerce business in Dubai. Furthermore, you can apply for it at the same time you apply for your trade name approval application. In addition to this, you need to take into account that this certificate is non-renewable and valid for 6 months.

4.6 Draft an MOA and local service agent agreement

You need to draft an MOA (Memorandum of Association) with your sponsor, and then submit it to the DED. Any legal firm can type out the memorandum. In it, the firm needs to specify arrangements and ownership percentages among all partners. If you are setting up your company in a Free zone, you can skip this step. However, if you are setting up in the Mainland, you need to do this step.

4.7 Register your physical office and the final approval of the license

After drafting an MOA (or applying for an IAC), you´ll need to set up a physical office in the jurisdiction you´ve chosen. Even if your business activities are done completely online, a physical office is still required for Dubai´s authorities. After you´ve finished all the steps above, you´ll get your ecommerce license Dubai.

4.8 Open a corporate bank account

Lastly, after getting your e-commerce license, you will be able to set up a corporate bank account. In this case, since the process is quick and simple, you´ll only need to choose a bank that covers your needs.

5-Benefits of obtaining an E-commerce license in Dubai

Getting an ecommerce license Dubai can give business owners many benefits. You can promote and sell products/services online by obtaining an e-commerce license. In addition to this, you´ll be lawfully permitted to participate in exhibitions and conferences if you have this license. Here are 6 benefits an e-commerce license gives you if you have one:

• When you apply for a license, you can register your own trade name.
• A local sponsor isn´t needed to get an e-commerce license. This means that you, as the owner, can be the sole shareholder of the company.
• As we just mentioned, an e-commerce license lawfully permits you to participate in exhibitions.
• You can register with the Dubai Chamber and be able to import and export products.
• With an e-commerce license, you can conduct training and workshops.
• Last but not least, with an e-commerce license, you´ll be able to promote your products on social media via ads. Consequently, this can make you gain more customers if the ads can catch their attention and Discover the steps you need to follow to apply for an industrial license in a UAE Free zone.

6-How can Connect Free Zone help you obtain an Ecommerce license Dubai?

Getting an ecommerce license Dubai is a great choice for entrepreneurs looking forward to setting up an online business. However, without a company helping you, you might have problems following the process to get one. That is where Connect Free Zone comes in, with over 20 years of experience in the market. Let us guide you through the process of getting an e-commerce license and do the tedious work for you.

Would you like to know more about ecommerce license Dubai and more general information about e-commerce? If you have any questions, call us on +97143316688. Or you can also email us at info@connectfz.ae, and you will talk to one of our representatives who will gladly answer all of your questions.