A trade license Dubai is one of the biggest aspects of your company’s formation. However, getting one can be an uphill battle if you don’t know the basics of obtaining them. Simply put, a trade license Dubai designates most of the activities that your business can carry out. Obtaining one opens up the way for many benefits for your future businesses.
However, before obtaining one, you should know the basics of a trade license, so you know what you’re getting into. Furthermore, you need to take into account that getting a trade license Dubai requires approval from the government and economic department. In addition to this, you need to get all your company’s formation documents cleared from UAE agencies.
In this article, we’ll talk about the basics of a trade license Dubai and the necessary steps to get one. We’ll cover:
- What is a trade license?
- Types of trade licenses
- Benefits of trade licenses
- How to obtain a trade license in Dubai
- Frequently asked questions regarding trade licenses in Dubai
- How can Connect Free Zone help you get your trade license in Dubai?
1. What is a trade license?
Before talking about a trade license Dubai, you need to know the basics of it. Firstly, what is a trade license? Simply put, a trade license is a license you need to get to legally carry out your business activities. More specifically, a trade license is a legal document; this document provides legitimacy to a company. In addition to this, with it, you have the ability to perform certain actions in the UAE.
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However, this license works only for the activity it was originally granted for. In other words, it doesn’t offer special permission to do an activity other than the one it was issued for. Furthermore, you need to show your trade license when you apply for credit or capital for your business. In addition to this, it can be also used to open a business checking account. Additionally, it is very valuable to hire employees.
The DED (Department of Economic Development) issues this license. You need to take into account that if you want to open a business, you obligatorily need a trade license Dubai. Furthermore, you’ll need to acquire this license at least 3 months before you start your commerce activities. Moreover, a trade license proves that your business activities don’t present any type of health hazard.
1.1. Facts to take into account when obtaining a trade license
There are many things you need to take into account before obtaining a trade license. Mainly, you’ll need to remember 5 important facts:
- You need to submit the application for the license before doing activities in your business. As we mentioned before, you’ll need to acquire it at least 3 months before starting.
- It is obligatory to renew your license yearly. More specifically, you’ll need to renew it 30 days before it expires.
- To get a trade license, you must be at least 18 years old.
- You can’t have a criminal record. However, depending on the situation, there are exceptions for it.
- You need to be able to do the required legal work. For example, income and expenses reporting.
2. Types of trade licenses
Now you know what a trade license Dubai is; however, you might be wondering what the types of trade licenses are. There are 6 main types:
2.1. Commercial license
This type of license is given to companies that are involved in any kind of commercial trade activity. These kinds of activities can be related to goods, commodities, and other services. If your business covers any of these kinds of activities, then this license is for you. For example, some activities that are considered commercial activities are logistics, real estate brokerage, and car rentals.
2.2. Industrial license
Secondly, we have the industrial license, which is given to companies that establish industrial or manufacturing activity. This license allows business owners to assemble and process goods using raw materials (either local or imported). This license is required for businesses that manufacture:
- Equipment and engines.
- Petroleum products.
2.3. Professional license
Thirdly, we have a professional license. Individuals can engage in a profession they are talented in thanks to this license. These professions are based on their educational qualification. For example, some activities that come under the professional license are:
- Consultancy services.
- Printing and publishing.
- Medical services.
- Beauty salons.
- Computer graphic design service.
- Repair services.
- Security services.
- Document clearing.
In addition to this, thanks to professional licenses, foreign investors get 100% ownership of their business.
2.4. Tourism License
Simply put, this type of license is issued to companies that provide tourism activities. For example, some activities that come under this license are:
- Hotel renting.
- Tourist camps.
- Cruise boat rental.
- Travel agencies.
2.5. Agriculture license
As implied by its name, individuals or businesses that are involved in activities related to agriculture need this license. Some examples of activities that come under this license are:
- Crop harvesting and cultivation.
- Pesticide trading.
- Any activity regarding crops.
- Greenhouse installation.
- Agricultural consultancy.
2.6. Craftsmanship license
Lastly, we have a craftsmanship license. Individuals and businesses that are involved in craftsmanship activities or employ workers to do them need this license. Some examples of activities that come under this license are carpentry, plumbing, and electrical work.
3. Benefits of trade licenses
A trade license Dubai offers many advantages to companies that have them. Obtaining one can give you many benefits ensuring that, in the long run, your business runs smoothly. The main benefits a trade license Dubai gives you are:
3.1. Increased credibility
A trade license assures you that your business is a law-abiding entity that commits to ethical business practices. In addition to this, it increases your business’s visibility within the market it operates in. Consequently, this lets your business establish trust among potential customers and established customers.
3.2. Render better exposure to financial aid
Thorough their life, every business needs funds to ensure their growth and enhance their productivity. However, with a trade license, any business can ensure loans and financial aids from financial institutions without any problems. In other words, a trade license acts as a gateway that makes sure the business gets financial aid. Consequently, this triggers the company’s growth.
3.3. Increased goodwill in the target market
Many business owners put compliances out of the equation to gain some extra profit. This renders some short-term benefits, but in the long run, makes them struggle. However, with a trade license, you have a high chance to focus on your core competencies. This lets you get the targeted customers’ trust, letting you lay a strong foundation for your business.
3.4. Motivate investors
An organization doesn’t have authenticity and credibility overnight. To get them, a company must work according to the law, and maintain compliances without any problems. A trade license lets you work in accordance with the law. Consequently, this helps your business secure significant investments from external entities.
3.5. Fewer confrontations with legal affairs
As we already mentioned, a trade license lets you work by the law, ensuring 100% conformity with compliances. Consequently, this makes your business less likely to mess up with legal affairs.
3.6. Makes sure there is better sanitation in your organization
Even though sanitation management requires additional funds, it ensures good hygiene within your business. Consequently, better sanitation is capable of dramatically improving your work environment. In addition to this, good sanitation is also capable of increasing your organization’s productivity.
Entities that work under a trade license are required to provide good sanitation for their existing employees’ wellbeing. Otherwise, they might face several legal contributions, forcing the entity to face hefty penalties.
3.7. Discourages unethical practices
Organizations that indulge in unethical practices are most likely to face legal consequences, getting penalized by concerning authorities. However, companies working under a trade license are under the obligation to avert those unethical practices. Simply put, if the company has a trade license, they’re discouraged from indulging in them.
4. How to obtain a trade license in Dubai
You need to follow the procedures required to obtain a trade license Dubai. Firstly, you need to outline your business activities. Depending on your license’s nature, it is possible to list more than one activity per license on your application. At this stage, it’s recommended to work with a formation company to ensure you list every activity that you intend to carry out.
The next step is to choose your company’s name while staying within the necessary rules and regulations. The UAE has a strict, yet easy to follow, set of naming conventions. For example, your name can’t resemble another company’s name. Otherwise, you might face legal complications if you don’t comply with this law. Once again, a formation company also helps you with this step.
Once you have chosen your business’s name and activity or activities, you can apply for a trade license. You make this application either to the DED (Department of Economic Development) or the municipality of the emirate that you are setting up in.
Whether you or the formation company makes the application, you’re still required to provide the necessary documentation and a few details. You must present the following documents to the entity you’re applying to:
- An application form, that needs to be filled out and signed by your company’s legal representative.
- Your company’s statutory documents, both in original and copy.
- The DED’s letter with your company name’s approval.
- The DED’s letter attesting your company’s set up approval.
- A tenancy agreement.
- All of your company’s shareholders’ details (copies of their passports).
5. Frequently asked questions regarding trade licenses in Dubai
Even though we talked about everything regarding a trade license Dubai, you might be left with some specific questions. Here we will answer the most frequently asked questions regarding trade licenses in Dubai.
5.1. Can I obtain a trade license in Dubai if I’m a foreigner?
Evidently, foreign investors can obtain trade licenses in Dubai. Of course, provided they register their companies in Dubai.
5.2. Do I need a trade license for each category of goods if my company sells various products in Dubai?
No, a general trade license covers all of your company’s activities if you sell goods.
5.3. Do I need to apply for a trade license if I open a branch office in Dubai?
Yes, branch companies also require trade licenses and need to apply for them. However, they only need one if their activities are related to the industries that require a trade license.
5.4. Can I change the trade license into another type of permit?
If needed then yes, a company can change its business license.
5.5. Do I need other licenses for other activities if I have obtained a trade license in Dubai?
Yes, but only if your trade license doesn’t cover all of your business activities.
5.6. Is it hard to obtain a trade license in Dubai?
Not at all, there aren´t any complexities regarding a trade license Dubai. If you provide all necessary documents, and they are approved, the DED will issue the necessary trade license quickly.
5.7. Who needs a general trading license?
For example, companies involved in import and export activities involving textiles, furniture, foodstuff, and electronics require one.
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5.9. How fast can I obtain a trade license in Dubai?
If no problems are met while providing the necessary documents, and they’re accepted, a trade license is issued quickly. In Dubai, formalities are straightforward, allowing entrepreneurs to start their businesses quickly.
5.10. Do I need support from a specialized agent?
Not necessarily; however, it is highly recommended to have a specialist’s support since they can handle all required formalities.
6. How can Connect Free Zone help you obtain your trade license in Dubai?
The procedure of obtaining a trade license Dubai is made easier if you work with a specialist. That is why Connect Free Zone, with over 20 years of experience in the market, is your best choice. Contact us and we’ll provide you with a specialist that will help you with all the necessary procedures to obtain a trade license in Dubai.
Would you like to know more about trading licenses in Dubai? If you have any questions, call us on +97143316688. Or you can also email us at firstname.lastname@example.org, and you will talk to one of our representatives who will gladly answer all of your questions.