One buzzword that has swept the business market in the tough times of Covid-19 is ‘being online’ or e-commerce. Most of the existing organizations are trying to shift their operations to online methods. The start-ups are initiating developing an online presence to grab as much benefit as possible in the current challenging times. If you intend to do an online business in Dubai, you have to get an e-commerce license in Dubai.
Similar to the growth of e-commerce businesses across the globe, Dubai is also witnessing a surge because of its immense popularity as a lucrative location. Being at a strategic central location, encouraging business landscape, zero taxes, and various other factors, Dubai is an attractive destination for the global business world. With a penetration rate of 4.2% in e-commerce, UAE is considered as the most advanced market in the MENA region as per Visa’s white paper on ‘The UAE eCommerce Landscape’ of June 2019.
Though setting up an e-commerce business in Dubai is easy, there are several laws and processes to comply with. The foremost requirement is to have an e-commerce license from the Department of Economic Development (DED) in Dubai. This article talks about the licensing procedure and other requirements to fulfill to conduct e-commerce business in Dubai.
Need for e-commerce license
A license is needed in Dubai to conduct online operations in Dubai to sell your goods and services legally to customers. If the e-commerce license is not obtained, it may lead to penalties, and the business may be closed forever. A licensed business ensures the possibility of opening a bank account, arranging payment gateways, obtaining relevant insurance, and building customer confidence. The licensing process will also depend on your decision regarding if you intend to produce and sell your products, create a platform so that sellers can sell their products, or create a platform to provide third-party services to buyers.
E-Commerce license setup type
Free zone or mainland
from customs duty. However, you cannot have direct operations with the local market; it is still possible, provided a local agent or distributor is appointed.
Many legal structures are possible in both the mainland and the free zones. Depending on the advantages of each, your objectives and vision, and your business industry, you can choose any legal structures such as LLC or foreign branch or any other.
Selection of the company name
Before applying for the e-commerce license, it is essential to decide on the company name. There is a set of regulations for naming conventions that businesses must follow. The name must be available for registration, exclude any religious or offensive connotations, and if the owner’s name is used, it must be in full. It is better to choose a name that people can remember easily since it will not have a physical presence, and people must not find any difficulty in searching it online.
Initial Approval Certificate
For an e-commerce license, a no-objection certificate is required from the relevant authority. It is called an Initial Approval Certificate and is valid for six months. It is non-renewable. It is recommended to apply for it at the same time as the application for the company name.
MoA and local service agreement
In case of selection of mainland Dubai as the official setup, it is essential to submit a Memorandum of Association (MoA) and Local Service Agreement (LSA) agreed and signed with a local sponsor. The LSA will mention the local sponsor’s details and the agreement details between them, while the MoA will mention the ownership stake and special provisions of all the partners. For a free zone company, this step is not required.
E-Commerce License application
Depending on the location and the legal structure chosen, the company can be set up with the submission of relevant documents and the stated application form. In the case of a free zone, the application is submitted directly to the authority of the free zone. For a mainland company, the documents are submitted to the municipality or DED.
The key documents required, along with the application form for an e-commerce license, are:
- Passport or visa copies of the shareholders
- Local service agreement
- Draft of the Memorandum of Association
- Passport copy or Emirates ID of local sponsor
- No-objection certificate from the relevant authorities
Generally, the e-commerce license is approved and dispatched to the applicant within one to seven business days.
Once the e-commerce license application process is done, the next step is the UAE residence visa for you and your employees. Based on the business setup that you choose and the location, the number of visas you can get for your family or dependents and employees is decided.
Corporate bank account for your e-commerce business
Once you receive the e-commerce license, you can open a corporate bank account with a bank after analyzing the multiple options and the features that a bank can provide, depending on your requirements. Along with this, you would be required to set up the payment gateway for receiving online payments, including credit/debit cards, smart cards, gift coupons, digital money e-cash, and other options.
Import-export registrations for your online business
To get an importer’s code, businesses need to register with the customs authority and one of the ports to facilitate the export and import of goods.
All of the information mentioned above is a good guide for you to read and refer to before thinking of applying for an e-commerce license in Dubai. It is a simple, easy, and affordable process. However, to eliminate the possibility of errors due to which the chances of rejection are higher, it is good to hire a specialist, professional firm dealing in company formation and licensing process.
The E-trader license allows only the Emirati and GCC nationals above 18 years to trade products and services online. Under this license, the UAE nationals cannot open a physical store and cannot issue visas. Herein, individuals conduct online businesses through social media applications such as WhatsApp, Instagram, Facebook, etc. On the other hand, the e-commerce license allows any individual from any country to set up an e-commerce business in Dubai, provided the required relevant conditions are satisfied.
In the case of mainland Dubai, there is no specific e-commerce license. A company with a general trading license can conduct all types of trading via any of the methods – online or physically. A company with a trade license in one activity cannot do an online e-commerce business for other activities.
In the case of free zones, e-commerce activity means sales through an electronic medium since they are restricted to operate only in the free zone. To sell its products online, a company must obtain a license from DED.
– Garments, textiles, and gifts
– Household, professional, and personal goods
– Jewellery and precious stones
– Publications and media materials
– Sports and recreational events tickets
– Vehicles and transport means
N R Doshi and Partners has an experienced and knowledgeable team of company formation experts who provide you the necessary assistance in all the steps of forming a company – be it on mainland UAE, free zones, or an offshore company. We handle all the tasks required to obtain the e-commerce license in Dubai diligently so that you are fully focused on the business part. We have answers to all your queries related to online business in Dubai.
If you are looking to obtain an e-commerce license in Dubai, do contact us. We will assist you with all the steps, options, and processes required to set up an e-commerce business in Dubai.