A firm in Dubai will be the right choice if your goal is to be successful in business. Countless men have established their businesses in Dubai and reaped huge benefits. The federal laws in the UAE are stringent regarding setting up a business here.
A business license in Dubai is compulsory for commencing business operations.
You can approach the authorities and submit the requisite documents for the establishment of your company in Dubai/ UAE. However, the drawn-out procedure may take some time to complete. In this blog post, we have included everything you need to know about business licenses in Dubai.
Which are the Authorities Involved?
The Department of Economic Development (DED) is the main authority for the issuance of a license in Dubai. There will be involvement of additional departments and ministries depending on the license you require.
The approvals from ministries, departments, and legal entities could be obtained by submitting the relevant documents in the prescribed format. A few types of businesses need a bank guarantee and additional fees before initial approval for business operations.
However, the businesses in the Free Zone area are different. The license for the same is issued by private agencies. Therefore, the procedures, regulations, and requirements are different.
What is the Necessity of a Business License?
The business license creates accountability for your business. It stipulates the jurisdiction of operation and ensures that you are operating in the authorized area. The company will be monitored for unauthorized/ illegal acts and financial dealings during the business period.
Additionally, the license will enable the Dubai authority to affirm that you are not violating any rule of the land. And the business is not affecting public health. Your business organization, small or big, will also be registered in the government’s documents.
Type of Business Licenses
There are four types of business licenses in Dubai/ UAE.
Professional License
A professional license is necessary for commencing businesses related to professional services. The profession may include, education, art, dance, and so on. Those, who are artists, models, artisans etcetera must obtain a professional license before setting up a professional academy in Dubai.
Commercial License
This license is compulsory for establishing an LLC. Commercial trade operations would be authorized through this license. The company must be registered under the Dubai Chamber of Commerce and Industry also.
Industrial License
Industrial licenses too must be registered under the Dubai Chamber of Commerce and Industry. This license permits you to set up production plants, manufacturing units, and similar firms.
Tourism License
It is for the companies operating in the tours and travel industry. This is subdivided into three, Outbound tour license, inbound license, and travel agent license.
- Outbound Tour License: This license is necessary for carrying out both outbound and inbound tourist operations. Tourism firms with outbound tour licenses can offer tour packages and business trips internationally. Besides, they can offer tour packages.
- Inbound Tour License: Inbound tour licensed firms can undertake domestic tour operations only. They are not authorized for international tour packages.
- Travel Agent License: Travel agencies must possess this license. They can offer domestic and international flight tickets and process visa formalities.
What is the Process?
The below-mentioned steps are intended for giving you a basic idea about the business setup in Dubai. And obtaining a business license for the same.
Find a Sponsor
You must have a local Emirati as a sponsor for setting up a business in Dubai if you are an ex-pat. The local sponsor will have 51% of the share in the company and you will own 49%. The fact of paramount importance here is that the sponsor must be a reliable person. Or else, the sponsor can cause unwarranted complications and business loss. A NOC from the local sponsor must be submitted along with the documents for a business license.
Business Owner/ Partners
The owner of the business (the ex-pat) or one of the partners must be present in Dubai whilst proceeding with the formalities. The copies of passports and resident visas of all the partners, directors, and managers are to be included in the documents/ certificate being submitted.
AOA and MOA
The formulated Article of Association (AOA) and Memorandum of Association (MOA) need to be prepared. The subject documents should be both in English and Arabic. These documents will act as the legal structure of your company.
Hence, those are to be prepared with extreme care. You may consult reputed agencies for the same if required. Additionally, experts must undertake the legal translation of the documents to Arabic.
Submission of Initial Approval
Although the initial approval will allow you to start your business, the business license is necessary for full-fledged operations. The initial approval and permissions from external departments/ ministries, along with other compulsory documents should be submitted for issuance of a business license.
You need to remit the specified fee, bank guarantee, and additional charges to the authorities/ departments.
Renting of Office Space and Ejari
Office space and commercial space, with stipulated dimensions (minimum of 200 sq ft), are mandatory for a business license. You will have to prepare a tenancy contract with the space providers for the utilization of the office and commercial space for the period.
The certificate for commercial space is called Ejari. It is an essential document that is to be submitted to DED for a business license. The business license is required to be renewed annually.
You must renew the business license before the due date, or else there is a fine for late renewal. There are also reputed business setup service providers in Dubai. They will be of great help in easing the business setup process.