How to get a Dubai Mainland Trading License
Over the last 12 or so months, Dubai has become even more popular for businesses as droves of people look to relocate to the UAE. Partly driven for a safer location, to escape lockdowns, and of course to be in the center of a thriving business hub with easy access to multiples of other countries. Setting up a new company here can be a tedious process without help and genuine advice. In this article we will therefore cover the process of registering as a Dubai Mainland Trading License company.
Benefits of a Dubai Mainland Trading License
- Up to 10 business activities per license
- Register your company as an LLC
- Access to a larger number of business clients and DED
- Easier and faster access to business bank accounts
- Stronger legal structure
- Better global reputation
Why do I need a trade license in Dubai?
A trade license is exactly as it sounds. A license to trade. To operate any business in Dubai under a mainland license, you need the legal permission of the Department of Economic Development. From here you can obtain two types of license.
- Commercial license
- Professional license
What’s the difference? A commercial license is the most commonly used in Dubai. Although there are strict laws in place to try to protect any overseas investors, the main drawback for many expats is having to technically give away 51% of the company ownership to a local sponsor. There is also an annual fee for the sponsor. These fees vary greatly but has had a declining tendency in the last two years, due to changes in UAE business ownership laws.
A professional license will allow you to own your Dubai mainland company 100% as a foreign owner. However, the business activities you can perform are very specific and you will still need the input of an Emirati; they’ll act as a local service agent (LSA) and not a sponsor with 51% ownership.
How do I get a Mainland Trading License?
Although Dubai mainland companies are certainly better for business, there are a lot of steps you’ll need to complete before you can really start trading.
- Research your company name and check if it’s ok to use. The government has rules for certain name types
- Check what activities actually fit your company’s products and services, there are 2,500 to choose from, be sure to double check there’s no conflict
- Submit the application to Dubai Economic Department (DED) in order to get the initial approval
- Start collecting all required information and documents
- Completed application signed by the legal owner or representative of the company
- DED letter of approval, company name reservation with company activities
- Residential tenancy agreement (not always required)
- Passport copies of all shareholders
- Memorandum of association with local sponsor
- Passport and Emirates ID copies of local sponsor
- Find and rent a suitable office. Some business types are required to have a minimum size, so please check before paying for an office. Your DED representative should be able to advise you
- Get approval from Dubai Land Department for your office space in order to get your Ejari (office renal agreement)
- Submit all documents to Dubai Economic Department and wait for approval
- Once approval is issued, you can pay the fees
You can now legally seek your company’s visa allocation quota. This is dependent on the size of your office and company activity.
What is the cost of a trade license?
License fees will vary, and it’s largely dependent on the following factors
- Business structure
- Business activities
- Third party approvals if required
- Number of shareholders
- Company sponsors
It is crucial to get this right the first time. Mistakes with a trade license can be very expensive to fix and often result in no bank account being available or simply having to start from scratch. Please check with your service provider and ensure you get a holistic view of the entire structure, measure twice, cut once!
Are there any reoccurring costs?
In short, yes. Every 12 months you’ll need to renew your trade license, your bank will also request the new documents each year to keep your company account operating properly. Make sure you are 100% aware of all renewal fees, if you fail to renew there will be financial penalties to deal with. A current and valid trade license is proof your company is legally allowed to trade during that 12-month period, without it, you can’t run your business in Dubai.
Starting your new company should be exciting and the beginning of something great. Don’t get bogged down with processes and paperwork. Unless you really have the time and know what you’re doing, always hire an expert to do this for you.