Do you want to start a business in the UAE? Then you will need to get a general trading license, also called a trade license. This allows you to legally sell products and services.
Getting a trading license can seem complicated. But this guide breaks it down into easy steps so you can understand the requirements.
Why Do You Need a Trading License in the UAE?
The UAE government requires all businesses to register for a license. This is to regulate companies so there is order and safety. It also helps them make sure companies pay taxes.
There are fines if you operate without a license. So it is very important to register your business correctly before starting operations.
What are the Types of Licenses You Can Get?
There are three main license types in the UAE:
Sole Proprietorship License: This is for one owner only to trade under their name. It is easy to set up but has less flexibility.
Limited Liability Company (LLC): An LLC has between 2 to 50 partners. It provides more protection for owners but requires more setup legal steps.
Branch of a Foreign Company: This allows overseas companies to open a branch in the UAE. The branch must register and follow all UAE laws.
LLC is most common for new companies in the UAE. The next sections will focus on getting an LLC general trading license.
Step 1 – Develop a Business Plan
First, you need to plan all aspects of your business in detail. This includes:
- Company name and trade name
- Business activities (what products/services you will sell)
- Business location and required space
- Estimated start-up and operating costs
- Expected revenue and profit targets
- Owners and initial required investment
Proper planning is key. It ensures you pick suitable business activities that follow government rules. It also helps complete the next application steps.
Step 2 – Choose Emirate and Free Zone or Mainland
There are free zones in UAE specially created for foreign businesses. Mainland means setting up in the normal UAE states like Dubai, Abu Dhabi, etc.
Free zones make registration easier but have limitations. Mainland is more complex but gives access to the whole UAE market.
Choose whether free zone or mainland meets your business needs better. Then pick which Emirate (state) you want to base in.
Step 3 – Select License Activities
Every license lists allowable “business activities”. You must match activities exactly to your planned trading.
Some common general trading activity words are:
- Trading
- Services
- Distribution
- Import/export
- Consultancy
- Repairs
Work with a lawyer to correctly pick your activities during application.
Step 4 – Gather Requirements and Apply
Main requirements for LLC license application:
- Business plan with planned activities and costs
- Proposed company name and words
- Emirates ID and valid passports of owners
- Signed declaration from all partners
- Signed lease agreement for company premises
There will be fees to pay based on activities and location. Free zones can cost less than mainland.
A lawyer helps prepare all documents and submit application correctly.
Step 5 – Get Initial Approval
Authorities will review the application. This can take 2 weeks to 2 months depending on location.
They will check proposed activities follow all rules and restrictions. There should be no issues with chosen name or premises lease.
If approved, you get initial acceptance letter. But you must complete a few more steps before getting full license.
Step 6 – Set Up Company Legally
After initial approval:
- Hire a registered agent legally representing company
- Get trade name verified on Ministry database
- Draft Memorandum of Association between partners
- Establish company bank account
The lawyer will guide you on finishing these crucial legal steps.
Step 7 – Get Final License
Now the company can apply for final general trading license issuance.
This requires:
- Submitted application form
- Manager’s passport copies
- Office lease contract attested
- Proof of share capital deposited into company bank account
The final license will be issued in 1-2 weeks once all is complete.
Step 8 – Register for Taxes and Permits
With the license, the company must also register for:
- Federal Tax Identification Number (FTIN)
- VAT tax account
- Emirates ID cards for staff
- Trademark registration if using unique brand name
- Any other required permits
Then you can start company operations fully legally!
Conclusion
Obtaining a general trading license is a crucial step for any business looking to establish itself and operate legally within the United Arab Emirates. While the process may seem daunting at first glance, this comprehensive guide has broken down the journey into manageable and well-defined steps
By following the outlined procedures, from developing a robust business plan to selecting the appropriate license type and emirate, entrepreneurs can navigate the licensing process with confidence. Seeking guidance from legal experts and consultants can further streamline the application process, ensuring compliance with all relevant regulations and requirements.
With this guide, you are ready to set up your dream business in the UAE!
FAQs
License fees start from 20,000 AED but can go up based on activities, employees, and location. Consult government portals for accurate estimates.
Renewal costs around 10,000 AED on average. It must be done each year before current license expiration.
Fines start at 5,000 AED. Without a license, authorities can suspend business operations, cancel visas, and impose jail time for owners.
