Ecommerce business is spreading across the globe in all sectors like consumer goods, food delivery, real estate, hospitality, travel, and tourism, etc. In the UAE, there is a great scope for e-commerce retailers. The target audience for business is a diverse population and this is the great advantage of the e-commerce business in the UAE. The infrastructure facilities and road connectivity are the add-on features for the profit of the e-commerce platforms in the market. Some examples of e-commerce businesses in the UAE are Souq, Talabat, Zomato, Careem, Namshi, Noon, and others. The Centrepoint and Home Center made their strong presence in UAE. For budding entrepreneurs, there is still a lot of scope in the UAE.
How to get an ECommerce License?
To get an e-commerce license for business below are the basic steps.
- The Legal Structure of the business
- The physical location of the office
- Registration of trade name
- Trade License preparation
- Initial Approval Certificate
- Local Service agreement and Memorandum of Association
- Registration of office
- Trade license issuance
- Requirements for Import or export
- Corporate Bank Account
1. The legal Structure of business
The legal structure of the business is the initial plan to decide upon. It is about deciding whether the business is a Limited Liability Company, a single person company, which is a branch of a parent company, a representative business office, or others. Limited liability companies are high in number in Dubai because of their multiple advantages.
2. The physical location of the office
The physical location of the office is the place of the office location to get the license. It is not the physical location of your shop or office. There are two kinds of zones such as the free zone and the mainland. Freezone provides you 100% ownership of the company. If the office location is in the mainland, there should be a regional sponsor with a minimum of 51% holding and the remaining share can be of the company. Free zones and the mainland have their own pros and cons. The entrepreneur should consider various things and take decisions about where to start an online e-commerce business.
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3. Registration of the trade name
Choosing a name that customers will get to know easily should be registered as the trade name. A business name may be applied as the domain name this will help in finding the company name easily for the user. You have to see that the domain name is unique. It should not resemble any other name of another company, this will lead to confusion and legal complications.
4. Trade license preparation
Once the location is decided, you should apply for a license from your e-commerce company. Approach the Department of Economic Development and it will issue the license.
- If you are setting up an e-commerce business in the mainland, arrange for paying AED 10,000 to the Department of Economic Development (DED) for registration of the trade name. The first approval and giving the license are further steps that will be processed by the DED.
- If you are setting up an e-commerce business in the free zone then the license will be given by the free zone authorities. The license issued will depend on the business line.
5. Initial Approval Certificate
To start an e-commerce business, getting this certificate is required. It is a No objection certificate issued by the authorities. It is valid for six months and it’s not renewable. You can apply for this certificate when you are submitting a trade name application.
6. Local Service agreement and Memorandum of Association
If you are selecting the place of the company in the ‘mainland’ then preparing a draft of Memorandum of Association with a sponsor is the first step. Then the draft should be submitted to the Department of Economic Development. A legal firm provides the facility and you can get the draft prepared by them, specify special requirements, and mention the ownership percentage of all the partners. If you are selecting the location of the company in the free zone then this step can be skipped.
Click here for How to get a Trade License in Dubai
7. Registration of office
This step is about setting up the physical office registration. It is mandatory to register the company. It is also important to set up an office. Registration of the company creates a separate identity for the business.
8. Trade license issuance
Once the above points 1 to 7 are completed you will be issued the license within one to seven days. However, this depends on the jurisdiction that you have applied.
9. Requirements for Import or export
The e-commerce business should get registered with one of the ports and customs authorities. This will enable you to get an ‘importer’s code’. A customs duty of 5% will be imposed on the goods by the UAE government. The e-commerce companies which are under the free zone do have to pay import duty. The reason is these companies should make sales of their products and services within free zones.
10. Corporate Bank account
Once the business is established and got its trade license for an e-commerce business you need to create a corporate bank account. The process is simple and quick. According to the requirements of the business choose the corporate bank and create your account.
Benefits of Ecommerce License
- There are no restrictions on currency
- There are no import duties on e-commerce license
- Operating costs are low
- There is 100 percent foreign ownership in free zones
- Resident visas will be granted for three years
- The business will get autonomy to repatriate capital & income
- Zero percent personal and corporate tax
Takeaway
E-commerce is a need of the present generation and consumers get connected across the globe. The e-commerce sector in the UAE is at a growing stage and the digital environment with the advanced infrastructure supports the e-commerce business. According to Google research, 91.9% of the UAE population has internet access so this factor is very favorable for e-business. With the increased usage of the internet, a favorable tax environment shows this business can be profitable in the UAE.
About the author
Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It's a commercial mortgage banking company. He has a "Doctoral Degree in Commerce" and two master's degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.
