Exploring the various license options can be daunting for first-time entrepreneurs in the UAE. The answer to the question, ‘Which license?’ depends almost entirely on the nature of your business activities.
Companies wishing to import, trade and export goods and products such as food, furniture, electronics or clothes must apply for a general trading license. This allows businesses to trade not only locally within the UAE but also with markets around the world. What’s more, a general trading license enables companies to trade in mixed goods.
In practical terms, that means a business could import, export and trade any number of products – such as cosmetics, building materials and toys – all under the same license. And the best part is, applying for a general trading license in Dubai and the UAE is extremely straightforward.
Why should I apply for a general trading license in Dubai and the UAE?
If it sounds like the general trading license meets your needs, here is everything you need to know to get started.
1. Setting up is easier than you think: One major factor behind the popularity of the general trading license in Dubai and the UAE is the straightforward set up process. In fact, in many cases, applying for a general trading license is easier than setting up in a free zone. New initiatives have made the entire process so simple that, providing you meet the eligibility criteria for a license, you could be registered with the Dubai Department of Economic Development (DED) within just 90 minutes – without the need to commit to a lease agreement.
In many cases, applying for a general trading license is easier than setting up in a free zone.
2. Affordable setup costs: The received wisdom is that setting up business in the UAE with a general trading license is a costly way to go about things. However, in reality the costs are comparable to other options such as establishing a free zone company. The cost of applying for trading licenses starts at just AED 17,000 and depending on the exact requirements of your business, the total expense is unlikely to exceed AED 100,000 – similar to popular free zones such as Dubai Multi Commodities Centre.
3. Set up anywhere: Unlike some other methods of company setup, establishing a business with a general trading license allows entrepreneurs to take on both office and warehouse space anywhere in the UAE.
4. Easy to apply for multiple visas: General trading licenses are particularly popular with businesses with large workforces as they allow for unlimited visas when setting up on the mainland. However, when it comes to increasing the number of visas it’s important to be aware that there is a corresponding increase in the amount of office space you then need to acquire. The general rule of thumb is 100 sq ft of office or warehouse space per visa. However, this may be negotiable with the DED. For example, a domestic cleaning company may have 500+ employees working remotely – and therefore will not be required to take 50,000 sq ft of office space.
5. Set up with multiple shareholders: Another reason general trading licenses are popular with larger organisations is that they allow entrepreneurs to set up business with multiple shareholders. While there is no official upper limit on the number of shareholders you can start your business with, the generally accepted cap is 50 – these can be either individuals or corporate entities.
6. Low barriers to entry: As well as a fast and easy application process, general trading licenses offer entrepreneurs a low barrier to business ownership in a number of other ways. Firstly, upfront costs are minimal as there is no requirement for paid up share capital when establishing a mainland general trading business. Plus, general trading businesses are not required to undergo a yearly audit.
As well as a fast and easy application process, general trading licenses offer entrepreneurs a low barrier to business ownership in a number of other ways.
7. It’s easy to sponsor dependants: Getting a general trading license in Dubai and the UAE doesn’t just make it easy to apply for visas for yourself and your employees, you will also be able to sponsor dependants for their visas as well. Whether you require a visa for a spouse, child, maid or driver, the process is straightforward: entry permit, status adjustment, a medical fitness test, then Emirates ID registration and visa stamping. As this is such an important process, it’s a good idea to get advice from an expert in setting up UAE free zone businesses to ensure that before starting an application, both you and those you are hoping to sponsor meet the entry criteria.
8. Getting your general trading license in Dubai and the UAE: So, if it sounds like the right path for your business, the next question is how do you apply for a general trading license in Dubai and the UAE? The first port of call when setting up a UAE mainland business is to approach a sponsor. A local sponsor is required by any foreign investor wishing to set up a general trading business in the UAE mainland. Local sponsors own 51% of the business with the other 49% owned by the investor or investors – however, profits are not split down these lines and full repatriation is a possibility. Sponsors must be professionals, business owners or government employees and citizens of the UAE. As this process can be complex, it is advisable to engage the services of a company formation specialist at this stage.
The first port of call when setting up a UAE mainland business is to approach a sponsor.
Next up you’ll need to choose your business name and find out if it is available to be registered. There are a few things to keep in mind here: offensive language is forbidden, company names cannot contain religious references, or indeed references to any known organisations (anything from ‘FBI’ to ‘Mafia’). Only full personal names can be included in your company name – meaning both first name and last name are required if you are using your personal name for your company name. When it comes to your company name in different languages, all names must be written as they are sounded out, rather than translated.
At this stage, you will also need to provide the DED with certain documents, including a memorandum of association detailing sponsor arrangements and ownership percentage among all partners, along with copies of shareholder passports and visas. Now you can apply for your company license, immigration card and any visas that may be required.
And that’s it. The whole process usually takes around one week and once you receive your license you will be ready to open your corporate bank account and set up your business anywhere in the UAE mainland.