How to Get an E-commerce Licence in Dubai
Dubai is a great place for online entrepreneurs to start e-commerce businesses. The city's location, business-friendly environment, and growing e-commerce market make it perfect for tapping into, with a predicted 12% increase in growth over the next few years. Let's look at how you can get an e-commerce business licence in Dubai.
The Growing E-commerce Market in the UAE
The e-commerce market has transformed consumer shopping in the UAE, and is projected to reach close to $17 billion in 2025. Established online marketplaces in the country include Noon, Namshi, and of course, Amazon. Support from the government to develop the digital infrastructure required, along with a youthful demographic have led to an increased adoption in e-commerce. This is all good news if you’re looking to setup an e-commerce business in the UAE.
Do I Need an E-commerce Licence in Dubai?
An e-commerce licence in the UAE is a must if you’re looking to sell products or services online. Its also important for a number of reasons:
Business Credibility
To show customers and partners that your business is established and legitimate
Compliance
To prevent any penalties and ensure you are compliant with the regulations in the UAE
Financial Services
To open a corporate bank account and handle financial transactions, a licence if often needed
Market Access
To access the tax benefits of trading in the UAE
Understanding E-commerce Licences in Dubai
There are different types of e-commerce licences in Dubai. Each one has its own benefits and requirements, depending on your business model and needs. Whether you choose to setup in a freezone or on the mainland, the licence options are:
E-commerce Licence
If you’re looking to setup your own store and website to sell products online. Similar to a trade licence while also allowing online trade of goods or services. Available to non-UAE nationals.
Portal Licence
If you want to setup a marketplace to connect buyers and sellers (the Amazon model). Also available to non-UAE nationals.
Virtual Company Licence
If you want to have an online business in Dubai without relocating there, the virtual company licence is an option. However, a virtual business can only be established in predefined sectors including printing, advertising and design, etc.
E-trader Licence
Issued by the Department of Economic Development. The licence can be issued to a single owner. Good for small businesses, but only if you're a UAE or GCC citizen.
Choosing a Free Zone in the UAE
Choosing the right jurisdiction is the first thing you need to think about before applying for your e-commerce licence. Setting up on the mainland will allow you to trade with the UAE market directly, while a freezone can give you full foreign ownership and an exemption from customs duty.
Dubai has many free zones, each with different benefits for e-commerce businesses. When picking a free zone, think about things like location, facilities, costs, and networking chances. Some popular options are:
- Dubai CommerCity: A dedicated e-commerce free zone with modern facilities
- Dubai Multi Commodities Centre (DMCC): Offers an ecosystem for e-commerce businesses
- IFZA: Quick, efficient setup for your e-commerce business
- Jebel Ali Free Zone (JAFZA): Great infrastructure, ideal for businesses trading physical products
- Dubai South: Close to major shipping hubs, site for e-commerce hub EZDubai
- Meydan: Cost-effective free zone, centrally located for e-commerce businesses
Look into each free zone carefully to see which one fits your business best. Think about setup costs, ongoing fees, visas, and special e-commerce support services.
How to Get Your E-commerce Licence in Dubai
Here's the steps to get your e-commerce licence:
- Choose your business activity: Decide what kind of e-commerce business you want to run in the UAE
- Business Setup: Choose whether you want a mainland or freezone company setup
- Find a business location: Get an private or shared office, depending on your licence type
- Pick a company name: Follow UAE rules for naming companies
- Get your documents ready: Collect things like passport copies and your business plan
- Apply: Submit your e-commerce license application to the right authority
- Pay fees: Pay for registration and licensing
- Visa: Apply for your residency visa and Emirates ID
- Open a corporate bank account: Choose from local or international banks in the UAE
- Start your business: Once your documents and residency is complete
This process usually takes 4-6 weeks for the business setup, including your residency and medical, but it can be less. It's a good idea to work with someone who knows about setting up businesses in Dubai to help you through the process. For a more in-depth guide on setting up your business in Dubai, check out our blog post.
The Cost of an E-commerce License in Dubai
The cost of an e-commerce license in Dubai and the UAE will depend on the type of license you go for, how complex the business operation is, and the emirate in which you decide to setup.
The cost of the license obtained through a freezone or mainland setup varies, ranging from AED 15000 to AED 50000 plus, for cost-effective options to dedicated industry freezones. If you would like to add residency visas to these that will be an additional cost.
The freezone location you choose isn’t really important, but it can be a hassle to travel to another emirate if you’re based in Dubai. There are more cost effective options outside Dubai, but its worth it to have one closer to you, especially when you need to travel to the freezone to register certain tasks.
An e-Trader licence will currently cost AED 1070 in licence fees with an additional AED 300 for Dubai Chamber of Commerce membership fees.
Can I sell online in the UAE without a licence?
Selling online in the UAE requires a licence, even if the business is not e-commerce. Many partners and payment providers in the UAE also require you to have a licence. Also, you wouldn't want to receive penalties for non-compliance as they can be quite severe.
Do I need to register for VAT for my e-commerce business in Dubai?
The mandatory threshold for VAT registration in the UAE is once your turnover exceeds AED 375,000 per year. The standard VAT rate is 5% on most goods and services in the UAE.
Conclusion
Starting an e-commerce business in Dubai can be really exciting, providing the opportunity to build a successful online business in this growing market. The city has brilliant infrastructure along with favourable business and tax policies to take advantage of. If you are keen to setup your e-commerce business in Dubai, make sure you understand the licensing requirements and regulations before proceeding.
At Capture, we can assist you with moving to Dubai and setting up your business, ensuring you hold the necessary licenses to build a successful e-commerce business in the UAE. If you’re looking to make the move,
contact Capture Accounting to kickstart your journey to the UAE.
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Meet Reza
Reza is the Founder of Capture Accounting and also a content creator himself. He spends most of his time coaching and mentoring other accounting firm owners to build more profitable firms and do better for clients. You'll find him very active on LinkedIn.
