Getting Trade License in Dubai-Commercial vs. Professional

05 Nov 2020

Were you thinking to get a trade license in Dubai, but have very few information about the same? Well, this article will give you enough insights.

What is a Trade License?

A trade license is a legal document that is required by a business entity looking to setup a business in Dubai or UAE. Dubai has always been a popular business destination for businessmen from around the world.

Complementing the same, the local government at UAE is also quite supportive to such businessmen and makes every effort to simplify and fast-track the process of issuing a trade license.

Different Types of License

For anyone planning on a new business start in Dubai would know that it begins with getting a trade license. Three different types of licenses are issued in Dubai—Commercial, Industrial and Professional license.

A commercial license is meant for a company that involves trading activity. An industrial license is required by a company involving industrial or manufacturing activity. And a professional license is issued to craftsmen, professionals, artisans and service providers.

In this article, we learn more about Commercial and Professional licenses in Dubai.

Which authority is responsible for issuing a trade license in Dubai?

The Department of Economic Development in Dubai is responsible for issuing professional as well commercial licenses to business entities. For anyone looking to setup or expand business in Dubai will require a trade license that will be issued by this regulatory body.

Commercial License vs. Professional License

Nature of business activity

A professional license is required by any individual who is willing to exchange their special skills or knowledge in exchange for a fee. These are issued to artisans, craftsmen and other similar professionals.

Commercial licenses are issued to people who sell tangible products as a part of their business activity. Some of the activities that require commercial license are software trading, general trading and electronic trading.

Minimum Share Capital required

A company requiring a commercial license in Dubai must have a minimum share capital of Dhs 300,000.

On the other hand, a company requiring a professional license must have a minimum share capital of Dhs 150,000.

Government License Fee

The cost of procuring a commercial license in Dubai is Dhs 17000 (approximate).

The cost of procuring a professional license in Dubai is Dhs 11000 (approximate).

Nature of Liability

A commercial license is issued to a company that has limited liability. This means such a company offers its shareholders, limited liabilities and debts.

In case of professional license, the holder of the license is responsible for everything—right from establishing the business to taking up unlimited responsibility of its debts and liabilities.

Ownership of Business

In case of a commercial license, the foreign investor in the business has 49% ownership of business while a local sponsor, who is a UAE national, owns 51% of the share.

In case of a professional license, the holder of the license is also the whole owner of the business and has 100% ownership.

If you are willing to setup a business in Dubai, start with hiring a business setup consultant. Such consultants take care of all the important issues involved in the setup right from obtaining the license to taking care of the paper work and from finalising a commercial space for office to finding a genuine sponsor for the business.

Advantages

The holder of a commercial license can do a maximum of ten activities in one license and it assists in the opening of corporate bank accounts. The company can get residence visas issued for the management and the employees of the company. If there are several business activities of a similar nature, they can be covered under one type of license—commercial license.

The Final Word

A professional license brings about transparency in the execution of work, the business gets authority to apply for its employees’ visas, and the license holders are required to pay a fixed annual fee. So, if you have decided to start a business or work as a professional in Dubai, get the trade license to begin towards your journey smoothly.

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