Every E-commerce business Needs E-Commerce License to operate in Dubai and The Electronic Commerce (E-commerce) market has only risen through the years. This is thanks to the ever-growing usage of phones, computers, and other devices. Shopping online has become a trend recently thanks to that. A company can benefit from E-commerce, since they can set up online shops, reaching an audience from any part of the world.
E-commerce allows clients to buy anything from any part of the world with just a click of a button. This makes it convenient for both the company and its customers. UAE companies are no exception to this. With a shop in your local market, your reach is limited, but with an online shop, you can reach larger audiences.
In Dubai is estimated that the e-commerce market´s value is $10 billion (Dh36.7 billion), meaning it´s lucrative. However, if you are looking forward to setting up an online store in Dubai, you will need a license for it. If you´re interested in getting an E-commerce license in Dubai this article is for you. In this article we´ll talk about:
1-What is E-commerce?
2- E-Commerce license in Dubai
3-How much does an E-Commerce license in Dubai cost?
4-Advantages of obtaining an E-Commerce license
5-How can Connect Middle East help you with your E-commerce license in Dubai?
1-What is E-commerce?
Before learning about E-commerce licenses in Dubai, you need to know the basics of E-commerce. When we talk about Electronic commerce (E-commerce) we refer to a business model. Said business model allows the purchase of goods and services over the internet. They can be conducted over computers, phones, tablets, and other devices.
Almost all services and products can be related to E-commerce. Books, music, furniture, plane tickets, and even financial services are available. Those are just some of the services available through E-commerce causing it to be considered as a disruptive technology.
Furthermore, E-commerce business is an organization/company that practices this type of business model, seeking the benefits it brings. They offer goods, products, and services through the internet, allowing customers to buy at the push of a button and with various types of payment. There are many types of E-commerce companies; their formation depends on the model chosen.
As said before, there are numerous types of models companies can choose for their E-commerce business. The main types are:
As implied by its name, this type of model involves two businesses or companies trading between them. Such trades usually have conventional wholesalers and producers that deal with retailers.
Secondly, we have this type of model that deals with the retail aspects of E-commerce. One example of this is the sales of goods and services to the consumer through the internet. This facility makes the customer able to see in detail their proposed procurements before placing an order. After said order is placed, the company or business delivers them.
We already mentioned before that this kind of model is better for customers in comparison to traditional shopping. This is because they gain access to content that guides their purchases appropriately.
Thirdly, we have C2C. In this model type, a consumer sells used goods or services to other consumers through online means. The transactions are provided by a 3rd party.
Following C2C we have C2B. This type of model is the exact opposite of the 2nd type (Business-to-Consumer) we mentioned. As implied by its name, this type of model involves end consumers with an opportunity for them to sell their products/services to a company or business. This method is popular for crowdsourcing-based projects.
Second-to-last, we have B2A. This type of model allows businesses and companies to negotiate with public administration (Like the government for example). They enable the exchange of information through a central website. It offers a business a platform to bid on government opportunities such as auctions, tenders, application submission, etc.
Lastly, we have this type of model. A C2A platform is meant for consumers that request information or post feedbacks concerning public sectors. The requests and feedbacks posted are sent directly to the government authorities/administration. The areas you apply them are:
- Information dissemination.
- Distance learning.
- Remittance of statutory payments.
- Tax returns filing.
- Appointments seeking, information about illnesses, payment of health services, etc.
Here you will find out all you need to know about your company formation in Dubai mainland.
2-E-Commerce License in Dubai
Building an E-commerce company in Dubai is not complicated, but you need to follow the law and its regulations. If you want to have an E-commerce company, you´ll need to apply for an E-commerce license in Dubai. The Department of Economic Development (DED) in Dubai gives this license. You have to follow a procedure if you want to get this kind of license.
According to research conducted by GMI, the UAE has 9.89 Million active internet users (99% of the population). Therefore, this factor combined with others like a favorable tax environment makes Dubai a good place for you to build an E-commerce company. The steps necessary for an E-commerce license in Dubai are:
Decide your company´s legal structure:
First, you have to decide which type of structure your company will follow. To put it simply, you´ll decide if you want to set up an LLC, one-person company, branch of a parent company, representative office, etc. The most common of them in Dubai are LLC formation and branch offices thanks to their advantages.
Choose your location
Secondly, you need to choose your location. With this, we don´t mean a geographical location, we refer to the jurisdiction where you want to obtain your license. Dubai has 2 types of jurisdictions, free zone, and the mainland.
A free zone lets you get 100% possession of your company. Mainland on the other hand used to need a local sponsor to have at least 51% ownership of the company. However, as of this day, it´s not necessary, meaning that both locations allow 100% ownership of the company.
Register a trading name
Once you have chosen the location, you will need to build your physical presence. First, you´ll choose a trading name for your company. Be sure to choose an easy-to-remember name. People use this name to find your company online easily. In addition to this, you have to make sure your name doesn’t bear a resemblance to other existing companies, to avoid legal problems.
Apply for a License
After the previous steps, the next step for an E-commerce license in Dubai is applying for it. As mentioned before, the Department of Economic Development (DED) issues this license.
For a mainland company´s setup, you´ll pay around AED 10,000 ($2,722) to the DED. You pay this for trade name registration, the initial approval, and the issuance of the license.
On the other hand, for a free zone, you will need to look for the license with the relevant authorities. The license you get will depend on the nature of your company´s activities.
Apply for Initial Approval Certificate
An IAC (Initial Approval Certificate) is a NOC (No Objection Certificate) from the authorities. They give it to you so that you can start your business. It’s valid for 6 months and it isn´t renewable. You can apply for it at the same time you submit your trade name.
Draft an MOA
MOA means Memorandum of Association. You´ll draft it with your sponsor and submit it to the DED. Every legal firm can type out this memorandum. It must specify the arrangements and ownership percentages to all your partners.
This step is only necessary if you set up your company on the mainland. If you set it up on the free zone you can skip it.
Register your physical office
The next step is to set up your physical office, it is mandatory since the authorities in UAE made it mandatory. If you don´t you won´t be considered as a legal entity.
You will get your E-commerce business license once the previous steps are completed. However, remember that it´ll take 1-7 business days for you to get it (it depends on the authority).
Import and export requirements
You must register your business with one of the ports/customs authorities so that you can receive an importer´s code. UAE gets 5% customs duty on imported goods. On the other hand, companies that were set up in free zone won´t need it. That is because they have to sell the product or service within the said free zone.
Open a corporate bank account
Lastly, once you obtain your e-commerce license in Dubai and establish that business, you need to open a corporate bank account. This process is quite simple since it comes down to simply choosing which bank covers your needs.
If you need to obtain UAE Visa Services here´s what you need to know.
3-How much does an E-Commerce License in Dubai cost?
Now that you know how to get an E-commerce license in Dubai you want to know the E-commerce license UAE cost. Its price depends on various factors. The main ones are the size of your business, visas you apply for, and choice regarding mainland and free zone. In addition to this, it takes into account if office space is required.
Because of all the factors, it takes into account, it´s difficult to find out exactly how much would it cost. However, to give you an idea of how much it costs, you can approximately expect around 15,000-45,000 AED. As said before, it depends on the requirements.
Setting up your business in a free zone is the most efficient way to keep it low-cost.
4-Advantages of obtaining an E-Commerce License in Dubai
Free Ground of Operation
UAE provides business owners flexibility to establish their business or company. In addition to this, it has 3 grounds of operations dedicated to different types of businesses. These 3 zones are mainland, free zone, and offshore. Each one of those zones has its own legal proceeding that has to be followed by people looking forward to setting up their business.
Thanks to technological advances being made daily, various aspects of daily life are changed, the market is no exception. UAE has been taking many spaces towards the implementation of technology in all possible business factors. This gives investors and entrepreneurs numerous business opportunities.
In addition to this, it improves the benefits and advantages of starting an E-commerce business. Furthermore, Dubai has its own separate free zones dedicated to dealing with these kinds of start-ups; they are Dubai Internet City and Dubai Techno Park Free Zone.
Easy company formation
In comparison to other countries, the UAE has easier procedures for your company´s formation. This is because they´re made to attract foreign investors and entrepreneurs who want to start their businesses.
No personal taxes
In the UAE you don´t pay any personal tax if you´re a business owner. This means that your business operations can take place without involving any other taxes. Recently the government added VAT (Value Added Tax) implementation of 5% to figure out an additional source of revenue.
Easy availability of a business license
As mentioned before, you´ll need a specific business license to set up and carry out your business activities. However, as seen in the previous points in this article, it can be simple and easy to get an E-commerce license in Dubai.
5-How can Connect Middle East help you with your E-commerce license in Dubai?
E-commerce is taking the market by storm, and this is only boosted by UAE making changes towards that direction. Furthermore, you can get an E-commerce license in Dubai easily, in comparison to other countries. That´s why you should look for ways of starting your own e-commerce business since it brings a lot of benefits to the table.
However, without knowledge or experience in E-commerce, it can be difficult to start a business. It’s better to have a business companion alongside you to help you take your steps towards building an E-commerce business. With over 20 years of experience in the market, Connect Middle East helps you towards that goal. Let us do the tedious work for you.
Do you want to contact Connectme to know more about E-commerce in Dubai? If you have any questions, feel free to call us on +0097143316688. Or contact us via email at email@example.com, and you will talk to one of our representatives who will gladly answer your questions.