Posted on: Friday March 6, 2020
Having a business license is necessary in Dubai, especially if you are planning to open a business or Shopify store in Dubai just like anywhere else in the world. Moreover the process is more entangled and complex like rest of the countries or regions like Europe, UK and USA.
After having a Shopify UAE license, you can start commercial trading and also open a current account.
The type of license is dependent upon the nature of your business and how you choose to operate your business commercially. But make sure to choose the best suited business activity. For instance if you will be involved in importing and exporting activity then you need to apply for trade license in UAE , but if your business is all about selling third-party products registered in country, you will have to apply for an ecommerce trade license in UAE. You can either set up your business in the mainland or in free zones to enjoy the benefits that come along with them. It’s also recommended to consult with an independent corporate services/company setup provider to ensure whether you considering all the correct options and information before making any choice for your business license. Always keep in mind that laws and regulations can quickly change in our region too.
Difference b/w Trading activity license & E-commerce activity license
With e-commerce activity license you can set up a business with which you can sell products already been registered in the UAE. However with a trading activity license, you can export and import certain goods in and out of the country. It implies that if you are willing to sell foreign goods, you need to apply for a trading license. But if you are dealing only with local products, an E-commerce activity license will suffice.
Operating with two licenses
Businesses having e-commerce activity license are allowed to sell products in local market via agents or local distributors such as a last mile delivery service provider. This also means that you are not allowed to sell products directly to end consumers on the mainland.
The business having a mainland license doesn’t require appointing an agent or distributor for selling your products directly to end- consumer in UAE. But if you are operating under a free zone license, you need to appoint local distributors and agent for selling your products. The mainland license and infrastructure costs are higher than a free zone solution ensuring 100% company sponsorship, whereas in cases of a mainland license you require to have a 51% local sponsor.
Businesses with an E-commerce license are allowed to open bank accounts for receiving payments. However payments will be credited to you through payment gateways.
After having an ecommerce license application approved, you are not required to have an office or warehouse location since most free zones provide ‘Flexi Desk’ service from to run your business. But a warehouse will not be required since a third party delivery partner will be handling the products for you.
Businesses operating under mainland licenses are likely to spend more since they need to have offices and warehouses. But with Free Zone licenses, the costs of operations are lower since offices and warehouses are not a required unless you want to have them.