Business Licenses in Dubai
Business licenses in Dubai pave the legal foundation of any entity. Starting a business journey in Dubai requires careful consideration of compliance and other legal implications. Many entrepreneurs confuse a business license with an incorporation certificate. It should be noted that business licenses do not precede the incorporation certification. It is worth noting that an incorporation certificate legitimizes the legal structure chosen by the entity. This article seeks to extinguish skepticism around business license and incorporation registration and elaborate on what you need to secure the former.
Incorporation Certificate vs Business Licenses in Dubai: What are the differences
Whereas an incorporation certificate signifies that an entity is incorporated under the particular legislation, business certifications serve as auxiliary yet mandatory documents that legitimize the type of business you are pursuing. Business licenses are categorized under four major heads (as shown below) and vary industry-wise.
- Commercial license for general trading businesses
- Professional license for service-related businesses
- Industrial license for manufacturing goods
- Tourism license for the travel and tour industry
Applying for company registration and business registration requires following different methods altogether since they adhere to distinct regulations and compliances.
| Aspect | Business Registration | Company Incorporation |
| Legal Entity | May or may not create a separate legal entity. | Creates a separate legal entity. |
| Purpose | Required for operating certain types of businesses. | Necessary for establishing a distinct legal entity with limited liability. |
| Formality | Typically involves registering the business name, owner(s), and obtaining necessary licenses or permits. | Involves more formal procedures, including drafting articles of incorporation, appointing directors, and issuing shares. |
| Liability | Owners may have unlimited personal liability. | Owners usually have limited liability, protecting personal assets from business debts. |
| Taxation | Taxed based on the structure of the business. | Subject to corporate taxation laws. |
| Compliance Requirements | Generally fewer compliance requirements. | Subject to stricter regulatory compliance, including annual filings and meetings. |
| Credibility | May lack credibility compared to incorporated entities. | Typically perceived as more credible by customers, suppliers, and investors. |
| Growth Potential | Limited growth potential in terms of attracting investors or raising capital. | Offers greater potential for growth and expansion through investment opportunities. |
| Duration | Can be relatively simple and quick to establish. | May involve a longer and more complex process. |
Significance of Business Licenses in Dubai
A Dubai-based business license is a legal approval to carry on specific business activity in Dubai through a registered establishment. It affirms that a business is bound to pursue its activities legally with utmost regard to the environment and human life.
The business certificate enables governing authorities to keep a continual tab on entities and ensure they adhere to underlying norms for human safety and environmental protection.
Which authority is entrusted to grant Business Licenses in Dubai?
The Department of Economic Development (DED) is the sole authority that is entrusted to grant business licenses in Dubai. The type of business license you need would vary industry-wise. It is worth noting that entities (excluding free zone companies) belonging to the mainland territory fall under the ambit of DED.
Underlining Different Types of Business Licenses in Dubai
Commercial License for General Trading Businesses
This license is compulsory for entities involved in the trading of goods. Businesses with this license are liable to abide by DED’s norms concerning the import, export, distribution, and storage of goods. Commercial license usually spans wholesalers, retailers, traders, etc.
Professional License for Service-Related Businesses
The professional license typically covers service-based entities, including legal firms, accounting firms, legal firms, advertising agencies, etc. Upon securing this license, eligible entities can pursue their respective businesses within Dubai.
Industrial License for Manufacturing Goods
Entities involved in the production, processing, and packaging of goods require this license. It majorly covers production facilities active in the specified industrial area. It is mandatory for production entities belonging to the food, textile, production, and electrical sectors.
Tourism License for the Travel and Tour Industry
Businesses belonging to the tourism sector are required to secure this license without fail. It is worth noting that a tourism license also spans businesses offering tour packages, hotel bookings, and transportation services.
Documents required to secure Business Licenses in Dubai
Business license in Dubai attracts plenty of paperwork. Below is the checklist that you can refer to while applying for a business license in Dubai.
- ID proofs of all the business partners. You can submit a passport for validation of your identity with authority.
- An NOC from the company’s sponsor for overseas partners or expat investors.
- Copies of the residency visa relating to all the business partners.
- Incorporation certification (based on the chosen legal structure)
- Initial and external approvals from the DED.
- The business place proof.
Note: All these documents are submitted by the Public Relation Manager i.e. PRO to the Department of Economic Development.
Conclusion
Business Licenses in Dubai play a vital role in legitimizing the entities under the relevant legislation. Businesses under this license are bound to abide by the DED norms to ensure public safety and environmental protection. Kindly note that the renewal of this license is mandatory since it adheres to a limited validity.
Read Our Article: LLP And Company Differences
