The UAE has positioned itself as a global hub for business and innovation. Attracting entrepreneurs from all corners of the world with its strategic location, modern infrastructure, and investor-friendly policies.
But what does it take to establish a business in the UAE? One of the key steps is obtaining the appropriate business license. Whether you’re setting up in Dubai or any other emirate, understanding the different types of licenses, their costs, and the process involved can significantly ease your entry into the UAE market.
In this blog, we will cover the essential steps and requirements for securing a business license in the UAE, focusing on free zones, mainland setups, and cost considerations.
Understanding Business Licensing in the UAE
To legally operate a business in the UAE or in any country, you need to secure a valid business license. The type of license you need will depend on the nature of your business activities and the location where you plan to set up. Broadly speaking there are three types of business licenses in the UAE:
1. Commercial License
For businesses engaging in trading or commercial activities, such as buying and selling goods.
2. Professional License
For service-oriented businesses, such as consulting, IT services, or marketing.
3. Industrial License
For businesses involved in manufacturing or industrial activities.
Types of Business Licenses and Setup Options
Licensing in the UAE is not simple. There are a multitude of specific licenses which you might need to acquire depending on the type of business you are establishing, each with their own requirements. However, according to the area
there are two major types of licenses in the UAE. Continue reading to know the details about business licensing in the UAE.
● Mainland Business License
A mainland license basically allows you to operate anywhere within the UAE, including engaging with local UAE markets directly. This license is issued by the Department of Economic Development (DED) in each emirate.
- Ownership: As of recent reforms, 100% foreign ownership is allowed for many sectors, making mainland setups more attractive for international
- Flexibility: Mainland businesses can trade across the UAE and internationally, and they can also bid for government contracts, which free zone companies
To set up a mainland company, you will need to work with a local sponsor, unless your business qualifies for full ownership under specific categories.
● Free Zone License
A significant contributor for the UAE’s positions as a global business hub are its Free Zones. These allocated land are designated by the government offering business-friendly environments with unique regulatory and economic structures. They are established to encourage foreign investment and provide companies with several advantages
There are over 50 free zones across the UAE, including well-known zones like Jebel Ali Free Zone (JAFZA), Dubai Multi Commodities Centre (DMCC), and Abu Dhabi Global Market (ADGM).
- Ownership: Free zone companies can be 100% foreign-owned, and they allow businesses to operate with no restrictions on repatriation of profits.
- Tax Benefits: Most free zones offer 0% corporate tax and no customs duties on imports and exports, making them attractive for businesses looking to minimize their tax
- Limitations: Free zone companies are restricted from trading directly with the UAE mainland without the involvement of a local distributor or setting up a mainland
If you’re looking to get a free zone license in the UAE, the process is straightforward but varies slightly depending on the zone. Common steps include selecting the right free zone, determining your business activity, choosing an office space, and applying for a license.
● Cost of a Business License in Dubai and the UAE
The cost of a business license in the UAE can vary depending on several factors, including the type of business, the location, and the specific free zone or mainland setup. Typically, the cost includes initial registration fees, visa quotas, and renewal fees.
- Dubai Trade License Cost: For mainland companies, obtaining a Dubai trade license from the DED can cost between AED 10,000 to AED 30,000 annually, depending on the business activity and office
Free Zone License Cost: The cost of a free zone license varies across different zones but typically ranges from AED 15,000 to AED 50,000 annually. Many free zones also offer affordable startup packages that include a license, visa, and office space for small businesses.
How to Get a Business License in the UAE?
1. Determine Your Business Activity
Before applying for any business licenses, you need to clearly define your business activities. The UAE government categorizes business activities under specific codes, and you must ensure that your activity is allowed under the license you apply for.
2. Choose Your Legal Structure
Your business structure will influence the type of license you need. The most common legal structures include:
- Sole Proprietorship
- Limited Liability Company (LLC)
- Branch Office
- Free Zone Company (FZC)
3. Select a Business Location
Choosing the right location—mainland or free zone—depends on your business activity and your market goals. A mainland business allows trading within the UAE market, while free zone businesses benefit from tax exemptions and 100% foreign ownership but are restricted from trading directly with the local market.
4. Register Your Business Name
Once you’ve defined and determined your business activity and location, the next step is registering your company name. The UAE has specific regulations regarding business names, so make sure it complies with the guidelines, including not offending any religion and avoiding terms like “global” or “international.”
5. Submit Your Application
After all the above steps are completed, submit your business license application to the relevant authorities. For mainland setups, this involves the Department of Economic Development (DED) in your chosen emirate. For free zones, you will have to apply through the specific free zone authority.
6. Obtain Additional Approvals
Depending on your business activity, you may need special approvals from government entities. For example, if you’re in the food industry, you may need to apply for a food license.
7. Secure Your Business License
Once your application is approved, you can pay the license fee and obtain your business license. Ensure that all documentation, including visas for your employees, is also in order.
Conclusion: The UAE as a Business Hub
The UAE offers a robust and business-friendly environment for entrepreneurs, with multiple options for securing a business license based on your needs and
goals. From the bustling markets of Dubai and Abu Dhabi to specialized free zones, the region is a gateway for international trade and innovation.
The first step to establishing a business in the UAE is to decide where and take it from there. By understanding the licensing process, costs, and business setup options, you can confidently establish your presence in this dynamic economy and scale your business globally.
FAQs
1. What are the main types of business licenses available in the UAE?
The UAE offers three main business licenses: Trading, Industrial, and Service licenses, each catering to different business activities such as trade, manufacturing, and services.
2.What is the cost of a business license in Dubai?
The cost of a business license varies between AED 20,000 and AED 50,000 per year, depending on the license type, business size, and whether you are setting up in the mainland or a free zone.
3.What are the advantages of setting up a business in a UAE free zone?
Free zones in the UAE offer benefits like 100% foreign ownership, tax exemptions, and simplified procedures. However, businesses must appoint a local distributor to trade within the mainland.
4. What documents are required to obtain a business license in the UAE?
You will need passport copies, proof of address, a business plan, and a bank reference letter. Additional approvals or NOCs may be needed depending on the nature of your business.