Trade License UAE: Types, Importance, Documents and Application Process

The UAE is well-known for its business-friendly policies and strong support for entrepreneurs. In fact, it even ranks first in the Global Entrepreneurship Monitor Report 2024.

A big part of this success is the UAE’s system for trade licenses and its taxation system. The entire system is structured to support the growth of anyone who wants to run a business. This is also why we have seen a massive growth in the number of startups registering in the UAE.

If you are also looking to set up your venture in the UAE, you need to be clear about the rules and regulations regarding business licenses. We have prepared this guide that will explain everything you need to know about trade licenses in the UAE.

What is a Trade License in UAE?

A Dubai Trade License is a permit issued by the Department of Economic Development (DED) that is needed by a business to operate in the UAE legally. It is needed for activities like: 

• Trading goods
• Importing
• Exporting
• Providing services

Types of Trade Licenses in the UAE

All the eight types of licenses come with their own set of rules. To understand which license your business needs, we need to understand each type in detail.

Types of Trade License Applications in the UAE

Invest in Dubai initiative has introduced alternative application types for trade licenses, simplifying the process for businesses that did not previously meet the criteria. 

Importance of a Trade License for Businesses

Without a trade license your business can be ceased to operate by the government as it won’t be legally viable. So, it is evident that the license is extremely important. Other than that, there are several other reasons why you need a trade license. They are:

• Having a license makes sure your business follows UAE laws and operates legally. It also protects your business from fines or legal trouble.
• You need one to open a business bank account and sign contracts.
• It lets you hire employees and rent office space.
• You can access utilities in your company’s name only with a trade license.
• It builds credibility with clients by showing you run a professional and reliable business. So, in a way, it strengthens your brand image and reputation.
• To get a license, no specific paid-up capital is required.
• With it, businesses can apply for full repatriation of capital and profits.

Steps to Apply for a New Trade License in the UAE

If you want to set up a new firm, you can follow the next steps to register your business:

1. Choose a unique trade name
2. Apply for initial approval with the DED
3. Draft and notarize the MOA
4. Submit all required documents to the DED, including the MOA and lease agreement
5. Obtain approval and proceed to pay the fees

Fees for a new trade license can be:

• License Fee: Starts from AED 12,000
• Activity Fees: AED 150 - AED 500 (based on business activity)
• Additional Costs: These may include translation fees, license replacement fees, or activity class guide fees.

6. Once approved, the DED will issue your trade license.

Request for Initial Approval

The Initial Approval is the first formal step towards obtaining your trade license in the UAE. This crucial step allows you to:

1. Define your legal form, economic activities, and license partners.
2. Secure a commercial site lease contract.
3. Obtain approvals from relevant authorities for economic activities that require external permissions (e.g., Health Authority, Roads and Transport Authority, Telecommunications

The total cost for initial approval is AED 120.  You can submit your application for initial approval online through the Invest in Dubai portal or visit any of the available service centers. The process typically takes 10 minutes.

Documents Required for Dubai Trade License

You need the following documents for a new trade license:

1. Completed application form
2. Passport copies of shareholders and partners
3. Copy of initial approval certificate
4. Notarized Memorandum of Association (MOA)
5. Lease agreement for the business premises
6. Proof of payment for trade license fees

Renewal of Trade License in the UAE

Your Trade License is typically valid for one year since issuance. You need to renew it again after a year. The steps to renewal include:

1. Ensure you have at least one month in the tenancy contract before renewing the license.
2. Fill out the BR/1 form and provide the following documents:
   1. Copy of the current trade license
   2. Valid tenancy contract
   3. Passport copies of business partners and investors
3. Submit the renewal application and fees to the DED.

The fees can be:

• Renewal Fee: Typically similar to the initial trade license fee (AED 12,000 and above).
• Additional Costs: Any applicable late renewal fees or fines for non-compliance.

Conclusion

A trade license is just like the birth certificate of your business and is as important as business registration. It validates your company’s existence, ensuring you're legally allowed to operate within the UAE. You can also apply for instant license through Invest in Dubai portal if you need it on urgent basis.