Dubai is one of the world’s top markets for online businesses, raking in $8.5 billion in annual revenue for the Dubai economy. In Dubai, setting up an online business requires an e-trader licence, to protect you and your clients. This ensures your business activities are fully operational according to the law.
The internet, social media platforms, smartphones, and rapid delivery services have made it possible to buy or sell anything online. This has been good news for consumers and entrepreneurs alike. The advent of an e-trader licence is a welcomed incentive for locals. Correspondingly, anyone located in Dubai, Abu Dhabi or the UAE can operate a business from several social media platforms like Instagram, to sell their products or services.
This article covers everything you need to know about the e-trader licence in Dubai including how to apply for one.
Online Business is Booming in Dubai
In recent decades Dubai has become an economic powerhouse.
It’s true that Dubai is an important financial part of the UAE. Dubai lies at the crossroads of the Middle East, Africa, Abu Dhabi and India. As a result, the entire region is favourable for trade within these booming markets.
The population of Dubai is just over three million. Dubai is a cosmopolitan mix of expats who outnumber local Emiratis. This provides an excellent potential customer base and is positive for business owners.
Economic growth stood at 5.5 per cent in 2021. To bolster economic diversification, there’s a noticeable shift in focus away from physical infrastructure toward services.
Likewise, e-trade is a major part of this long-term economic growth plan.
The online marketplace has seen a rise in freelancers worldwide, especially during the COVID-19 pandemic. From here, aspiring entrepreneurs learned that they could run successful businesses without needing a brick-and-mortar office space. Setting up your own online business has never been easier. You can offer your services via popular social media accounts like Facebook and Instagram.
Getting hold of an e-trade licence is a must if you want to have an online operation.
Why Do You Need an E-trader Licence in Dubai?
Since it is so easy to set up an online business, it can be hard to police which businesses are legitimate or not. Therefore, obtaining an e-trading licence can be a confidence booster for business entrepreneurs. What’s more, having an e-trader licence in Dubai will increase customer confidence.
The Department of Economic Development (DED) was mindful of online scammers when it created the e-trader licence in 2017. The idea was to try and regulate Dubai businesses that exist online and on social media platforms.
Social media websites can be a valuable marketing tool for a business owner in Dubai. Because social media is so readily accessible, it provides a personable and professional interface between you and your customers. Embarking on an eCommerce business via social media is a great way to test the success probability of your venture.
As a budding entrepreneur, having an e-trader licence in Dubai will give you an air of professionalism. Furthermore, you will be able to create your own business, protect your trade name and market the goods you make to sell.
What Social Media Platforms Apply to The E-Trader licence in Dubai?
With an e-trader licence established in Dubai, you can legally sell your goods on any social media account and website. Examples of applicable social media sites include:
- Personal websites
You can also sell your products and services on major online marketplaces.
The e-trade licence is not just a permit. Once a licence is granted, the Department of Economic Development offers workshops and training sessions to newly established businesses. If you are starting in business, this can be a valuable asset to improve your skills and brand.
Moreover, you will also become a member of the Dubai Chamber of Commerce and can participate in exhibitions and conferences.
Benefits of an E-Trader Licence
100 per cent handmade goods and designer items are allowed to be sold under an e-trader licence in Dubai. Likewise, engraving or picture framing is permissible under a Dubai trading licence.
As a foreigner looking for an e-trading licence, you’re not permitted to sell a physical product. Under Dubai law, commercial activity stipulates that a 51 per cent share of the company must be held by a citizen of the United Arab Emirates.
Therefore, as the 100 per cent sole owner of your online company, the e-trader licence will only allow you to provide services. Importantly, you must be at least 21 years old to hold an e-trade licence in Dubai
Popular business ideas for an e-trader licence are:
- Graphic design
- Event management
- Project management
- Marketing services
- Fashion Apparels
- Website creation
Conveniently, the Department of Economic Development lists around 3,000 activities available, for use under an e-trader licence. You can have a maximum of 10 under one e-trader licence, provided they are related.
Limitations with an E-trader Licence in Dubai
The restrictions that govern what you can do with a DED trader license depend on where you reside. If you are a foreigner residing in Dubai, you will face more restrictions than a citizen. For example, making adjustments to products and re-selling them isn’t allowed.
Foreigners with a DED trader licence are not permitted to run a fitness business. Importantly, this also precludes personal training, yoga classes, or anything else that is sports-related. This is governed by the UAE sports ministry.
Conversely, UAE and GCC nationals are allowed to conduct these activities with an e-trader licence. They are also entitled to sell physical products. This includes preparing and selling food from home.
If you’re unsure about the rules relating to company formation, it’s a good idea to hire business setup specialists. Professionals like Virtuzone can help with the entire license registration process, making everything that much smoother.
What are the Eligibility Criteria for an E-trader Licence?
Online sales using all social media networks require an e-trader licence. It is also necessary for the license applicant to hold a valid emirates id and be either a UAE national or a GCC national.
Accordingly, the e-trader licence in Dubai is available to any United Arab Emirates citizen and other countries that are members of the Gulf Cooperation Council (GCC), including:
- Saudi Arabia
Any foreigners with a visa who reside in these countries are eligible.
There are many different paths to getting a visa for the UAE. For instance, you can get a business visa, a remote work visa, a Golden visa, or a sponsored family visa. Setting up an online company via your social media websites and getting an e-trader licence could be the perfect option for your ex-pat life in Dubai.
Aside from UAE and GCC nationals, other expatriates conducting business via social media channels are eligible for an e-trader licence in Dubai. Those who can apply for a trade licence include housewives, home professionals, side business professionals, self-employed individuals, business entrepreneurs and freelancers.
The Department of Economic Development is keen to target GCC Nationals and those who are a resident of Dubai. Specifically, the DED aims to attract stay-at-home mothers and fathers who are interested in starting a side business using social media platforms like Instagram, Facebook etc.
The minimum age requirement for anyone obtaining an e-trader licence in Dubai is 21 years. Applicants who are 21, who are also residents of the UAE, Abu Dhabi or Dubai, and possess a valid emirates ID can apply for their e-trader account.
Importantly, only one person can be registered under a single license. You cannot have employees or sponsor another person’s licence.
Where Can You Use Your E-trader Licence?
The United Arab Emirates consists of seven different Emirates, including Dubai.
The DED-granted e-trader licence is only valid for one specific area. For example, if you have a Dubai e-trader licence, you may not conduct your business in another area of the UAE.
If you wish to work in another emirate, you will need to get the proper permissions and permits for that specific region.
Also, you are not allowed to have an e-trader licence for a company that has its own office space or premises.
How to Apply for an E-trader Licence?
Fortunately, the e-trader licence application process is relatively straightforward. Nevertheless, you may consider hiring business setup consultants to assist you with navigating a foreign business environment and culture.
When you apply for an e-trader licence in Dubai, you will set up an account on the DED Trader website. You will need to set the main language to English, and not Arabic, in the bottom right-hand corner. The DED authority has created a streamlined process for the issuance of the subject license.
The steps to apply for your Dubai e-trader licence are simple:
- Create a username and password
- Enter your address details
- Enter the social media accounts of your business
- Choose the relevant license activity
- Pick a business trade name
- Pay for the licence fee online
- Await confirmation
Important documents that you will need for an e-trader licence in Dubai are an Emirates ID document, a filled-out application form, copies of your passport and passport photos.
Once you’ve compiled your necessary documents, you’re ready to apply for your trading licence. It can take three to five business days to receive your e-trader licence. It will be valid for one year, and then you need to renew it.
How much does this trade licence cost?
A Dubai e-trader licence is the cheapest business licence available in the UAE. Licence fees can be paid up to 24 hours from the issuance of the payment voucher.
The permit costs AED 1,070 ($291/279 euros) per year. Whereas, for a chamber of commerce membership, you will pay an additional AED 300. Because this licence is so affordable, you can set up your home business and sell your professional services quickly.
Can You Run a Business Without an E-trade License?
Dubai law is clear: every trading activity needs to have a licence.
Therefore, it’s not a good idea to trade in an online business without an e-trader licence. In 2018, UAE authorities closed down several online websites for operating illegitimate businesses. Even someone selling beauty services, or something that seems inoffensive, is still a businessperson who must have the right permits to do so.
Crucially, if you’re found conducting your business online without an e-Trader licence, you can face fines of up to AED 500,000 ($136,000/130,000 euro).
When Is It Not the Right Option?
Lastly, if you want to begin traversing the online business world in Dubai, you need to ensure that the e-trader licence is the right choice.
Similarly, the e-trader licence isn’t appropriate if you want to hire an office space and many employees. For a trader licence in Dubai to be relevant, you need to be a one-person show who is happy to work independently.
Importantly, you’ll need to explore other ways of obtaining a Dubai visa, because an e-trader licence is not an avenue for visa residency.
Discuss your business plans with a company formation specialist to decide if an e-trader license is right for you.
Get Assistance With Your Online Dubai Business
Dubai is undeniably an excellent place to do business because of its eCommerce growth potential. The main language of business is English. It is also safe, stable, and has low levels of crime.
Of course, the popularity of eCommerce businesses in Abu Dhabi and the Emirates region means diversification is a natural next step.
Once you have an e-trader licence you’ll be empowered to take your business ideas to the online world. This will give you the flexibility you have always dreamed of while showcasing your talents.
However, this process can be complex if you’re new to Dubai regulations. Hiring a business setup specialist to help with company formation, will remove the red tape. For more information on establishing an e-commerce business, or on working in the mainland or free zones, contact our team today.
Contact us for assistance with applying for your E-Trader license.