Whether you’re launching a startup, starting a freelance business, or expanding an existing company, setting up a business in the United Arab Emirates (UAE) brings plenty of exciting opportunities. However, it also involves legal requirements, such as obtaining a business licence.
At Remitly, we understand the challenges of starting a business in a new country, from coming up with the right name to paying freelancers overseas. That’s why we’ve created this guide to help you navigate the process and make it as smooth as possible.
Why do you need a business licence in the UAE?
Many immigrants move to the UAE to launch startups, work as freelancers, or set up small businesses. The country’s strategic location, attractive tax structures, and supportive business environment make it a paradise for entrepreneurs.
While business owners are given plenty of freedom to innovate when it comes to how they make their money, one thing is non-negotiable: having a business licence.
Operating a business in the UAE without a licence can lead to hefty fines and potential business closure. But beyond compliance, having a business licence also unlocks opportunities. It allows you to sign contracts, open business bank accounts, and access unique funding options.
What types of businesses can foreigners start in the UAE?
There are several types of businesses you can start when you move to the UAE, each with its own structure, rules, and requirements. The best choice for your business will depend on where you set it up and the nature of your activities.
Mainland company
A mainland company can operate in over 2,000 different sectors and can be 100% foreign-owned if it participates in one of the 1,000+ activities listed in the Commercial Companies Law. Popular sectors include retail and e-commerce, construction, real estate, and tourism.
Registering a mainland company is quick, typically taking just a few hours. Plus, the structure allows business owners and employees the opportunity to obtain UAE residency and tax status.
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Offshore company
An offshore company is registered in one of over 45 Free Economic Zones (FEZs), but only conducts business outside the UAE. It’s suitable for businesses involved in global trading, investment management, and those with significant intellectual property or asset holdings.
Although these entities can’t have physical offices in the UAE, this structure allows them to operate internationally while benefiting from the UAE’s favourable tax laws.
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Free Zone Company
Free Zone Companies (FZCs) are popular with entrepreneurs in industries like tech, media, healthcare, logistics, and finance. These businesses are established in the UAE’s Free Economic Zones, where they can enjoy 100% foreign ownership and benefit from a variety of zone- and sector-specific perks.
Each FEZ has its own list of permitted activities. For example, the Dubai Knowledge Park (DKP) focuses on education, while the Sharjah Airport International Free Zone (SAIF) allows almost all types of activities but is particularly supportive of jewellery trading.
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Types of business licences in the UAE
The type of business licence you need when setting up shop in the UAE depends on the nature of your business activities. Each licence has specific rules and requirements, so it’s important to follow them closely to ensure your application is successful.
Commercial licences
A commercial licence is one of the most commonly issued business licences in the UAE. It allows companies to buy and sell goods both within the UAE and internationally. Businesses engaged in general commerce, retail, import and export, logistics, and other trading activities will need this licence.
To apply, you’ll need to select a business activity and obtain approval from the Department of Economic Development (DED) in the Emirate where you plan to operate. You’ll also need to lease office space before your application form can be approved.
Professional licences
A professional licence authorises certain businesses and professionals to offer specialised services in the UAE. This includes fields like consulting, legal services, healthcare, education, engineering, and other technical industries.
Since this licence is linked to an individual, you’ll need to provide the DED with documentation to prove that you hold relevant and recognised qualifications in your industry. You’ll also need to appoint a local service agent to handle your administrative matters.
Industrial licences
Businesses in the manufacturing, production, and industrial sectors can benefit from the UAE’s advanced infrastructure and strategic location. However, you’ll need an industrial licence to operate. Essentially, this licence allows you to transform raw materials—like textiles, metals, and foodstuffs—into saleable products.
To qualify, you’ll need to meet specific criteria, including having a physical office and warehouse in the UAE, a minimum investment of AED 250,000, and at least 10 employees. You’ll also need approvals from the government body overseeing your industry.
E-commerce licences
Entrepreneurs who want to sell goods or services online from within the UAE will need an e-commerce licence. This licence authorises businesses to operate digital platforms, including websites and social media shops, and facilitate online transactions.
E-commerce licences are issued by both mainland and FEZ authorities. The specific authority you apply to depends on whether you plan to sell goods within the UAE or only to customers outside the country.
Steps to apply for a business licence in the UAE
The process of applying for a business licence in the UAE can vary depending on the type of business you want to start and the Emirate in which you plan to register your company. To make things a little easier, we’ve outlined the key steps, including the documents you’ll need to prepare.
1. Determine the legal structure of your business
The structure of your business will impact how it operates, who’s liable for any issues, and which laws you need to follow. Whether you’re the sole owner, have partners, or plan to scale your business activities, this decision is crucial.
There are five main legal structures for businesses in the UAE. Here’s a brief overview of how each of them works:
- Sole proprietorship: Popular with solo entrepreneurs and freelancers, with full control over business decisions, but full liability for all debts and legal actions.
- Limited Liability Company (LLC): Popular in the UAE, allowing between two and 50 shareholders, with 100% foreign ownership in certain sectors. Liability is limited to your share in the company.
- Civil company: Typically for professionals like doctors, lawyers, engineers, accountants, and architects. This structure allows you to offer services independently, but may come with unlimited liability if not correctly structured.
- Public Joint Stock Company (PJSC): For large ventures that raise capital through public stock offerings. Requires a minimum of 10 founding partners and substantial capital.
- Branch office: For foreign businesses that want to operate in the UAE under the parent company’s name, but with some limitations on the type of work. This type of company is easier to set up than the others, but there are restrictions on the types of work you can do. They also usually require you to work with a local service agent and can involve cross-border money transfers.
It’s wise to consult with experts to ensure that your business structure aligns with your long-term goals.
2. Reserve a trade name
Your business’s trade name should be unique, relevant to your business’s activities, and compliant with the relevant UAE regulations.
You can’t use offensive terms, religious references, country names, or abbreviations of personal names. Also, the name shouldn’t be identical or too similar to existing businesses, especially those in the same industry.
To reserve a trade name, you can apply through the Department of Economic Development (DED) in your chosen Emirate. The approval process is usually quick, but it could take longer if your business activities fall under a regulated sector.
3. Submit your application
Once you’ve determined your business structure and reserved your trade name, the next step is to submit your application form for a business licence to the DED or relevant Free Economic Zone (FEZ) authority.
Required documents typically include:
- A completed application
- Trade name reservation
- Memorandum of Association (MoA)
- Passport copies of the intended business owners
You may also need additional approvals from industry-specific authorities, depending on the sector, business type, and Emirate in which you operate.
4. Pay the necessary fees
The cost of a business licence in the UAE varies depending on the type of licence you’re applying for and the Emirate where you’re going to register.
Generally, mainland company licences range from AED 5,000 to AED 30,000, while FEZ and offshore licence costs will depend on your chosen location.
Keep in mind that you’ll also need to pay for your trade name registration, office rental, and any government approvals or industry-specific permits.
5. Obtain your licence
Once you meet all the requirements, the DED or FEZ authority will issue your business licence. With your licence in hand, you’ll be legally allowed to start operations, sign contracts, open your company bank account, and start promoting your business.
Conclusion
Securing the right business licence is an essential first step in setting your business up for success in the UAE.
Whether you’re starting a small business, launching an online store, or offering professional services, having all your documents in order ensures that you can operate legally and without unnecessary setbacks.
By being prepared with the right paperwork, you can focus on what matters most: growing your business, taking advantage of the UAE’s thriving economy, and setting yourself up for long-term financial success.
FAQs
How do you get a business licence in the UAE?
To get a business licence, you’ll need to determine what legal structure you want to use, reserve a trade name, and submit the required documents to the DED or FEZ authority in your Emirate.
How much does a business licence cost in the UAE?
The cost of a business licence varies depending on factors like your business sector, location, and licence type. Fees typically range from AED 5,000 to AED 50,000.
What are the three types of business licences in the UAE?
The three main types of business licences in the UAE are:
- Commercial licences (for trading activities)
- Industrial licences (for manufacturing and industrial operations)
- Professional licences (for service-oriented businesses). Additionally, there are e-commerce licences for digital retail businesses.
Do small businesses need a licence in the UAE?
Yes, all businesses, regardless of size, must obtain a licence to operate legally in the UAE. This helps to ensure that people are compliant with local regulations.