The Ultimate Guide to Obtaining E-commerce License in UAE in 2021

The UAE is becoming a formidable global business hub - there's no denying that. And when it comes to the e-commerce sector, there are no signs to indicate that the UAE is lagging. The emerging e-commerce growth has enticed thousands of entrepreneurs and start-ups around the world. Getting an eCommerce license in the UAE is your stepping stone to getting a piece of this booming e-commerce pie.

Here are some mind-boggling statistics from Datareportal that will give you an overview of this pie.

There were 9.84 million internet users in the United Arab Emirates in January 2021
The number of internet users in the United Arab Emirates increased by 158 thousand (+1.6%) between 2020 and 2021.
Internet penetration in the United Arab Emirates stood at 99.0% in January 2021.

And as per a report from Statista, "The market size of the e-commerce industry in the United Arab Emirates (UAE) was expected to grow from seven billion U.S. dollars in 2020 to reach 17 billion U.S. dollars by 2025, after the adjustments for the effect of the COVID-19 pandemic on e-commerce. From 2020 to 2022, there was an expected additional six percent annual market growth due to COVID-19 in the Gulf Cooperation Council (GCC) region."

But how do you go about it setting up your e-commerce business license in UAE? Here is our complete guide to it.

What is an E-Commerce License UAE?

An e-commerce license is a legal document that allows you to conduct your online business within UAE legally. If you are looking to start an eCommerce business in UAE, you have to get a license under the rules and regulations outlined by the UAE government. You can get the license from the Department of Economic Development (DED).

How to get an e-commerce License in the UAE?

Here are five things you must consider before applying for a DED e-commerce license.

1. Type of company

First, you have to decide on the type of legal entity or legal structure you want your company to have. It could be either a Limited Liability Company (LLC), a branch of an existing company or a company owned by a single person.

2. Jurisdiction

Entrepreneurs who wish to set up an e-commerce business in UAE have two location options:

Free zones
Mainland

We have written extensively about free zones and mainland business in our blog. To know more about the difference between a free zone company and a mainland company read this blog.

3. Trade Name

The third step is to register a trade name or a company name that is brandable and catchy. Since you will be selling goods online, make sure you choose an appropriate domain name.

4. Apply for an E-commerce license

You will have to get in touch with the Department of Economic Development (DED) or the free zone authority to get an eCommerce license. The type of eCommerce store you are planning to start will determine the type of license issued to you.

5. Initial Approval Certificate

Apply for an initial approval certificate which is valid for six months.

6. Choose an office space

Next is to find an ideal location for your office. As per UAE government norms, it is mandatory to have a physical office for your company to be registered as a legal entity.

7. Get your license

Once you fulfill all the formalities and complete the application process, you will get your eCommerce license in around a week.

Furthermore, you will need to be registered with one of the ports and customs authorities to move your eCommerce products in and out of UAE. Once you get your license and your eCommerce business is registered, you can go ahead with opening a local corporate bank account for easy transfer of funds. Meanwhile, you may also apply for a UAE residence visa.

Also read - 100% Foreign Ownership In UAE: Impact on Startup Ecosystem

General Trading License and E-commerce license.

If you have a general trading license, you can sell your goods online as well. However, there are some restrictions. For example, if your business is registered under a specific trade category, you cannot sell goods online under any other category.

E-commerce in Free Zones in UAE

Free zones in UAE have their own rules and regulations. To conduct your eCommerce business beyond the boundaries of a free zone, you may need to obtain a license from Dubai Economic Development (DED).

Types of E-Commerce Licenses in the UAE

E-trader license

The DED has recently launched an 'e-trader scheme' according which online stores on social media platforms such as Facebook, WhatsApp, Snapchat, etc., can obtain an eCommerce license. However, only UAE citizens are eligible to avail themselves of this scheme. Moreover, one cannot a physical store with this type of license.

Portal License

This is a type of license that even non-UAE citizens can obtain. The portal license enables you to link buyers and sellers with each other. The license is best suited to listing websites.

Virtual Company License

You can also obtain a virtual company license, but the scope of business is limited to only three sectors:

Computer and technology
Designing Related Businesses
Printing and advertising related services

The Role of the UAE Government in E-commerce Growth in UAE

The government has embraced the potential of e-commerce business growth in the UAE in the coming years. In line with this, it has encouraged businesses to adopt cashless transactions in private and government services. In addition, most of its government services are now available online, so businesses don't have to run from pillar to post to get their work done. Most importantly, investors and entrepreneurs wanting to start a company or e-commerce business in UAE can apply online and get a significant portion of the formalities done through the government's online portal.

Consider Hiring a Business Consultant (Company formation expert) to Setup Your Online Business In the UAE.

Hiring a company to register your e-commerce company for you is beneficial in many ways. It saves time on research and gives you peace of mind knowing that your online business license will be registered with the UAE government.

The process of registering a business can take some time and research before it's done correctly, and it's not always easy to figure out what information is needed for registration.

This is where our team of experts at Danburite can come in handy. Our experienced team can take care of the professional services on your behalf in addition to providing legal advice so that you can spend your time building your e-commerce business strategy.

Conclusion

The UAE Government is making it easier for e-commerce companies to start-up shop and thrive in the country. To foster growth in e-commerce, the government has adopted an investor-friendly approach to attract entrepreneurs. There couldn't be a better time than now to invest in the e-commerce business in UAE.