Any person who wishes to do any sort of commercial trade activity in the UAE is required to have a commercial trade license by law. The trade could be related to goods, commodities as well as services. Apart from this, retail companies, construction companies, real estate businesses, transport companies, etc., also need to apply for commercial trade licenses. In the process of obtaining a commercial trade license, the Department of Economic Development and various other governing bodies are involved.
A commercial trade license is an identity of you and your business enterprise. Obtaining a commercial trade license lets you incorporate several adjacent activities under one trade license. Also, it relieves you from corporate taxes, income taxes, and provides the company with a simplified financial reporting system. Although, like any other license, it has an expiry date and has to be renewed every year.
Procedure to obtain a commercial trade license in Dubai
Before you proceed with the commercial trade license renewal, it’s important to know how to obtain one. Decide on categories of activities that your business will deal in. Choose from import and export, real estate, logistics, etc. Moreover, choose the trade name for your enterprise. Follow the detailed instructions given below to obtain a commercial trade license in Dubai:
1. Select a legal entity for your business and decide the trade activities in which your company will participate. Once decided, select a suitable business form that matches the commercial license type. You can obtain the permissible business activities from the DED or the concerned governing authority.
2. Draft the Articles of Association of the company and the Memorandum which must specify the activities to be completed.
3. List out the specifics about partnership according to the legal entity such as their stake in the enterprise, and distribution of profits and losses between the partners. The best approach is to collaborate with business experts in Dubai who guide you throughout the process to remove any window of errors and doubts that you might have.
4. Register your enterprise with the DED in the UAE and obtain a VAT number. It’s a vital step to ensure that your business inclines with the taxation policies maintained by the government.
5. After you have submitted all the required documents and filled the forms, the last step is to make the payment. You are issued a payment voucher using which you have to pay the fees related to the registration of your company and issuance of the trade license.
Once you have followed all the instructions listed above, the trade license of your company will be issued automatically. This license comes with a lot of advantages such as the application of visas, labor quotas, translation services, no corporate tax, no income tax, etc.
Steps to Renew a Commercial Trade License in Dubai
All businesses in Dubai need to have an active license to comply with the various legal policies. Here’s how you can go about commercial trade license renewal to avoid license expiration:
1. Have a valid tenancy contract
The first thing to ensure is to have a tenancy contract with a minimum validity of one month. If the tenancy contract doesn’t have a validity of at least one month, you can’t apply for the associated license for renewal. Therefore, it’s not advisable to postpone the renewal procedures until the very last moment. The tenancy contract must be Eljari attested (an online registration system by the Real Estate Regulatory Agency).
2. Submit all requirements
The next step is to apply for license renewal to the DED, along with all the required documents. In order to renew a trade license, you need approval from other concerned authorities too, depending on your business activities. To apply for a renewal, the following documents are required:
- A typed BR/1 form
- Ejari registration certificate
- A copy of the office space lease contract
- A copy of the tenancy contract
- Photocopy of current business trade license
- Photocopies of all business partners’ passport
3. Pay the service fees
Now that you possess a valid tenancy contract and have all the required documents, the final step is to make the payment. The DED in Dubai provides a payment voucher after you have submitted the application. Pay the fees using the voucher number.
Once you have completed all the above steps, you will receive your renewed license immediately via a portal maintained by the DED.
Complications of not renewing your trade license
The DED takes the trade license and its renewal seriously. If the trade license is not renewed in time, it might lead to various legal repercussions. Fines may be imposed on the business enterprise, and in some cases, it may even lead to the cancelation of the license. The DED imposes penalties of varied kinds from the date of expiry of the license. The complications of not renewing your commercial trade license include:
1. Failing to renew commercial trade licenses can lead to the blacklisting of your company.
2. A fine of up to AED 5,000 may be levied if a company is found working without a trade license or with an expired one. Delay in renewing the license can cost your company up to AED 250 per month.
3. Apart from the blacklisting of your company and monetary fines, the DED can even stop your company from further expansion in case you fail to keep the records clear.
The companies must renew their licenses in time, as the expiration can not only cause monetary penalties, but it could even lead to the shutting down of your entire business. If blacklisted, it could result in termination of all your employees’ visas, discontinuation of your transactions, and cancellation of your resident visas.
Therefore, to avoid any of these setbacks or monetary penalties that your company might face, it’s recommended that you connect with a consulting agency to help you with the paperwork and save the hassle.
Connect with Shuraa
At Shuraa Business Setup, our goal is to simplify business formation activities and the various legal procedures that business aspirants must follow in the UAE. You can collaborate with us for your commercial trade license renewal, and we’ll do all the heavy lifting for you. The business consultants at Shuraa hold prolific experience in the company formation domain and know the business license procedures inside out. We assist our clients with documentation, paperwork, approvals, and everything else they need for their company.
To get in touch with us, call at +971 44081900. You can also send a WhatsApp message at +971 50 777 5554. For email assistance, mail your query at info@Shuraa.com.