The United Arab Emirates in all its glory stands tall as a commercial hub, a giant of technology and innovation, aptly named a land of opportunities. In order to make the most out of the myriad of opportunities this land offers, you still need a nod of approval from authorities high above. This nod of approval can also be referred to as a commercial license.
Want to set up shop in Abu Dhabi or offer products and services? Then you need to have a commercial license. Before applying for one, it is important that you know what a commercial license actually is, the importance of a commercial license for a business in UAE and the exact steps to get one.
As a business consultants in UAE, MBS Consultancy presents this ultimate guide to you where we explore the steps involved to obtain a commercial license so you would have no trouble in navigating the process. Our guide ensures that your experience with obtaining a commercial license is smooth so that you can start your business today.
What is a Commercial License in Abu Dhabi?
Before applying for a commercial license, you should be well-versed in how many licenses are out there in Abu Dhabi, which license is suitable for different industries, and whether you qualify for obtaining one. It is also imperative that you know all about a commercial license.
There are different licenses issued in UAE that work as a legal permit to perform various activities being compliant with the UAE laws. There are all kinds of licenses for businesses or trade purposes. It all depends on what you are selling. There are six types of business licenses in Abu Dhabi, namely:
- Commercial License
- Professional License
- Industrial License
- Craftsmanship License
- Agriculture License
- Tourism License
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Commercial License
Commercial licenses are for businesses that are selling any products or providing some kind of services. Following businesses serve as an example that would require a commercial license:
- Real estate agencies
- Logistics companies
- Retail stores
- General Trading
- Transportation
- Contracting
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Professional License
Issued to individuals who are skilled professionals and run a service-based business, professional licenses require people to provide an elaborate description of the services offered in their line of work. Following are some examples of skilled professional services that would require a professional license:
- Educational Services
- Medical Services
- Consulting Services
- IT Services
- Legal Consultations
- Auditing
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Industrial License
As the name suggests, industrial license is for businesses that perform industrial activities or are involved in manufacturing, production, or even mining. For people who are looking forward to establishing their manufacturing plants or factories, this is the license they would need.
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Craftsmanship License
Seeking to open a company where you will hire people to harness their skills in craftsmanship or handicrafts, then you need a craftsmanship license. Following businesses are the ones that require a craftsmanship license:
- Blacksmith
- Plumber
- Electrician
- Carpenter
- Tailor
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Agriculture License
Reflective of what the name suggests, agriculture license is required for:
- Cultivation
- Harvesting
- Animal Husbandry
- Fisheries
- Farming
- Agriculture Consultation
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Tourism License
Since Abu Dhabi is a hotspot among tourists, it is a city with tourist attractions. Tourism License is fit for following businesses:
- Hotels
- Event Management Companies
- Travel Agents
- Tourist Camps
- Hospitality Management Services
A commercial license in Abu Dhabi is basically a certificate that allows businesses to trade in Abu Dhabi. Some of the business sectors that require a commercial license to operate in Abu Dhabi are:
- Real estate agencies
- Logistics companies
- Retail stores
- General Trading
- Transportation
- Contracting
The commercial license depends upon the type of products that will be sold or services that will be provided. There are four types of commercial licenses available in the UAE, depending on the various factors such as the different requirements and legal standpoint of a business. The four kinds are:
- Establishment
- Company
- Branch
- Cooperative Society
- Establishment
Establishment is a business owned by one person or a sole proprietor. - Company
Company has a contract between two or more people. A company needs to be either a general partnership, an LLC, a public joint stock company or a private joint stock company. - Branch
The business can take the form of a branch. A branch — either foreign or Abu Dhabi based — is one that offers the same services or sells the same product as its main company. - Cooperative Society
In a cooperative society, a group of people have collective ownership of a particular project.
Why is commercial license important for businesses?
Commercial license is important for businesses because having a commercial license will enable you to perform trade related activities in Abu Dhabi. The significance of a commercial license lies in it being a legal permit for businesses to perform business activities carrying out any commercial operations in compliance to the laws in Abu Dhabi.
Advantages of A License for Business
Something of great significance comes with great advantages. It won’t be just to emphasize on something to a large extent and not have a strategy in place to provide some benefits as a result. There are several advantages to having a commercial license. Some of them have been shared below:
- Flexibility
Take your business to new heights with the flexibility of being able to do your business anywhere in the country. A business that avails flexibility will be the one that will have more room to grow and expand. - Pay No Tax
No personal income tax that you would have to pay. By obtaining a commercial license, you can avail tax exemptions. - No Corporate Tax Either
No corporate tax either, except if you are a foreign bank or an oil company. - Ownership 100%
Enjoy 100% ownership. - Trade License Renewal
By acquiring a commercial license, you benefit in the form of being able to renew your trade license sans audit. - Ten Different Business Activities, Legally
A commercial license legally allows you to perform upto 10 different business activities.
Steps to get Commercial License in Abu Dhabi
If you need a commercial license for your business in Abu Dhabi, you need to follow the given steps:
- Determine the nature of your business activity
- Identify the legal structure of your business
- Register the trade name
- Sign the memorandum of association
- Select a business address or location to set up your business
- Attain additional government approval
- Pay the license fee
- Register the license
- Register your business in the Chamber of Commerce
Business Activity Selection
It is essential to identify the business activity and selecting the one that best fits the description of your business. You need to understand the specific set of activities that your business performs.
Legal Structure
It is highly recommended to appropriately choose the legal structure of your business since it affects your business operations as well as the tax liabilities of your business. You will need to select one of the following legal forms:
- Partnership
- Limited Partnership
- Limited Liability Company
- Public Joint Stock Company
- Private Joint Stock Company
- Branch Of A Foreign Company
Here they are:
- Partnership
When different individuals share responsibilities of managing a business as well as any accountability, it is a partnership. - Limited Partnership
Limited partnership means that liability shared among the stakeholders is limited. - Limited Liability Company
LLC offers limited liability as well as flexibility in terms of operations to the stakeholders. - Public Joint Stock Company
A Public Joint Stock Company offers shares to the general public. A public joint stock company is required to have a capital of minimum 30 million dirhams. - Private Joint Stock Company
A Private Joint Stock Company may offer shares to the public but it must have a board of directors. A Private Joint Stock Company is required to have a minimum capital of 5 million dirhams. - Branch Of A Foreign Company
A branch of a foreign company offers the same services or sells the same product as its main company.
The legal structure of a business depends upon its requirements and is supposed to identify and be in compliance with the laws and regulations of UAE. The legal structure you select for your business has to be consistent with its economic activity.
Trade Name Registration
After you have identified the nature of your business activity and have figured out the appropriate legal structure that is consistent with its economic activity, it is time to get your trade name registered.
A trade name is what makes your license distinct from other licenses. The trade name you select should be relevant to the type of license you are opting for. A trade name is significant as it is an identity of your brand or business. A trade name will provide the first glimpse to the vision of your brand, the first impression that your business will have on its target audience, and a portal that will transform a viewer into an audience or the public into your customers.
To apply for a trade name in UAE, simply visit the Department of Economic Development or head to their website or app.
Terms & Conditions for Selecting a Trade Name
There are certain terms and conditions that must be met when selecting a trade name, as described by Ministry of Economy, UAE:
- The trade name has to be followed by abbreviation of legal form or structure of your company
- The trade name should not include any improper words or violate public sense
- It should be consistent with economic activity perform
- The trade name must not include names of Almighty Allah, names of government authorities, or the names or logos of any third party.
- The trade name should be available and not already registered by any other company
- It should be approved by the Department of Economic Development
- The trademark must be approved by the Ministry of Economy
- Trade name certificates are renewable
Tips for Choosing a Trade Name
There are some tips out there to help you wisely choose your trade name. MBS Consultancy has brought you some of these tips and suggestions to assist you in moving forward of your process to obtain a commercial license:
- Originality is key. Be daring to stand out, willing to be unique and refusing to fall far behind in the line of generic names. Your trade name should have the very essence of your business poured into it, succeeding to share the soul your business has to its potential customer. After all, when it comes to customers, you need to turn potential ones into regular ones. To ensure the trade name that you have spent hours or even weeks pondering over having reached the peak of originality at last is not actually in use already by some other business, you should check Abu Dhabi Business Directory.
- The fanciest name you have come up with should actually not be complicated. Try to keep alive the spirit of ‘simplicity is the best policy by choosing a trade name that is simple to remember yet easy to spell. If it is not easy to spell or if it is hard to pronounce, your potential customers may remain merely potential by not being able to reach you easily online. A simple yet unique name assists you in standing out, provides a great marketing tool as well as help in building an outstanding online presence of your brand.
- You should make sure that the trade name you have chosen is in compliance with Abu Dhabi’s Terms and Conditions that have been laid out by the Ministry of Economics, UAE. You need to be careful that your trade name is not violating any trademarks or copyrights or any laws.
- Be sure to check that the domains and usernames that match with your trade name are available online or it can result in losing online customers due to arising confusion between similar brand names.
The takeaway from these tips can be: Be unique. Be original. Be different, not difficult. Easy to remember, not hard to spell. Catchy for the masses, reachable for the audience. All easy but high quality tips, right?
Initial Approval from the DED
After you have identified business activity, determined the legal structure of your business and have registered a trade name, now it is time for you to obtain an initial approval from DED (Department of Economic Development).
Initial approval will mean that there is no objection from the Government of UAE and it signifies that you can now take the next step to attain a commercial license. An initial approval is not an authorization to initiate the business practices though.
In instances of foreign investors, before receiving an initial approval, they need to get an approval from the GDRFA or General Directorate of Residency and Foreigners Affairs.
In other instances, where activities are related to legal affairs or security entities, they need to obtain approval from the relevant authorities before applying for initial approval.
Required Documents
It is necessary to have all your documents in order, organize them as they are the foundation for your commercial license. The documents required to obtain a commercial license for your business in UAE are:
- Legal Documents
- Business Plans
- Financial Statements
- Business Address
- Memorandum of Association
- Additional Industry-Specific Documents
- No Objection Certificates (NOCs) and Approvals
- Registration with Abu Dhabi Chamber of Commerce
Accurate documentation is the backbone of your license application. This includes legal documents, business plans, financial statements, and proof of your business location.
- Legal Documents
Organize all your documents. These legal documents may include:
- Passport
- Visa
- Emirate ID
- Residency Permits
Legal documents are required to verify your identity and eligibility to carry out your business operations in Abu Dhabi.
- Business Plans
You need to have an elaborate business plan that has it all outlined: the objectives of your company, an analysis of the market, your business’ financial projections and strategies that you have come up with for your business. - Financial Statements
You should have your financial statements ready. For obtaining a commercial license, these are some of the most important financial statements that you need to put together:
- Balance sheets
- Profit and loss statement
- A forecast of cash flow
- Business Address
You will need to provide documents that verify your business address. Some examples of proof for your business address you will need to provide will be lease agreements for your office or warehouse.
The commercial building or location that you have opted for, you must make sure that your business address is compliant with the local laws and regulations as well as the requirements set by the Department of Economic Development. - Memorandum of Association
A memorandum of association may be required to be prepared and signed depending upon the legal structure of your company. If your company is structured in these forms, a memorandum of association will be needed:
- Partnership
- Limited Liability Company (LLC)
- Limited Partnership
- Private Joint Stock Company
- Public Joint Stock Company
- Additional Documents
You may also need to submit additional documents. Whether or not you need these documents will be dependent on your business type. If your business type qualifies, you may need licenses specific to certain industries, certifications or permits. For example, if you plan to run a restaurant, you will need a food service license whereas you might need other certifications if you are running a legal firm. - No Objection Certificates (NOCs) and Approvals
In instances where your business may require special permission, you will need to attain a No Objection Certificate (NOC). Having an NOC will mean that relevant authorities have granted their approval finding your business compliant with the local laws and regulations.
Depending on business activities, you will need additional approvals from federal or local government authorities. Following are the relevant Ministries that will issue you the additional approval based on your requirement:
- Ministry of Justice
The Ministry of Justice is the authority to obtain an additional approval for legal activities. - Ministry of Economy
Whether you are planning your business venture to be a private joint stock company or maybe you offer auditing services, the Ministry of Economy is the one that you will apply and receive the approval from. - Ministry of Interior
Ministry of Interior is the authorized body to issue you an additional approval if you offer one of these services: - Alarm and Protection systems
- Fire Extinguishing Equipment
- Public Transport Services
- Driving Centers
- Used Cars
- Used Spare parts
- Car rentals
- Supreme Petroleum Council
The Supreme Petroleum Council should be your point of contact if the services you are planning to offer are oil drilling or oil and gas field services. - Municipality Department
If the business activities are related to those of engineering or architecture, the Municipality Department is the one concerned with issuing approval for them. - Health Authority
Any business concerned with health related activities are to be authorized by the Health Authority. - Executive Council
Executive Council issues permits for following ventures: - Branches of Foreign Companies
- Shipping and Marine Agencies
- Air Transport Charter
- Car Clubs
- Trading Charters
- Tourism and Travel
- Telecommunication Regulatory Authority
Telecommunication activities are a focal point of your business? Then, the Telecommunication Regulatory Authority is the one you need to contact to gain approval.
- Registration with Abu Dhabi Chamber of Commerce
Lastly, you will need the registration of your business with Abu Dhabi Chamber of Commerce and Industry.
Submit Application
Once done with sorting out all your documents, having gained initial approval from DED and of course, having your trade name registered, now it is time to take the next big step to climb to heights of your commercial success: submit your application.
Payment of Fees
Submission of applications do happen to go hand-in-hand with fee payments. To acquire a commercial license in Abu Dhabi, you will need to consider the relevant fees it is going to be required. There will be different elements involved for you to assess when you are setting aside the budget for your commercial license application.
Your commercial license fees will be determined by considering various factors such as your business activity, legal structure, financial projection, any administrative charges that may be involved, any inspection charges that may arise, legal consultation costs to have your back, fee for document translation that may be required, or any additional miscellaneous fee that may emerge.
A payment receipt will be issued. You must pay the fee within a specified time. The timeframe specified is usually 30 days from the issue date of payment receipt. If the payment is not cleared it will result in your application being cancelled. So tread carefully and responsibly.
Final Approval
Have followed all the above steps? Now it is time to receive that nod of final approval – your commercial license — through any service center of the economic department or its online platform. To gain the final round of approval, you will need to submit documents, initial approval that you had previously obtained, a copy of registration certificate of your lease contract, a verified memorandum of association and the mandatory fees.
Conclusion
In this guide, we have explored all there is to commercial license — its introductions, its requirements, its importance, and even a detailed step-by-step guide to help you obtain one. If you are seeking to open up a business in Abu Dhabi or have an ambition to set your shop there, you will need one thing the most: a commercial license.
You may be feeling intimidated by the prospect of applying for a commercial license or you may need someone to guide you through, the best answer to your problem at hand is a consultancy agency.
MBS Consultancy is here to help you with all your business needs. We bring our expertise and experience to the table, save your time and resources, and offer reliable solutions customized for you. So consult us today for setting up your business in Abu Dhabi. For more in-depth insights and informative blogs, you can connect with us.
