If you’re considering an online or home-based business in UAE, then it’s important that you do your research thoroughly in advance. The process of obtaining a virtual commercial license in Dubai as well as zoning approvals and permits can be a complex and time-consuming process. Not having enough lead time can also cause delays in the launching of the business.
In this article, we’ll take a look at the rules and regulations for starting an eCommerce business in UAE, including the processing of Dubai virtual commercial licenses.
Licenses that are required for eCommerce businesses
The types of permits and licenses that are required from a business in UAE depends on a lot of factors: the structure of the business, the type of the business, the business’ geographic location, and the number of staff members.
- Virtual commercial license – a virtual commercial license is the type of license that allows an entrepreneur to establish business operations without having to set up a physical store in the UAE. The license has been introduced in order for the UAE government to boost its foreign direct investment. With the license, you can acquire it regardless of where you are in the world. You can also secure an e-residence and/or open a bank account.
- Tax registration – with tangible goods that are sold online, UAE authorities mandate eCommerce businesses to collect VAT from customers. You can also collect VAT if your business online is providing services that aren’t in the list of services considered in UAE as VAT-exempt or zero rated such as financial services. You can obtain more information regarding the matter with regulated tax agents in Dubai.
- Alarm permits – there is a chance that you may need an alarm permit that is issued by the local government for commercial fire alarm systems. For businesses that are providing home based care services for children, there is a need to have the premises or the home inspected by authorities prior to being issued a permit for the business to operate.
- Health inspection certificate – for online businesses that are preparing any kind of food products, obtain the proper permits that are health-related and allow the authorities to undergo inspections.
Penalty for non-compliance
Those who are selling online or starting e-commerce businesses can face stiff penalties that reach up to Dhs 500,000 if operating without the required licenses. Businesses can include beauty businesses that are started from home, tailoring, and catering among others. Accessories, shoes, homemade food and clothes are commonly found sold in social media platforms. Experts on business setup in UAE have warned eCommerce businesses and online sellers on the fines that they may face.
Since 2018, the government authorities have been trying to crack down on all illegal websites that sell products even when they don’t have the appropriate licenses. Under the local legislation, any resident in the UAE has to get a license or permit prior to marketing anything, even online.
When customers face certain issues, most especially related to health, businesses can be placed in a very vulnerable position in which they are unregulated. They can be exposed to even higher fines and penalties imposed by UAE government authorities. Article 6 of Dubai Law (no 13) of 2011 states that the conduct of any economic activity in the emirate of Dubai has to be backed with the proper license. Local legislation states that natural or legal persons that are conducting trading activities are to have licenses issued by proper authorities such as the DED or Department of Economic Dev’t. Failure in complying with the local regulations can make any e-commerce business illegal. It’s also important to settle penalties.
If you want to know more about e-commerce businesses in the UAE, don’t hesitate to contact us. At FAR Consulting Middle East, we have been providing business setup solutions to foreign and local investors and entrepreneurs for decades. With our team’s experience and expertise, you will have the assistance you need in establishing your business with less to no hassle! Call us.
How will I be able to acquire a license for online business in the UAE?
There is a need to undergo the entire process of acquiring an eCommerce license or Dubai virtual commercial license which involves the following phases: deciding the business’ legal structure, selection of the location, registration of a trade or company name, application for a license, drafting all required business documentation and paperwork, and waiting for approval or rejection from the authorities.
Do UAE authorities allow the selling of products and services online?
Online platforms can be utilized by investors and entrepreneurs in the UAE provided that they have the right licenses required. Reports have been released regarding penalties of as much as Dhs 500,000 which are imposed on violators of regulations regarding online selling of goods and services without any permit.ec