Company formation in Dubai begins when you are set to apply for a business license and business activities with the Department of Economic Development (DED) or the Free Zone Authority of your choice. In general, Dubai DED and some Freezone Authorities offers Commercial, and Professional, with the following descriptions:
● A Commercial License in Dubai is issued to businesses and companies that will undergo any trading activities.
● A Professional License is a service-oriented license given to individuals with a certain area of expertise and educational background.
Commercial and professional licenses are the most commonly acquired licenses in Dubai, as they are the easier and cheaper to acquire.
How Do the Two Differ?
As mentioned, commercial license allows a business to undergo trading activities. It is the most basic trade license available and covers a variety of available and tangible commodities such as general trading, clothes, real estate, hardware, construction, etc.
A Commercial License is used for companies who wish to have more than ten business activities under their acquired trade license. Foreign investors who hold this type of license are only allowed to own up to 49% shares of the company in Dubai Mainland and the company has limited liability, which means the company obtains the suffix LLC. Strategically, a commercial license in Dubai has multiple benefits, including tax benefits (zero corporate and income tax, low VAT), visa allocation for employer, employees and their dependents, as well a fully grown ecosystem of local and international trading scene.
In Dubai, the minimum paid-up capital for a commercial license is AED300,000.
Meanwhile, a Professional License is best used for individuals who target special practices that fit their educational attainment and craftsmanship. It is service-oriented, meaning they provide the service themselves. Consumers pay for their craft simply because they are licensed or experienced to do it.
Contrary to a Commercial License, under the E-Trader License introduced by Dubai DED, a practitioner who is not a UAE or GCC national may have full ownership of his/her company under a Professional License.
Related Article: How to Get an E-Trader License in Dubai?
However, this means that the owner/professional has unlimited liability on the company. Consultancy activities require a professional license; if a professional wants to trade goods that he/she has made, he/she must then acquire a commercial license.
With a professional license, the expert is required to pay for a fixed annual fee for his/her license, official regulations would require him/her to have full transparency in dealing with clients, and moreover, he/she is eligible to apply for a residence visa in the UAE.
The minimum paid-up capital requirement for a professional license is AED150,000.
Though different in most ways, both licenses are very effective and worth it especially if an investor is looking into everything the UAE has to offer: a strong workforce, competitive rates, improved lifestyle, and hub for network, partners, and consumers. This proves that no matter what type of license or entity you choose, Dubai is the best place for you and your investment.
How Can IBG Help You?
Dealing with license acquisition may be complex and stressful at times. There is a need to prepare documents as well as deal with regulatory boards and get their respective approval.
With this, IBG Consulting offers its services to you.
Located in Dubai, IBG is made up of consultants with extensive experience that are handy when it comes to helping you make decisions as well as assist you in complying with government applications. We provide holistic corporate services to investors just like you – from license applications to everyday-assistance such as accounting and bookkeeping, renewal services, digital marketing, and a lot more.
As your local agent, we are dedicated to making your investment story as comfortable and easy as it should be. Contact us today!
