With all economic activities, one needs to have a license to proceed legally. However, there are some cases where a person isn’t involved in a full-scale business and working from a small office or home-based setup only. However, this setup also requires a license to conduct a business in Dubai. This license is known as an e-trader license.
People often confuse an e-trader license with an e-commerce license. Let’s take an in-depth look at what these both licenses are about:
What is an E-commerce license?
The e-commerce license is issued to those that are working in the e-commerce field. This means setting up an online store while delivering goods to the clients ordering them online. E-commerce is a growing domain and has become the apple of the eye for many, particularly during the pandemic.
What is an E trader license?
On the contrary, the e-trader business license is similar to the e-commerce business license. However, it differs in the sense that it’s available to those that are running a small home-based business. This business can include professional services such as plumbing, mechanic services, etc. handmade goods selling, etc.
The sellers can use directly as well as social media to attract and sell their services and goods. It’s issued by the Department of Economic Development DED. The DED ensures that only those with the license are allowed to service to minimize and eliminate the risk of scams and counterfeit products entering the market.
Difference Between E-Trader And E-Commerce License
The difference between both licenses can be explained with various examples. Although both licenses are issued by the Department of Economic Development DED, the implication is different.
For starters, the size of the business illustrates the primary difference. With an e-commerce license, one is already running a full-scale business via a website, various social media handles as well as dealing with clients internationally.
On the other hand, the e-trader license is used for small businesses. It allows entrepreneurs to function from their home-based setup while investing in a minimal supply of goods. However, when this transforms into a successful business, it will lead to having an e-commerce business or others of its kind since it’s no longer a small scale business.
Activities Allowed With An E-Commerce License
Like other e-commerce businesses, an e-commerce license can grant access to various kinds of activities. One can invest in selling items that would include:
- Jewelry, precious stones, etc.
- Electronics, gadgets, etc.
- Clothes, accessories, etc.
- Household, home improvement, interior goods, etc.
- Machine parts, spare parts, etc.
- Sports goods, etc.
- Transportation goods, etc.
Activities Allowed With An E-Trader License
Based on the idea that e-trader license is for businesses operating from homes, the following activities are allowed for owners to proceed with:
- Professional services, including small-scale IT consultation, plumbing, maintenance, etc.
- Selling handmade goods
- Social media account promotion
- Event management
- Photography services
You can contact the DED in case you’re confused regarding the services you’re offering and whether or not they fall in the e-trader license category
What Are The Limitations Of An E-Trader License?
Even though the e-trader license is a great way for establishing small scale footings legally, it still has some limitations that are as follows:
Only GCC or residents of the UAE are allowed to sell goods. This means, one using the e-trader license cannot establish a physical store or start selling commercially.
- The license doesn’t provide an investor visa. The person acquiring the e-trader license must hold an Emirates ID or a Dubai resident visa.
- The license can benefit only a business run by 3 personnel.
- The e-trader license is only valid for the particular state in which it has been issued. If you wish to sell in other states, you’ll have to acquire it from those states and get approval from the DED.
- Ejari or Makani number is necessary.
Who Can Avail An E-Commerce License?
Anyone holding an Emirate ID or being a resident of the Emirates can avail an e-commerce license. However, they need to be 18 years or above to acquire the license. Moreover, recruitment under the license isn’t allowed.
If one seeks to recruit employees, the company has to be registered with the DED. Furthermore, the company would also need trademark registration as a result of company registration.
Who Can Avail An E-Trader License?
People residing in the UAE and GCC as well as foreign nationals are eligible for getting the e-trader license. However, the limitations of the e-trader license apply to foreign nationals in terms of the type of activity they can include in the license.
Cost For E-Commerce And E-Trader Licenses
The cost for e-trader licenses is given as follows:
- General e-trader license: AED 1,070
- E-trader commercial license: AED 1,370 (includes AED 300 fee for membership into Dubai Chamber of Commerce)
Several factors determine the cost of an e-commerce license in Dubai. This includes the size of the business one is about to begin, total investors, the zone where the business is being established, etc.
Most people usually opt for setting up their e-commerce business in a freezone because of the low-cost setups. The starting price of e-commerce license is AED 5750, depending upon business requirements.
How Can IBG Consulting Help?
IBG Consulting has been helping investors establish their e-commerce and e-trader businesses for the past many years. We aid in setting up the business according to the budget and requirements of our clients. In addition, our team is well-versed with the license application and approval process that would help you get your license at the best rates in no time!