Dubai is one of the best cities to start a trading business and reside in due to its economic growth and significant location. The tax rates are very low, and the economy is stable and secure. Furthermore, the Emirati government also creates a positive work atmosphere and distinguished resources, which helps promote startup companies.
If you want to start a trading business, Dubai is one of the best options. In this article, we will explain everything you need to know about how to start a trading business in Dubai.
Meaning of a UAE Trading Business
A trading business in the UAE deals with the import/export and trade of various goods. It involves extensive trading of physical goods, including clothes, toys, digital products, and factory-made appliances.
If anyone seeks to start a trading business in UAE, they’ll need to acquire a trading license. The Department of Economic Development (DED) issues these licenses to investors.
Types of General Trading Licenses in the UAE
If a foreigner wants to start a UAE trading business, they need to get a Trading License, which the UAE government provides.
There are two types of general trading licenses in Dubai:
General Trading License
It authorizes commerce in all kinds of goods and commodities, except for a few that are banned by the UAE government, such as oil, gas, digital currency, and rare-earth metals.
Special Trading License
This license authorizes the import/export of various goods, such as construction tools, clothing, digital products, toys, and cosmetics.
Key Steps To Start A Trading Business In UAE
To start a UAE trading business, you need to follow some key steps, which will be discussed below.
Design a Business Plan
To start a trading company, the first step is to create a good business design and business activities that the company wants to execute. A good design will assess every element of business, which includes goods and services, competitors, market requirements, business activities, investment, and workplace requirements. These elements are crucial to establishing a firm.
Pick A Company Name And Apply For A License
When choosing a name for your company, ensure that it is simple and unique. Once the name is approved, you can apply for a general trading license for your trading company.
Select Commercial Area
There are three main areas in the Dubai marketplace: mainland, offshore, and free zones. Foreign investors need to find a local sponsor on the mainland who owns 51% of the company’s shares.
The offshore firm is set up in a state other than the investor’s residence. The Free Zone provides 100% rights of possession to the sponsors. Decide on the Zone according to the requirements of your company and Business Plan.
Legal Obligations
In Dubai, it is crucial to get a trading license to make your trading company legal. Once you get a general trading license, you can import/export products such as garments, home furniture, decorative pieces, electronic devices, etc.
Perks of Starting a Trading Business in Dubai
There are numerous perks to starting a Dubai trading business. Some of these will be discussed further.
Smooth Business Setup
The business setup process is smooth and effortless when starting a UAE trading business. You will need to provide your company name and photocopies of important documents; the rest will be handled by the business consultants.
Low-Cost Tax Policies
Trading businesses in the UAE produce considerable profits because of low-cost business taxes. There are no taxes on imported goods, corporate taxation, or other fees in Dubai; companies have to pay a 5% sales tax (VAT).
Minimum Funds Required
In the UAE, to meet the lowest investment demand, there’s no need to provide a bank guarantee or deposit the capital stock with a bank. Dubai enterprises are also allowed the freedom of 100% capital return.
No Trade Obstacles
There are no trade obstacles to running a company in Dubai because companies with mainland trading licenses are free from audits and equity capital demands. As a result, they are economically and commercially successful.
Approach to Global Market
Due to the UAE’s prime location, traders from all over the world are present here. This gives companies a huge advantage as they can easily interact with global and local traders. Startup trading companies can also expand their business by approaching the local and global markets.
Premium Office Spaces
Shared workspace has become a significant trend globally. Trading companies set up their businesses in ready-to-use office spaces, which helps them shift into the industrial sector and adapt swiftly.
Family Sponsorship & Residency Visa
Investors can also sponsor their families and live with them in Dubai. They can also apply for Residency Visa and employee visas.
Charges of Trading Company License in Dubai
The charges for a trading license in UAE depend upon various factors, such as the nature of the business activities, size, and area in which the company is conducting business. Normal charges for a trading company license range from AED 20,000 to AED 50,000.
Required Documents for UAE Trading Business
In Dubai, all commercial enterprises need to submit official documents to the authorities. In order to get a general trading license, the following documents are required to submit to the Department of Economic Development.
- ID card and address of CEOs and shareowners
- A license application signed by a legal executive
- Primary approval from relevant authorities
- Memorandum of Association (MOA)
- Certified letter from DED approving the company name
- Fee deposit receipt
- A copy of each Partner’s Visa and passport is required.
After the documents are submitted, the officers will check and verify them. The Department of Economic Development will then forward them to the Federal Ministry of Economy for publication. If the publication is successful, the Federal Ministry of Economy will issue the authorization letter for your trading Company.
Final Thoughts!
At the end of this article, we expect it to have given you a thorough understanding of how to start a Trading business in Dubai. When it comes to trading business, the UAE is one of the top priorities of investors due to its stable economy and low tax rates.
You can easily set up your trading business in Dubai by following the key steps and guidelines provided in the article. The icing on the cake is that the establishing trading company also provides benefits to investors as well as their families.
