Dubai’s strategic location and thriving business environment make it an attractive place for eCommerce activity. According to Statista, the UAE’s eCommerce market revenue is projected to reach $10.21 billion in 2023. The figure below highlights the revenue breakdown per segment.
Figure 1. Revenue Per Sector (Source: Statista)
The fashion sector accounts for the majority of the revenue, followed by electronics. The average revenue per user is the highest for the fashion sector. It stands at almost $630 in 2023. The average revenue per user for the different sectors can be seen below.
Figure 2. Average Revenue Per User in UAE
Due to the high potential of eCommerce in Dubai, many are considering setting up their own online business. Indeed, running an online store is a great way to establish an alternate source of income or transition from a job to your own business. However, running an online business is not as easy as it seems. It requires considerable hard work and patience.
Before entering into eCommerce, you must apply for an eCommerce license first. Remember, without this licence, you cannot run an eCommerce business in Dubai. This article guides you through getting an eCommerce license in Dubai for your online business.
What is an eCommerce License?
Just as a doctor cannot practice without a medical license, you cannot run an online business without an eCommerce license. Of course, the laws and regulations governing this license vary in each country. The license grants the individual or business permission to engage in an online business. The eCommerce license in Dubai is required for any individual or business entity that conducts business through digital channels.
For instance, if you have an online store that sells electronic items, you cannot operate without an eCommerce license. Similarly, you’ll require two charges if you engage in business through a physical location such as a store and sell online. You’ll need a trading license and an eCommerce license for the physical location for online selling.
Why Do I Need an eCommerce Licence in Dubai?
An eCommerce license in Dubai is essential for several reasons. Let’s discuss a few of them.
Legal Requirement
First and foremost, the license ensures legal compliance. Without it, you are running an illegal business, which can open a world of legal challenges. On top of it, you may be faced with considerable fines and potential jail time. Therefore, the license offers protection against this.
Customer Trust
Would you prefer to engage in a business transaction with an unregistered entity? Remember that when engaging with a non-registered business, your consumer rights are significantly reduced compared to a registered company. An eCommerce license in Dubai is a great way to build and enhance customer trust in your business. They know that you have the necessary permit, which guarantees consumer rights.
Professionalism
When your eCommerce business is legally registered, it enhances your business credibility. Customers and potential partners know that you are serious about your work. Operating illegally means you’ll always be confined to a tiny area in the hopes of escaping the law.
Getting an eCommerce License in Dubai
- Select the Business Zone
When setting up any business in Dubai, there are two options – mainland and free zones. If you opt for the mainland, you can set up your business anywhere in Dubai and the rest of the UAE. In the latter option, companies cannot do business in mainland UAE. There are pros and cons to each.
For instance, businesses set up in the free zones are exempt from taxes and can repatriate 100% of their profits to their home country. You can own 100% of your business as there is no requirement for a local agent. If your business is mainland UAE, you can take on Government projects and have no limitations on employee visa quota. Of course, this quota depends on the business size. However, your business must have a local UAE agent.
- Select the Business Name
Once you have decided upon the business zone, focus on the name. UAE has issued several guidelines regarding business names. For instance, the business name must not be profane or vulgar. The name must not be related to Allah or His divine attributes. There are many other guidelines which you must keep in mind. So, adhere to these guidelines to avoid hassle during the license application.
- Apply for the License
If you opt for mainland Dubai, you must apply through the Department of Economic Development. You must apply to the Department through the respective emirate. The Telecommunications and Digital Government Regulatory Authority (TDRA) regulates eTrade in the UAE. Therefore, all eTrade licenses must also be approved by it.
eTrade license is different from an eCommerce license. Keep reading to know more about the difference.
According to the TDRA, the following documents are required for approval:
- .ae domain name if the business plans to conduct business through a website.
- Social media page name and URL if the business is conducted through social media channels. A new application must be submitted in case of a URL or name change.
- In the case of a smartphone app, the name and URL of the app must be provided.
- If the app is under development, TDRA requires images of the main interface and a detailed description of the app.
To start the application process with TDRA, sign in here using your UAE Pass account. Fill in the online form and then provide the above documents. For information on UAE Pass, click here. TDRA takes two working days to respond to your application.
The eTrade license is only for UAE residents or GCC nationals.
All others require an eCommerce license. They can apply for the eCommerce license through their respective free trade zones. An eCommerce license allows you to conduct business in mainland UAE, provided you partner with a local logistics company. Otherwise, you’ll only be able to conduct eCommerce internationally.
Conclusion
Once your eCommerce licence is approved, you must open a business bank account. Otherwise, you’ll run into legal complications. We hope the above information provides a detailed view of how to get an eCommerce licence in Dubai for your online business. After you get your licence, iBytes.io can help develop eCommerce websites or market your online business. Contact us for more information about how iBytes.io can transform your business into a preferred choice for customers.
