Do I need a Trade License for Starting an E-commerce Business in Dubai UAE?
“Always deliver more than expected.” – Larry Page, co-founder of Google
Dubai will become the future of E-commerce in upcoming years. There are lot of scope to grow E-commerce and Online Business in Dubai because of the region, environment and government laws.
If you are willing to become part of this success journey, you need a trade license to start your business online. To start selling something in the UAE, you need to register your business officially and get a business trade license. This is a mandatory requirement by UAE Government.
Why you need Trade License?
An online business is just like every other business. In Dubai – every business needs a license.
If you are an individual who promotes or sells products and services through your social media accounts or a personal website, then you need an E-trader license in Dubai. For instance, this home business license would apply to stay-at-home mothers promoting handmade products or photography services and selling on Instagram in Dubai.
What can you do with the Trade License?
With this license, individuals can legally promote and sell products and services through their social media accounts including Instagram, Facebook and more, or on a personal website. You can also feature your products and services on online marketplaces such as Amazon, noon etc. With this license in Dubai, individuals and single-owned businesses can legally participate in and reach out to customers at exhibitions and conferences. It will also protect your trade name and any other intellectual property.
Which Trade License to Choose for E-commerce Business?
Important to know that there are few licensing jurisdictions in UAE: free zone and mainland.
From cost effectiveness side, e-business license is cheaper in free zone. All Free Zones have limitations to operate only inside the mentioned free zone, or internationally, thus comes with jurisdiction limitations.
By rule Free Zone licensees are facilitated to trade on mainland (inside UAE) only either wholesale to the importer company otherwise goods should be delivered through a local distributor in UAE that would act as importer of the goods from free zone and deliver them to the final consumer.
Mainland license issued by Department of Economy Development will allow you to operate without limitations inside UAE and internationally; you will be able to participate in government tenders, sell in local markets, open shop, etc.
Benefits of E-commerce Business in Dubai
As mentioned earlier, Dubai is blessed with a remarkable position in the region. Providing numerous business opportunities to business owners for setting up an e-commerce business in Dubai.
The UAE has easy access to the markets of three continents, not to mention it also has multiple free zones making it a prime spot to set up an online business.
The notable advantages of setting up an E-commerce business in Dubai are:
- Minimal taxation on capital investment and income.
- Low operating cost.
- Hundred per cent ownership of the company.
- Duty-free import-export.
- Growing Environment.
- Inspiring and Supporting Government laws and regulations.
Register your E-Commerce Business
The future of e-commerce is bright in the Dubai UAE. Worldwide, online shopping revenues are expected almost double to US$6.54 trillion from 2020 to 2022, and within the rapidly-growing Middle East region, the UAE boasts one of the largest B2C e-commerce markets. Thanks to its over 99% of the population (2020) internet users, the UAE e-commerce market is expected to maintain double-digit growth through to 2022.
If you are looking to register an e-commerce business in the Dubai UAE, click on the link below for detailed information.
VAT Registration of an E-Commerce Business
E-commerce refers to business transactions (sales and purchases) that are conducted electronically, as on the Internet.
If a person is supplying goods or services in UAE via the Internet or any other electronic media, he is accountable for the collection of VAT as in traditional commerce. This also applies notwithstanding that the transactions are effected through a third party e-commerce service provider.
The medium through which the transaction occurs does not alter the taxability of the transaction.
All physical goods supplied over the Internet attract VAT if the supplier is a taxable person and the supply is made in UAE. For example, if a taxable person sells goods via the Internet and the goods are delivered locally, he is making a standard-rated supply and VAT is chargeable at 5%.
Only a VAT-registered person can charge and collect VAT on all supplies of goods and services made in UAE apart from exempt or zero-rated supplies. The VAT-registered persons need to account and pay the VAT collected to the Federal Tax Authority within 28 days from the end of his tax period.
A person making taxable supplies is required to register himself mandatorily if the value of his supplies reaches AED 3,75,000. He can also get registered voluntarily if the value of supplies reaches AED 1,87,500.
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