Today, the e-commerce sector is growing worldwide. It is facilitated by the wide spreading of the Internet, the availability of gadgets for every person, and the continuous development of international courier services. The e-commerce segment is gradually replacing traditional stores. This is especially noticeable in the field of trade in electronics, furniture, clothing, and household goods. Unlike regular stores, an online store is much less expensive, and at the same time, its audience is not geographically limited to a city, region, or even a country.
As for the UAE, the e-commerce market is as lucrative as the online markets in any other area. The e-commerce sector already exceeds $10 billion, and given the fact that over 90% of the population has access to the internet, there are excellent opportunities for further growth.
Also, online commerce, as well as other types of business, is subject to preferential tax treatment conditions that operate in free zones. A well-developed logistics system – ports, airports, and ground communication networks make this country a real haven for an online store.
So, if you want to register an e-commerce business in Dubai, you must go through a number of procedures, from website development to obtaining an approved e-commerce license.
Key benefits of e-commerce in Dubai
Entrepreneurs, starting an online business in one of the free zones of Dubai, UAE gets some pleasing benefits:
- There are no taxes and fees (except for VAT of 5%);
- There are no restrictions on the withdrawal of capital and no currency restrictions;
- The possibility of 100% ownership of a foreign company in one of the free zones;
- Operating expenses are lower than in other jurisdictions.
- No import/export duties with e-commerce license.
- The possibility of obtaining a resident visa of the UAE for three years with the possibility of renewal.
How to start an online business in the UAE?
The process of registering a company in the free zone of Dubai and obtaining an online business license here depends on the type of commerce and the specific free zone. The general trading license and the e-commerce trading license are the easiest and fastest to get. Over 80% of companies have such licenses and are engaged in trade in various groups of goods.
In general, setting up an online business in Dubai begins with filing an application for a license for e-commerce. It is this license that makes it possible to conduct business and sell products specified in the license.
How to start an e-commerce business in Dubai, Abu Dhabi, and the other UAE Emirates?
Regarding the process of registering an online e-commerce business in UAE, the process of starting a business involves several steps:
- Select the type of company;
- Choose jurisdiction (place of registration);
- Register a legal entity;
- Choose and rent an office.
- Get a license.
- Open a bank account.
1. Choosing the right type of a company
There are several available options here. You can register a limited liability company, a branch of a foreign parent company, a representative office, and some other types of companies. Depending on your plans and potential access to other markets, one or another option will be optimal. The most common types of companies in Dubai are a limited company, and a subsidiary, as they have an important set of advantages. Free zones offer different conditions and preferences for the business registered here.
2. The choice of a company registration place
There are over 20 free trade zones in Dubai itself, in addition, they are some in other Emirates: Abu Dhabi, Ras Al Khaimah, Ajman, etc. Besides, you must choose a place where to get a license. Dubai offers two options, the first is the registration of a company in the free zone and the second one is the registration of a company outside the free zones. Registering a company outside the free zones is a good solution if you plan to conduct business in the region (for such companies there are no restrictions on the importation and exportation of goods and no import/export fees). However, unlike companies in free zones, foreigners must find a local partner who will own 51% of the shares. This requirement is expected to be abolished in 2019.
In free zones, it is not permitted to trade outside the free zones, but the costs are lower.
Thus, when choosing a place of registration, it is necessary to consider all these factors.
3. Registration of the trading company name
Choosing the name of the online store is an important step because this name should be memorable. When registering, you will need to provide several alternatives in case the name is already used.
4. Choosing a physical office in Dubai
Although an online store has no premises, like a classic store, there should be legal address (office), as the Dubai authorities oblige e-commerce companies to have one.
5. License approval
After completing all the above points, it will take up to 7 days to obtain a license (depending on the registering authority).
6. Opening a bank account in the UAE
Any company requires a bank account, so you will need to open it. Local banks offer many good opportunities for opening an account, including for offshore companies.