Dubai’s booming economy makes it a top choice for entrepreneurs worldwide. Whether you’re researching how to open a company in the UAE or figuring out how to start a business in Dubai, one of the first steps is obtaining the right business license.
For many ventures, that means securing a commercial license in Dubai. In this guide, we’ll explain everything you need to know – in simple terms – to help you get started on the path to a successful Dubai business.
(At Corporate Business Services (CBS), we’ve helped countless entrepreneurs navigate the Dubai licensing process. Read on to learn the essentials – and see how our team can make the journey smoother.)
What Is a Commercial License in Dubai?
A commercial license in Dubai is an official permit that allows a company to engage in trading activities within Dubai and the UAE. In the UAE, any business must have a trade license to operate legally.
A commercial license is actually a subtype of the trade license, specifically intended for businesses that buy and sell goods – i.e. trading companies. This includes activities like importing and exporting products, wholesaling, retail trading, general trading of various goods, and related commercial activities.
In other words, if your business involves tangible products or merchandise, a commercial license is likely the appropriate business license in Dubai for you.
It’s important to note the terminology: people often use “trade license” and “commercial license” interchangeably. Essentially, a trade license is the broad category of license needed to do business, and a commercial license is one of the main types of trade licenses (the others being professional and industrial).
So, when someone mentions needing a trading license in Dubai, they usually mean a commercial trade license that permits trading of goods. For example, a General Trading License – which allows a company to trade in a wide range of goods – is a popular form of commercial license in Dubai.
Benefits of Getting a Commercial License in Dubai
Choosing a commercial license comes with several key advantages for entrepreneurs:
- Legal Compliance and Credibility: A commercial license makes your company a legally recognized entity in Dubai.
This not only keeps you compliant with UAE law, but also enhances your credibility. Clients, suppliers, and banks will view your business as legitimate and trustworthy when you have the proper license.
- Wide Scope of Business Activities: A major benefit of a commercial license is flexibility.
Under one commercial license, you can conduct multiple related trading activities – often up to ten different products or lines of business under a single license.
The UAE’s authorities offer more than 2,000 possible economic activities to choose from, and you can include more than one on your license as long as they are compatible.
This means, for example, you could import electronics and furniture under one company if you list both activities.
- 100% Foreign Ownership: Historically, international entrepreneurs needed a local UAE national “sponsor” to own 51% of a mainland company.
However, recent reforms have annulled the local shareholding requirement for most activities. Now, foreign investors can often enjoy full (100%) ownership of their Dubai mainland companies, just as they do in free zones.
This is a huge advantage – it means you retain full control and equity in your business when obtaining a commercial license on the mainland, without the need to give a majority stake to a local partner (except in a few strategic sectors).
- Access to UAE and Global Markets: With a Dubai commercial license, you can tap into the lucrative local market and beyond.
Dubai is a global trade hub – a strategic gateway between East and West. A commercial license lets you import and export through Dubai’s world-class ports and airports, sell products in the local UAE market, and re-export goods internationally with ease.
You also can participate in trade shows, open retail stores or warehouses, and generally operate with the full support of Dubai’s pro-business infrastructure.
- Tax Benefits and Incentives: The UAE is known for its business-friendly taxation. Dubai imposes no corporate tax on most businesses and no income tax on individuals, aside from recently introduced corporate tax for larger companies (and a 5% VAT on goods/services).
With a commercial license, you benefit from this low-tax environment. Additionally, if you set up in a free zone, you often get exemptions like 0% corporate tax for a certain period, customs duty waivers, and easier repatriation of profits.
Even on the mainland, taxes are minimal compared to many other countries, which helps maximize your business’s profitability.
Mainland vs. Free Zone: Where Should You Set Up?
One of the biggest decisions when starting a business in Dubai is choosing where to license your company – on the mainland or in a free zone.
This choice will impact your ownership structure, the scope of your business activities, and how you can operate.
Business Setup in Dubai Mainland:
Setting up on the mainland means your license is issued by Dubai’s Department of Economy and Tourism (DET, formerly DED) and your business can operate anywhere within Dubai and across the UAE.
The major advantage of a mainland commercial license is market freedom – your company can trade directly with the local market (other mainland companies and consumers) without restrictions.
You can also take on government contracts and expand branches throughout the UAE. Essentially, a mainland company is free to do business anywhere in the UAE or abroad.
Thanks to the recent law changes, mainland businesses can now often be 100% foreign-owned, removing the old requirement of a 51% local Emirati shareholder for most trading businesses. However, you are still required to have a physical office space on the mainland (at least a small office or shop with a tenancy contract registered via Ejari in Dubai).
Mainland companies also must comply with UAE labor laws (for hiring employees) and will fall under any new corporate tax regulations.
If your goal is to serve customers throughout Dubai/UAE or open a storefront in the city, a mainland commercial license is usually the way to go.
Free Zone Business Setup in Dubai:
Free zones are special economic areas in the UAE designed to attract foreign investment. Each free zone is a separate jurisdiction with its own free zone authority that issues licenses.
Dubai has over 30 free zones (such as JAFZA, DMCC, IFZA, Dubai South, etc.), and there are many others across the UAE. A free zone commercial license offers benefits like 100% foreign ownership (guaranteed), no requirement for a local sponsor or agent, often simplified setup procedures, and exemptions from customs duties within the free zone.
Free zones are also known for sector-specific advantages – for example, a media free zone for media companies, or a commodities free zone for trading gold and diamonds.
The main limitation of a free zone company is that it cannot freely do business in the UAE mainland. If a free zone company wants to sell products to the Dubai/UAE market outside its free zone, it generally must go through a locally appointed distributor or agent and pay a 5% customs duty for importing goods into the mainland.
In other words, a free zone commercial license is excellent if your business is primarily export-oriented or online (with customers outside the UAE), but it’s not ideal if the bulk of your trade is within Dubai itself.
“A free zone company cannot operate in non-free zone areas (mainland) without a local agent, whereas a mainland company is free to trade anywhere in the UAE without such limitations”.
If you’re unsure, our CBS consultants can help weigh the pros and cons based on your specific business model and growth plans.
Steps to Obtain a Commercial License in Dubai
Getting your commercial license might seem complex, but it’s a very straightforward process if you tackle it step by step.
Here’s how to go from an idea to a fully licensed company:
Step 1: Determine Your Business Activity and Legal Structure
Start by deciding what exactly your business will do. The Dubai authority (DET) has an official list of permitted activities – from trading in electronics to importing textiles to general trading.
You need to specify your primary activity (or activities) that your company will engage in, as this determines the type of license and any special approvals required. Along with the activity, choose your legal structure.
Common structures for a trading business are a Limited Liability Company (LLC) (the most typical for a mainland company), or a Free Zone Company if you opt for a free zone. You could also consider a sole proprietorship or branch office, but an LLC is often preferred for trading since it allows multiple shareholders and full company status.
Your legal structure will affect requirements like minimum capital, number of shareholders, and liability, so choose one that fits your needs.
(If you work with CBS, we’ll help you identify the optimal structure – e.g., LLC vs. free zone entity – based on ownership, visa needs, and future plans.)
Step 2: Choose the Jurisdiction (Mainland or Free Zone)
As discussed above, you need to decide where to set up. If you choose Dubai Mainland, your licensing will go through Dubai’s DET, and you’ll need to rent an office in Dubai.
If you choose a Free Zone, you will apply through that specific free zone’s authority (for example, DMCC if setting up in Jumeirah Lakes Towers Free Zone). This decision affects the rules you’ll follow.
At this stage, also consider which free zone if you go that route – different free zones have different costs and specialties (for instance, Dubai Multi Commodities Centre for trading gold, Dubai Airport Free Zone for logistics, etc.).
Location can impact your fees, the ease of obtaining visas, and where you can operate, so take the time to pick the right option for your business plan.
Step 3: Reserve a Trade Name and Obtain Initial Approval
Next, you will choose a company name and get it approved. Dubai has specific naming rules – the name should not violate public morals, not duplicate an existing company name, and it must reflect the nature of the business to some extent.
You also need to append the legal structure (e.g., “XYZ Trading LLC”). You can propose a few names in case some are taken or rejected. Once a name is approved, it gets reserved for you and you’ll pay a small fee for trade name reservation.
After the name, you’ll apply for Initial Approval from the authorities. This is essentially a green light to proceed with the company setup – the government checks that it has no objection to you starting this business.
Initial approval is usually quick for standard trading activities. (If your chosen activity is sensitive or regulated – say, pharmaceuticals or security equipment – you might need special external approvals at this stage from the relevant ministry, but most common trading activities don’t require this.)
Initial approval from DET indicates you can move on to the next steps, but note it’s not the final license yet, so you can’t start trading until you finish all steps.
At this stage, if you are a foreigner outside the UAE, you might also need to get a pre-approval from immigration (GDRFA) to ensure you’re allowed to establish a company, which is usually handled as a formality.
Step 4: Prepare the Required Documents and Paperwork
With initial approval in hand, it’s time to compile your documentation for the license application. Key documents typically include:
- Shareholder passport copies.
- A Memorandum of Association (MoA) if needed (for an LLC, the MoA outlines the company structure and is signed by all partners.
- A leasing agreement for your office premises. Every company in Dubai must have a physical address, so you will need to secure a tenancy contract (for mainland, it must be registered via Ejari) for an office or warehouse space.
Free zone companies often offer flexible desk packages, but you’ll still have an office space allocation.
You’ll also fill out the license application form and any supplementary forms required by the authority.
Additional documents can include: a No Objection Certificate (NOC) from a current sponsor (if a resident visa holder is a shareholder and their visa sponsor needs to approve their new business), passport-sized photos, and in some cases, a business plan or reference letters (certain free zones ask for a brief business plan for evaluation).
Our team at CBS specializes in handling this paperwork – we ensure all forms are correctly filled and all required documents are submitted to avoid any delays or rejections.
Step 5: Final Submission – Pay Fees and Get Your License
Now comes the final step: submit all the documents to the relevant authority and pay the required fees.
The fees you pay at this stage include the license fee itself and various administrative fees (for name reservation, initial approval, registration, etc.).
If all is in order, the government will issue your commercial license within a short time. In many cases, once you’ve reached this final submission, the license can be granted within a week or two.
In fact, the process is so streamlined now that, for straightforward cases, approvals might even be completed in a matter of days.
When your license is ready, you will receive a certificate of the commercial license. Congratulations – your company is officially established!
Along with the license, you typically get or can then obtain your company’s establishment card and can proceed to related tasks like opening a company bank account and applying for residence visas for you and your employees.
Keep in mind that the commercial license needs to be renewed annually by paying the renewal fee and leasing a valid office for each year.
By following these steps carefully – or partnering with business setup professionals who handle the heavy lifting – you can navigate the Dubai company formation process with relative ease.
At CBS, we guide you through each of these steps, from initial paperwork to the moment you have your trade license in hand, ensuring a stress-free experience.
How Much Does a Commercial License Cost in Dubai?
Costs and fees are a major consideration for any new business. The total cost of obtaining a commercial license in Dubai can vary widely depending on a few factors, including whether you choose mainland or a free zone, the specific business activity, the number of visas you need, and which free zone (if applicable) you select.
In Dubai mainland, a standard commercial license with one activity and a small office typically costs somewhere in the range of AED 15,000 to AED 30,000 (approximately USD 4,000–8,200) for the first year.
This would cover the government fees for registration and licensing. This figure includes various components such as the initial approval, trade name reservation, license issuance fee, and usually the market fees levied by the Dubai municipality, but not the cost of renting an office.
In the free zones, costs can be quite competitive. Some free zones offer startup packages that include the license fee, a flexi-desk (shared office facility), and even a visa or two, for a bundled price.
These packages can start from as low as roughly AED 12,500 in some smaller free zones. On the higher end, a free zone license in a premium free zone or with multiple visas could cost AED 30,000 or more.
Generally, free zone commercial licenses tend to start at a lower base price than mainland, because you might not need to rent a full office (the included flexi-desk suffices) and there are often promotions to attract new businesses.
Overall, a ballpark range of AED 10,000 to AED 50,000 covers most typical scenarios for obtaining a standard commercial license in Dubaimeydanfz.ae. Simpler setups (single-owner, single activity in a free zone) fall at the lower end, while more complex setups (multi-partner LLC on mainland with larger offices and many visas) trend toward the higher end. It’s wise to budget in this range for your first year costs. Also note that renewal fees each year will be required and are usually similar to the initial license fee (minus one-time charges like name reservation).
Because figuring out the exact cost can get complicated, many business owners opt to consult with a setup specialist. We at CBS provide a transparent cost breakdown before you start, so you know exactly what you’ll pay, with no hidden fees.
Starting Your Business with CBS: Smooth Setup, Guaranteed
Setting up a business in a foreign country can be daunting – but you don’t have to go it alone. Corporate Business Services (CBS) is here to make the process of obtaining your business registration in Dubai utterly seamless.
As a leading business setup consultancy in the UAE, we have years of experience, and a team of experts dedicated to helping entrepreneurs like you succeed.
How can we help you? From the moment you decide to establish your company, CBS provides end-to-end support.
We will consult with you on the best license and setup (mainland vs free zone, appropriate legal structure, etc.), handle all the paperwork and approvals on your behalf, and coordinate with government departments to secure your license quickly.
Our professionals will prepare your applications, review all documents for accuracy, and even assist in arranging necessities like local attestations or translations. Essentially, we take care of the heavy lifting and bureaucratic steps, while you focus on planning your business strategy.
With CBS, you’ll also gain the advantage of local insight – we stay up to date with the latest regulations and opportunities. We pride ourselves on transparency, efficiency, and personalized service.
Every client’s situation is unique, so we tailor our solutions to fit your goals. And it’s not just about getting the initial license; we continue to support you with PRO services (for visa processing, license renewals, and any changes or updates you need as your business grows).
Ready to take the next step? Get in touch with CBS for a free consultation. Our friendly business advisors will walk you through the requirements and answer any questions you have about starting a business in Dubai.
