Advantages of Opening a Company in IFZA free zone

Residents of the UAE are avid users of the internet. According to research conducted by Google, 91.9% population of the UAE have access to the internet. Taking into consideration favorable factors like tax environment, increased internet usage, etc an e-commerce business in Dubai is most considerable. To obtain an e-commerce license in Dubai, you will have to go through the following steps

Table of Contents

Deciding on the legal structure for your business

The first and foremost step involves deciding the legal structure of the business. In simpler terms whether your business is to be a Limited Liability Company (LLC), branch of a parent company, one-person company, representative office, etc. Branch offices and LLC formation come with a set of advantages.

You will be interested on: E-Commerce License- Dubai

Selecting your location

Selecting a location does not appropriately mean the place where you are about to set up your office, but the place from where you need to get your license. There are two types of zones in Dubai namely, Mainland and Free Zone. Setting a company or business in Mainland needs a local sponsor who owns 51% of the shares in the business while the remaining 49% is vested with you. Free Zones allow 100% ownership of your company. Both zones have their share of advantages and disadvantages. You need to weigh down all the factors and select the one suited to your business.

Registering a trading name

As your business is not going to have a physical store, select a name that is easy to remember. it is better to use the trade name as the domain name as it is easy to find the company online. The domain name should not resemble any other existing company’s domain name as this may lead to legal complications.

Applying for a license

After confirming the location, you will have to apply for an e-commerce license. License is issued by the Department of Economic Development and hence advisable to approach them first. A company set up in Mainland will be liable to pay around AED 10,000 to the Department of Economic Development for initial approval, name registration, and license issuance. A Free Zone company will have to acquire a license from the concerned free zone authorities. The type of license issued depends on the nature of your online business.

Applying for initial approval certificates

A NOC from the authority to start your e-commerce business in Dubai is the initial approval certificate. It is valid for six months and is non-renewable. An initial approval certificate can be applied at the same time as submitting their trade name approval application.

Drafting MOA and local service agent agreement

In case you select Mainland for your company setup, you will have to draft a Memorandum of Association (MOA) with the sponsor and submit to the DED. One can avail help from any legal firm for this, they will help you type out the memorandum which specifies the special arrangements and ownership percentage among all partners. Free Zone companies can skip this step.

Registering a physical office in Dubai

It is necessary to set up a physical office in Dubai as the authorities have made it mandatory to consider it as a legal entity.

Final Approval

On completion of all the above steps, you will be able to get a business license in 1-7 days depending on the authority.

Export/Import requirements

In order to receive your importers’ code, you will have to register with one of the ports and customs authorities. A 5% customs duty is imposed on imported goods. Companies under free zone need not have import duty as they have to sell their products and services within the free zone.

Opening of Corporate Bank Account

After a successful application for an e-commerce trade license, and establishing your business, you can open your corporate bank account. The process is simple and quick, all it needs is to select the bank of your choice.