29th June 2020
E-Commerce is the buzzword of the moment in the UAE as organisations move their businesses online and individuals startup new businesses to sell goods online as a direct result of Covid-19. But, do businesses need to update their existing trade licenses? Do individuals need an e-commerce license to sell goods online? Read on to find why you need an e-Commerce License and if you need to take any action based on your current circumstances.
In March 2020, a report in the Khaleej Times stated the UAE's e-commerce market is estimated to be worth nearly AED100 billion in 2022. This was even before the world was struck down by the Covid-19 pandemic, which turned consumers to online purchasing and got businesses to ramp up their e-commerce offerings and fulfillment.
Why you need an e-commerce license in the UAE
To sell your goods legally
To open a business bank account
To arrange payment gateways on your website or app
To instill consumer confidence in your business (in case a problem arises with a transaction, the consumer can go directly to your business or the relevant government department. Two guides are available for businesses to help understand trading regulations and your obligations as a trader - Blue Book and Commercial Compliance Manual)
To arrange relevant insurance
Online business activities in Abu Dhabi
If you are selling products, whether as an individual or a company, then having a business license to do so is a legal requirement. Back in December 2017, Abu Dhabi's Department of Economic Development (ADDED) announced two new trade license activities for the Emirate to specifically regulate online trading:
E-Commerce Through Websites
E-Commerce Through Social Media
These are not stand-alone business activities. Instead they allow your business to sell through websites and/or via social media channels. Depending upon how your business sells its products online will depend upon whether you need one or both of these licenses. Eg. if you are selling via Instagram, but don't have a website, it will only be necessary to have E-Commerce Through Social Media as an additional activity on your trade license; whereas if you were selling via a website AND social media channels, then both activities would need to be added onto your Abu Dhabi trade license. Each of these two activities costs AED3,000, so it you need both, you need to allow an extra AED6,000 in your budget.
It should be noted that your trade license should also include activities specially related to the products you are selling. This is a common misunderstanding when we speak to people wanting to set up a new trade license - they assume that as they are selling products through a website that E-Commerce Through Websites is sufficient for their business, but it isn't. For help setting up your E-Commerce business in Abu Dhabi and choosing the correct activities for your license, Gateway Group Of Companies can work with you.
Online business activities in Dubai
If you are selling goods on the mainland in Dubai (e.g. not in one of the free zones), it is necessary to have a trade license with trading activities relating to the products you are selling. These activities cover your business to operate in a commercial premise (e.g. a shop or warehouse) as well as online via websites, social media platforms or apps. It is not necessary to add any additional 'e-commerce' activity. Gateway Group can help you to set up your business to sell goods in Abu Dhabi.
Is Dubai's E-Trader license the same as an e-commerce license?
This is an excellent question as the name E-Trader License often causes confusion with e-commerce. The E-Trader License enables Emirati nationals and GCC nationals to sell products online, but those activities are not currently available for other nationalities. Gateway Group has published an article specifically about the E-Trader license to explain what you can do with this license and who it is suitable for.
Online business activities in UAE free zones
Generally, if you are selling goods in one of the UAE free zones, you will need to have a free zone license with trading activities relating to the products you are selling, as well as an additional e-commerce activity. Activities vary between free zones, so it is best to check in advance. Gateway Group can set up your free zone company, including helping you to identify the best free zone and activities for your circumstances.
What happens if you are selling without an e-commerce license?
Selling goods online in:
Abu Dhabi without the relevant trading and e-commerce activities on your trade license
Dubai without an the relevant trading activities on your trade license
Free Zones without the relevant trading and e-commerce activities on your free zone license
will result in fines and your business could be closed.
How Gateway Group can help you e-commerce business
If you are already operating in, Abu Dhabi, Dubai or one of the UAE free zones with a trade license and you are not sure if your license covers the goods you are selling or to sell online via apps, websites or social media apps, Gateway can check your license to give you peace of mind that you are fully covered.
If you are planning to set up a business in the UAE selling goods and want help to get the right trade license, Gateway can organize this for you.
Gateway is known for being 'reassuring honest' so you can be sure of getting the right trade license for your specific circumstances. We understand that selling goods is your expertise and that trade licenses can appear to be cumbersome, time consuming and distracting when you aren't sure, so our intention is to relieve that burden so you can focus on selling your products.
☎️ +971 600 567562
Written by Jenny Hunt, Founding Partner & CEO
Gateway Group of Companies, Abu Dhabi & Dubai UAE
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Gateway Group Of Companies
Have peace of mind when dealing with trade licenses in Abu Dhabi, Dubai or UAE free zones that you are getting the one most suitable for your circumstances and business activities. Avoid the hassle and uncertainty. Award-winning Gateway Group delivers a straightforward and personalized business setup for your unique situation and requirements. To establish your business in the UAE, Email us: Info@GatewayToUAE.com
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