The Difference Between Professional and Сommercial License in the UAE

A business license is a vital component for entrepreneurs and investors looking to set up their businesses in the UAE. Each license in the country is tailored to suit different business activities and ownership setups and opens doors to the varied economic scene. Is it essential for entrepreneurs to get an accurate license that matches their business’s nature. Therefore, it is important for them to understand the difference between different business licenses available, especially the Professional vs Commercial License in UAE.

Through this master guide, we will walk you through the intricacies of these licenses, their key advantages, core activities, and legal requirements, helping you make a choice aligned with your business objectives.

What is a UAE Commercial in License?

The commercial license in UAE is a legal authorization granted to businesses engaged in trading activities, including import and export activities, within the legal and economic framework of the nation. It serves as a legal permit to perform import, export, wholesale, retail, or distribution functions.

Advantages of the UAE Commercial License

Here are the benefits of obtaining a commercial license in UAE:

• 100% Foreign Ownership: Full foreign ownership of businesses in free zones, which gives business owners full control over their operations, thereby eliminating the need for a local partner.
• Tax Advantages: Minimal tax liabilities with no personal income and low corporate taxes.
• Global Reach: A strategic gateway to the Middle East, Africa, and Asia, facilitating access to a vast network of trade partners and a diverse and lucrative market.
• Simplified Import & Export: Streamlined import and export procedures, enabling efficient international trade operations for businesses.
• Multiple Business Activities: Up to ten allied commercial activities can be covered under a single license, which provides increased operational flexibility and allows business owners to diversify their offerings.
• Repatriation of Profits: Free repatriation of profits to the home country, ensuring a smooth flow of funds.
• Access to Business Support: Dedicated business support services in several free zones, including assistance with company formation, office space solutions, and networking opportunities.
• Access to Local and International Markets: Freedom to trade both locally and internationally, and expand market reach.
• Prestige and Credibility: Enhance the prestige and credibility of the company, especially for trading and commercial activities.
• Warehouse and Office Facilities: Availability of warehousing and office facilities, particularly in free zones.
• Government Support: Strong government support through incentives and business-friendly regulations.

Major Activities Covered Under a UAE Commercial License

The core commercial license activities include the following:-

• General Trading: Importing, exporting, and distributing a variety of items.
• Electronics Trading: Smartphones, laptops, home appliances, and electronic accessories.
• Software Trading: Off-the-shelf solutions, custom-developed applications, and distributing software through physical media or digital downloads.
• Automotive Trading: Vehicles, spare parts, automotive accessories, new and used car dealerships, and selling car parts and accessories.
• Furniture and Home Goods: Furniture, home decor, indoor and outdoor furniture, home improvement stores, and other household items.
• Clothing and Apparel: Selling clothing, shoes, and accessories through physical stores or online platforms, and businesses involved in the import and export of fashion items.
• Food and Beverage Trading: Food products, beverages, and related goods, including grocery stores, specialty food shops, and businesses involved in importing and exporting food items.

What is a Professional License in UAE?

A professional license in UAE is a formal authorization granted to individuals or companies that provide specialized services or operate based on expertise and qualifications within the UAE. It encompasses fields like consultancy, architecture, engineering, information technology, and healthcare.

Advantages of a Professional License in the UAE

Here are the benefits of applying for professional license in UAE:

• Focus on Expertise: A credential that highlights the qualifications and experience of the individual or company to potential clients, fostering trust and strengthening their professional reputation in the market.
• Simplified Business Setup: Faster and less complex licensing process that allows business owners to focus on building their business sooner.
• Freelancing Opportunities: Ideal for consultants, solopreneurs, and those seeking project-based work, allowing them to operate legally as freelancers within the country.
• 100% Foreign Ownership: Full ownership of the business for foreign entrepreneurs, granting them complete control over operations and decision-making.
• Lower Operational Costs: Lower setup and renewal fees than other business licenses in the UAE, making them a cost-effective option for solo entrepreneurs and service-based firms.
• Access to Skilled Workforce: Dubai attracts a diverse and talented pool of professionals. The Professional License allows you to tap into this talent pool and build a strong team for your service-oriented business.
• Corporate Bank Account: Ability to open a corporate bank account in the UAE, facilitating financial transactions and enhancing the credibility of operations.
• Visa Sponsorship: Liberty to sponsor employee visas, making it easier to attract and retain skilled expatriates.
• Flexibility in Office Locations: Operational flexibility from a variety of locations, including business centers and shared office spaces.
• No Minimum Capital Requirement: No requirements for a minimum capital for setting up a professional company.

Major activities covered under a UAE Professional License

The specific professions covered under this license include:-

• Architecture and Engineering: Designing, planning, and constructing buildings and infrastructure, including architects, civil engineers, mechanical engineers, and structural engineers.
• Arts and Entertainment: Artists, performers, event organisers, and other creative professionals, including those involved in visual arts, music, theatre, dance, and event planning.
• Beauty and Personal Care: Beauticians, hairdressers, and spa therapists, including those specialising in wellness and fitness training.
• Consultancy Services: Business management, marketing, human resources, financial, and other specialised consultancy services.
• Educational Services: Educators, trainers, and academic consultants, including teachers, tutors, and educational advisors.
• Environmental Services: Environmental consultancy, waste management, and sustainability services, including environmental scientists, consultants, and auditors.
• Financial Services: Accountants, auditors, financial advisors, tax consultants, and professionals offering financial planning, investment advice, and auditing services.
• IT and Technology: IT consultants, software developers, system analysts, and cybersecurity experts, including professionals providing technical support and IT consultancy services.
• Legal Services: Lawyers, legal consultants, and notary publics.
• Media and Publishing: Journalists, editors, publishers, media consultants, and professionals involved in content creation, media production, and publishing.
• Medical and Health Services: Doctors, nurses, dentists, physiotherapists, and other healthcare professionals who meet the necessary medical standards and qualifications.
• Real Estate: Real estate agents, property managers, and real estate consultants, including professionals involved in property sales, leasing, and management.
• Research and Development: Scientists, researchers, and R&D consultants, including professionals working in various scientific and technological fields.
• Travel and Tourism: Tour operators, travel agents, and tourism consultants who are qualified to offer travel-related services and consultancy.

Key Differences Between Professional vs Commercial License in UAE

This table outlines the difference between Professional and Commercial License in the UAE:-

How to Obtain a Professional or Commercial License in UAE?

The business licensing is a simplified process that ensures a streamlined approach for entrepreneurs. The process to get the commercial license or a professional license is more or less the same. Here is a step-by-step guide:

• Define business activities and license type – The first step is identifying the primary business activities, such as consultancy or trading activities. This will help you select the appropriate license type between the professional vs Commercial License in UAE for your business.
• Prepare required documentation – The documentation process is straightforward. The business owners must submit essential documents, such as a copy of their passport, a business plan, and other supporting documents, based on the nature of their business, to ensure an efficient application process.
• Submit the application and pay the fees – Submit the license application along with the supporting documents, and pay the relevant fee, depending on the license type.
• Receive your license and begin operations – Once the application is approved, receive the business license and commence the operations legally.

Documents Required for the UAE Professional and Commercial License

Documents required for UAE Commercial license include:

• Application form
• Copies of the passports of shareholders
• A detailed business plan and activities
• Reference certificate of the financial statement
• No-objection certificate from the sponsor
• Letter of intent
• Notarized copy of registry identification form

Documents required for UAE professional license include:

• Application form
• Copies of passports of owners and all other partners
• Copy of the “Naturalization Book of Local Partners”
• No Objection certificate from the sponsor
• UID number of shareholders on a visit visa
• Proof of primary approval from the competent authority
• Ejari registration, a rental contract, and a trade name registration certificate
• A detailed description of the shared capital

Please note that documentation is subject to changes and may vary. You can consult our experts at Dubiz Business Setup for detailed assistance.

Tips to Decide between the UAE Professional and Commercial License

The choice between a Professional vs Commercial License in UAE depends on factors like the nature of the business, ownership preferences, and long-term business goals. Here’s a guide to help you make an informed choice between a Professional vs Commercial License in UAE –

1. Nature of Business Activities

• Professional License: This license is ideal for businesses involved in providing specialized services that rely on professional expertise, skills, or intellectual talent, such as consulting, accounting, IT services, legal services, medical services, etc.
• Commercial License: This is more appropriate for businesses engaged in trading activities, buying and selling goods, import/export, retail, real estate, or logistics.

2. Ownership Preferences

• Professional License: This permit can be beneficial for those who want to maintain full ownership and control over their business.
• Commercial License: This license traditionally requires a local sponsor (owning 51%) for regulated sectors in the mainland. However, under recent reforms, foreign owners can own 100% of their business in certain sectors and in Free zones.

3. Business Structure

• Professional License: Suitable for sole proprietorships, civil companies, single-owner LLCs, and businesses with fewer partners.
• Commercial License: Suitable for LLCs, branches of foreign companies, joint ventures, and businesses with multiple partners.

4. Cost Considerations

• Professional License: Suitable for startups and small businesses seeking lower initial setup and operating costs.
• Commercial License: Higher setup and operational costs, especially for trading and large-scale commercial activities.

5. Regulatory Requirements

• Professional License: Requires specific professional qualifications and approvals from relevant authorities, such as medical licenses, legal certifications, etc.
• Commercial License: Requires compliance with extensive regulatory requirements and financial record-keeping.

6. Market Reach and Expansion

• Professional License: Ideal for businesses that focus more on service delivery within specific sectors.
• Commercial License: Suitable for businesses looking for broader market reach, including local and international trade.

7. Flexibility and Office Space

• Professional License: Offers flexibility in terms of locations, including shared office spaces and business centers.
• Commercial License: Access to warehouse and office facilities, especially in free zones.

8. Strategic Goals

• Professional License: Focuses on professional services, reputation, and credibility.
• Commercial License: Focuses on trading, market expansion, and large-scale operations.

Conclusion

Thus, the choice between the Professional vs Commercial License in UAE revolves around the business model, growth aspirations, and preference for ownership structure. Whether you are into goods trading or offering specialised services, your choice of license must align with the regulatory compliance and your projected path for the company.

Get your business license with Dubiz

Getting the right license is the key to a successful business, but the process of obtaining a license can be tricky, which is why it is advisable to engage the services of a reliable business consultant at Dubiz. Through their in-depth knowledge of the UAE’s regulatory framework and licensing requirements, they will help you make the right decision and proceed with company formation smoothly.

Partner with Dubiz today!

📞 Call: +971 56 369 5485

💬 WhatsApp: +971563695485

📧 Email: info@dubiz.co

Frequently Asked Questions (FAQs)