E-Commerce License UAE - Why You Need One
29th June 2020, Updated 15th September 2023
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.
(Updated 15th September 2023)
The UAE has the 27th largest e-commerce market in the world, which is predicted to be worth $10.2 billion this year, according to eCommerceDB, making it even bigger than Saudi Arabia.
(Updated 15th September 2023)
For more info about UAE's E-Commerce market, check out our article: 8 Facts You Need To Know About E-Commerce In The UAE or watch our YouTube Shorts video: 8 Facts You Need To Know About E-Commerce In The UAE.
(Updated 15th September 2023)
According to EZDubai's E-Commerce Sector in the MENA region Third Edition, the e-commerce market in MENA* is expected to be worth $57 billion by 2026.
**MENA includes Algeria, Egypt, Iran, Israel, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, the KSA, Tunisia, and the UAE
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. There is a guide for businesses to help understand trading regulations and your obligations as a trader: 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, 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, they simply 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.
Your trade license (Updated 15 September 2023: trade licenses are now called economic licenses in Abu Dhabi) 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.
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.
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 to other expats.
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.
(Updated 15 September 2023)
Launched in 2021, Dubai CommerCity is a free zone dedicated to e-commerce. It is an e-commerce eco-system, set up with facilities to cater for each part of the supply chain, from importing goods to storage and delivery, as well as anciliary support services, including payment gateways, fulfilment and digital marketing.
(Updated 15 September 2023)
Located in Umm Ramool, next to Dubai International Airport, Dubai CommerCity is well positioned to provide short delivery times for UAE-based orders and regional shipments. Located within a domestic area, Dubai Commercity is classified as a bonded zone and has special arrangements in place for customs duties and import/export duties, e.g. shipments can arrive without paying duties and are kept in the bonded zone.
(Updated 15 September 2023)
Where to set up an e-commerce business in the UAE
Nowadays, there are numerous licenses suitable for setting up e-commerce businesses in the UAE. In addition to Dubai CommerCity, mentioned above, here are just a few additional license-types for you to consider:
EZDubai: A dedicated e-commerce free zone located within the Dubai South logistics zone. It is setup to license each element of the e-commerce supply chain with facilities for: e-fulfilment centres, last-mile centres, storage, return and repair centres and business offices.
Abu Dhabi Trader License: A mainland license in Abu Dhabi. The legal form of this license-type is an establishment for Emiratis and GCC nationals, which means they are the sole-owner; and, is a limited liability company (LLC) for UAE expats from other nationalities, and requires them to have an Emirati partner (local sponsor). Trader license holders are not required to have a commercial premise for the first two years - this is currently extended to three years.
E Trader License: A mainland license in Dubai. For e-commerce purposes, this license-type is suitable for Emiratis and GCC nationals only (it is available for other expat nationalities, but not for 'selling' activities). It is not possible to have a physical premise with this license.
What happens if you are selling online 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 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 of up to a hefty AED500,000 and your business could be closed.
(Updated 15 September 2023)
How Gateway Group can help your e-commerce business
Established businesses with an existing trade license: If you are not sure whether your existing license covers the goods you are selling, or to sell online via apps, websites or social media platforms, Gateway Group's team will happily check your license, free or charge, to give you peace of mind that you are fully-covered, send us a message.
New e-commerce businesses setting up in the UAE: Gateway Group can provide you with the following support services:
✅ Helping you to choose the best jurisdiction for your e-commerce business, based upon your specific requirements.
✅ Complete company formation services, so you get your trade license issued hassle-free, enabling you to focus on growing your business.
✅ Ancillary support services, including residence visas, business bank account opening, accounting, payroll etc.
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Written by Jenny Hunt
Founder, Gateway Group, Abu Dhabi & Dubai, United Arab Emirates
FORBES' Top 100 Most Influential Women in the Middle East
