Steps to start an online business in the UAE
The internet has made life simple and business easier. You can now conveniently expand your brick-and-mortar store without spending additional money. You can also create a business from scratch, provided the idea is worth investing in.
From the ideation stage to the execution stage, you can conveniently find every piece of information about how to start an online business in the UAE.
The UAE government has made it reasonably simple for anyone to start an online business in the Emirates. Whether you are exploring ways of starting an online business in Dubai or anywhere in the Emirates, you will get all the information in this article.
Before discovering how to start an online business in the UAE, you need to know that an online business is almost the same as an offline one. You need to have a strong business idea, a platform to help you carry out your business, a license from the UAE government, and customers.
The only difference with the online mode is that you get convenience, as you can carry out the online business from anywhere in the Emirates or even abroad. To make the deal sweeter, the UAE government extends the facility of a 0% tax to eligible firms conducting business in the UAE.
Are you into e-trading or e-commerce?
In the UAE, online businesses are of two types – e-trading and e-commerce. Before knowing how to start an online business in the UAE, you should know the category you belong, since the rules and regulations are different for both.
If you are into e-commerce, you procure goods or services and sell them through online channels. In contrast, an e-trader sells goods or services of their own company through online media.
Do you want to conduct business as a mainland company or a free zone company?
You can register a company in the UAE in two ways – mainland and free zone.
The scope and reach of a mainland company are bigger than a free zone company. When you register as a mainland company, you can carry out the business anywhere in the UAE, including a free zone, and outside UAE. If you want to register as a mainland company, you must include a UAE national in your business.
As a mainland business, you can register in two ways –
In an LLC, a foreign investor must have no more than 49% share, and a UAE national needs to have no less than 51% share. Hence, the majority stakeholder will be a UAE national. By registering as an LLC, you can sell all your products or services anywhere within the UAE’s jurisdiction. Additionally, you can import goods or services and sell them in the country. An LLC is treated as a local company and taxed accordingly. Some recent changes in the Foreign Direct Investment (FDI) law also enable some selective LLC companies to have 100% ownership of the company.
2. Foreign branch
If you are from outside UAE and do not want a UAE national to have the controlling stake in your company, you can apply as a foreign branch. In this case, you will have 100% shareholding in the company. However, you have to appoint a UAE national or a company as the National Service Agent (NSA).
Despite the benefit of 100% ownership, there are a few limitations of registering as a foreign branch. Firstly, the Ministry of Economy may ask you to maintain a bank deposit of AED 50,000 with the Ministry as long as the branch stays in operation. Secondly, government fees may be higher than an LLC company. Thirdly, a foreign branch cannot import goods for the purpose of trading. Fourthly, you may be taxed twice – one by the UAE administration, and the second by the home country.
If you are looking for a cost-effective option for starting an online business in Dubai and the Emirates, you can apply for a free zone license. With a free zone license, you can get some fantastic benefits, such as tax and fee exemption (except a 5% VAT) and 100% shareholding in the business.
Additionally, you do not need to pay customs duty on the goods you import. However, you can only sell the goods or services in the free zone where you are registered. If you want to sell your goods beyond the free zone, i.e., in mainland UAE, you need to contact an onshore agent with a mainland trading license.
The agent will charge you for delivering the goods or services in mainland UAE. You can get several Free Zone authorities in the UAE, offering various licenses and packages for setting up an online business in Dubai and the Emirates.
Hence, to choose the right option between mainland and free zone, you must analyse your online business’s needs. While a mainland license will enable you to trade in the whole of the UAE, a free zone license allows you to access the area that comes under the jurisdiction of the free zone authority.
When your business size is significant, and you want to cater to the entire country, applying for a mainland license would be better. And if your business is at a nascent stage, and you want to gauge consumer response before investing further, consider opting for a free zone license. For instance, most e-commerce companies prefer opening their online businesses in free zones such as Dubai Internet City, Dubai Science City, and Dubai Media City.
How to start an online business in the UAE
Whether it is for starting an online business in the free zones of Dubai or mainland UAE, you need to follow a few steps to get the right thrust.
The following are the steps you need to follow:
1. Sort out the legal aspects
Be it mainland UAE or the many different free zones within the UAE, every authority might have its specific requirements, which as a business person, you must be aware of. You must shape up the legal structure of your company according to the guidelines.
2. Get the appropriate license
There are various license types for setting up an online business in Dubai or other parts of the UAE. If you are want to get a mainland license, you need to contact the Department of Economic Development or DED. For setting up an online business in the free zones of Dubai or other places, you have to contact the respective authority.
3. Office space
Although your plan is to start an online business, you may still require an office space that will function as your registered address. The rules are different for free zones and mainland. For instance, if you want to apply for a mainland license, you may need to show an office space of 14sqm (200sqft in Dubai). However, you might not require an office space while applying for a free zone license.
4. Initial approval certificate
The Initial Approval Certificate is a mandatory requirement for starting an online business in Dubai and the Emirates. The issuing authority may vary depending on the category.
5. Create a website
You may also need to create a website where your customers and vendors can meet and interact. The first step is to select a domain, design the webpages, and launch the website. Ensure that you include a secured payment gateway for the smooth processing of funds.
6. Inform the customs department
If your business involves the import and export of goods, it is better to inform the customs and ports department. Registering your business with customs and ports will increase the speed of the import and export of consignments.
7. Open a bank account
As a final step, you have to open a corporate bank account in a UAE-based bank. Such an account will enable your vendors and customers to send money.
Get started with Shuraa
The most straightforward answer to the question, ‘How to start an online business in the UAE?’ is Shuraa. With a legacy of over two decades, the company knows the right way to set your online business in the quickest possible time.
Be it company registration or licensing, sponsorship or visa services, or value-added service like recruitment, advertising, and more, Shuraa’s team of public relations officers (PROs) are ready with instant solutions to simplify the process of starting an online business in Dubai and the Emirates.
For setting up an online business in Dubai or other parts of UAE, send a WhatsApp message on +971 50 777 5554, write to [email protected], or call +971 44081900 to start your online business in no time.