The Future of E-Commerce Business Setup in UAE

What You Need To Know About E-Commerce Business Setup In UAE?

Written By Antima – 27th July’22

Digital age is the new normal and we are living in a time where everything has moved to the online platform. From groceries, apparel, food, travel to appliances, medicines, machines each and everything can now be ordered with just one click.

UAE pioneered the e-commerce industry in the Middle East and the entire GCC. This is because of the technological advancement in the country. People have been speding a lot of time on the internet and majorly prefer shopping from the comforts of their home.

A few decades ago, this was not the scenario. Online shopping and e-commerce were not as popular as they are now. As per recent studies, the market share for these e-commerce firms are rising drastically, not only in Dubai but the entire country.

Did you know?

B2B ecommerce sales have grown from USD 1.1tr in 2019 to USD 1.3tr in 2020. Ministry of Economy

Another important fcator that led to the rise of e-commerce in the UAE is the pandemic that hit the world in 2020. Since then, e-commerce has broken many records. Apparently, the amount spent on global E-commerce climbed to $3.8 trillion in 2017.

What is the future of e-commerce in the UAE?

UAE holds a strong future for e-commerce in the coming years, and this won’t be stopping anytime soon. If you are thinking to invest in an e-commerce business in the UAE, then this is the best time to do so. This is also supported by the fact that the UAE government is always on the path to bring new initiatives to make sure that expats investing in e-commerce reap benefits.

An added advantage that decides the future of e-commerce in the Emirates is the vibrant location and thriving economy it showcases. In addition, Dubai which is an important business hub in the UAE supports many e-commerce companies. It serves as one of the leading and most technically sound infrastructures in the world.

Did you know?

The GCC ecommerce market is expected to grow from USD 8.3B to USD 28.5B by 2022 driven by KSA and UAE. Ministry of Economy

Why you must apply for an e-commerce license in the UAE?

Since the global pandemic struck the entire world, people are now considering buying things online. It is very clear now that this industry knows no limits and will continue to boom across all major commodities. Social lockdowns, the ease to get everything delivered at home has made it easier for the users to shop.

For expats, and international start-ups looking to start or expand their e-commerce business to the next level, this is the best time to invest in the UAE. Speaking of the UAE market trends in the e-commerce domain, the graph is contiously going upwards. Once you start a e-commerce business in the UAE, you are in a good position to completely take advantage of the e-commerce market.

What is the e-commerce license in the UAE?

Before starting an e-commerce company in the UAE, you need to have a license with you. This license is necesssary to conduct an e-commerce business in the country. It is a legal document that states that you are allowed to operate lawfully in the country. The license is issued by the Department of Economic Development (DED).

What are the major types of e-commerce license in the UAE?

1. E-trader license

The E-trader license is for people who offer services in the e-commerce sector. The licnese is valid for people who live in UAE and the GCC. With this licence, you are not permitted to open a store or a physical office.

2. Portal license

Portal license can be obtained by the expats and the non-residents of the UAE. With this license, you are allowed to commence an online business in the Emirates. In addition you can if you are selling products, services on your website, this license is for you.

3. Virtual company license

A virtual compnay license is useful for those who are conducting their e-commerce business from the other countries. However, with this license, you can only deal with advertising, designing, printing, and computer programming and related operations.

How can you get an e-commerce license in the UAE?

1. Select your business jurisdiction

Start with selecting the business jurisdiction for your business. The major choices are mainland, and free zone, both having their distinct set of rules.

2. Decide on the legal structure

UAE offers four types of legal structures for a company-

  • Sole Proprietorship

  • Limited Liability Companies

  • General Partnership

  • Representative branch office

3. Pick a company name

Naming your business is a vital part of the process. You can choose a name that defines your business. In addition, the name chosen by you must abide by all the rules decided by the concerned authorities.

4. Apply for the license

Once you have a name, and all the required paperwork ready, apply for the license. The license is issued by Department of Economic Development (DED).

5. Memorandum of Association (MoA)

In case you choose to go for a mainland jurisdiction, then this step is required, otherwise it can be skipped for a free zone. Draft and submit a Memorandum of Association to the DED on behalf of your company and the sponsor, partner, or investor.

6. Set up an office space

Having a physical office set up in the UAE is essential for a mainland company. Choose and register your physical office in the UAE, registered in accordance with legal requirements.

7. Import & export requirments

Having an e-commerce license needs you to register with a port or customs authority. The UAE government will apply a 5% customs duty on the products. The free zone’s e-commerce businesses are subject to import duty payments.

8. Open a bank account

Finally, open a business bank account in any of the leading banks of the country. The procedure is simple and quick. Pick a good corporate bank and open an account in accordance with the needs of your company.

What are the documents required for the e-commerce license?

  • Copy of passports for all shareholders.

  • Copy of visas for all shareholders.

  • An Emirate ID

  • A No Objection Certificate (NOC).

  • An draft of the MOA (Memorandum of Association).

Which are the most preffered locations to set up an e-commerce business in the UAE?

The most prefeered areas where you can choose to set your e-commerce business are-

  • Sharjah Media City (SHAMS)
  • Ras Al Khaimah Economic Zone
  • Dubai Multi Commodities Centre (DMCC)
  • Dubai Internet City
  • Dubai South

What are the major challanges involved in e-commerce business setup?

1. Logistics issues

The region’s massive trade obstacles make it difficult to deliver goods via logistics and online shops. These barriers might affect small e-commerce players because of high tariff rates, changing laws, and volatile currency exchange rates.

2. Payment gateways and logistics

Due to a lack of trust in online payment systems and internet fraud, users made 60-70% of their e-commerce transactions via the cash on delivery, according to an A.T. Kearney study.

3. The VAT structure

The implementation of VAT in the UAE has also posed a challenge to the e-commerce sector. Because most online transactions are dispatched from outside the country, the tax will be applicable not just to products but also to services.

How can RadiantBizz assist you with setting up a e-commerce business in the UAE?

RadiantBiz is the leading name when it comes to setting up a thriving e-commerce buisness in the UAE. We are trsusted by numerous international clients who have worked with the experts at the company.

Our team understands that each business has specific needs that are different from one another. For this reason, RadiantBiz assists you with establishing your own e-commerce venture in the Emirates. We will take care of all the license approvals, office set up, VAT, and all that comes under the umbrella of an e-commerce business formation.

We are familiar with the latest industry laws and all applicable rules. Hence, we can help you navigate the risks, and difficulties that come with the process. An e-commerce business setup in the UAE becomes easy with a team of proffesionals at RadiantBiz.

FAQs

What is the estimated cost for the e-commerce license in the UAE?

The estimated cost for a e-commerce license in the UAE is approx 6,000 to 20,000 AED. In addition, you can use the cost calculator from RadiantBiz to get an instant estimate of the expenses.

Do you need to have a warehouse for a e-commerce business in the UAE?

Yes, a warehouse is an added advantage for your e-commerce business. Warehouses are needed by the e-commerce industry to hold anything from raw materials to final products that are to be delivered.

How many types of e-commerce licenses are there in the UAE?

There are three types of e-commerce license in the UAE namely, E-trader, portal, virtual company.

Do you need a bank account for e-commerce business setup?

Yes, like every other business in the UAE, an e-commerce business also requires a corporate bank account.

Is starting an e-commerce business easy in the UAE?

Yes, starting an ecom business in the Emirates is not only easy but very beneficial, given the statistics above.

How much time does it take to obtain the e-commerce license?

You will get the license in a few days or a week. However, When you work with RadiantBiz license approvals become quick, and you can get it in just a day.

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