Topic Summary
Know Which License Type You Need
A commercial license covers trade in physical goods, while professional licenses apply to services and industrial licenses cover manufacturing. Choosing the wrong type can trigger fines, cancellation, and costly re-registration.
Confirm Your Activity Code Before Applying
Your activity code directly determines which license you receive, so browsing the approved list before you commit is essential. Getting it wrong delays your setup and may require a full reapplication.
Decide Between Free Zone and Mainland Setup
Free zone licenses like those at Dubai South offer 100% foreign ownership, flexi-desk options, and setup in as few as 3 business days, but UAE market sales require a local distributor. Mainland licenses through the DET give direct access to all UAE customers but typically involve longer setup times and a physical office lease.
Understand the Corporate Tax Implications
The UAE applies a 9% corporate tax on taxable income above AED 375,000 under Federal Decree-Law No. 47 of 2022. Free zone businesses may qualify for a 0% rate if they meet Qualifying Free Zone Person conditions.
Prepare Your Documents in Advance
You will need a passport copy, visa page, passport photo, and proof of address to complete your application. Having these ready before you start can significantly speed up the process.
Use Your License to Open a Corporate Bank Account
Once issued, your commercial license serves as legal proof of registration and is required to open a UAE corporate bank account. This step is critical for operating and receiving payments as a legitimate business.
Compare Costs Before You Commit
Free zone and mainland licenses carry different fee structures covering registration, name reservation, office requirements, and visa packages. Using a cost calculator to compare both options before applying helps avoid unexpected expenses.
In 2026, Dubai is home to more than 570,000 registered businesses (u.ae, 2024). The commercial license is the most widely held license type in the emirate. It covers retail, trading, import-export, and distribution. The UAE introduced its corporate tax framework under Federal Decree-Law No. 47 of 2022, with a 9% rate on taxable income above AED 375,000 (Federal Tax Authority, 2024). A free zone commercial license at Dubai South Business Hub can be issued in as few as 3 business days.
This guide explains what a commercial license in Dubai is, who needs one, what it costs, and how to stay compliant once you have it.
What Is a Commercial License in Dubai and Why It Matters
A commercial license in Dubai is an official permit that lets a company buy, sell, import, export, or distribute goods. Mainland licenses are issued by the Dubai Department of Economy and Tourism (DET). Free zone licenses are issued by the relevant free zone authority. Without one, trading activity is not legal.
Commercial vs. Professional vs. Industrial License
Commercial license: covers trade in physical goods
Professional license: covers services and consultancy (see our professional license guide)
Industrial license: covers manufacturing and production
Choosing the wrong type delays your setup and can trigger a cancellation. Confirm your activity code before you apply.
Who Needs a Commercial License in Dubai
Any business that trades in physical goods needs a commercial license. This includes importers, exporters, distributors, wholesalers, retailers, and general trading companies.
Business Types That Require a Commercial License
Import and export companies
Wholesale and retail distributors
General trading companies
E-commerce businesses selling physical goods
Commodity traders and re-exporters
Check the full list of business activities to confirm your category.
When You Do Not Need a Commercial License
Pure service or consultancy businesses use a professional license. Manufacturers need an industrial license. Getting the activity code wrong leads to fines and re-registration costs.
How to Get a Commercial License in Dubai
Getting a commercial license takes five main steps. In a free zone like Dubai South, the process can take as few as 3 business days.
Free Zone vs. Mainland: Key Differences
Feature | Free Zone (DSBH) | Mainland (DET) |
|---|---|---|
Foreign ownership | 100%, no local sponsor | 100% in most sectors; some restricted activities require a local partner |
UAE market access | UAE sales require a local distributor or mainland branch | Direct access to all UAE customers |
Setup time | As few as 3 business days; fully remote | Typically longer; in-person steps may be required |
Office requirement | Flexi-desk options available | Physical office lease required |
Corporate tax | 0% if Qualifying Free Zone Person conditions are met; 9% otherwise | 9% on taxable income above AED 375,000 |
Step 1: Choose Your Activity and License Type
Your activity code determines which license type you receive. Pick the wrong one and you may need to cancel and reapply. Browse approved free zone activity codes before you commit.
Step 2: Book Your Trade Name and Submit Paperwork
Check name availability using the company name search
Book your trade name via the DET or DSBH portal
Prepare your documents: passport copy, visa page, photo, and proof of address
Submit and pay through the relevant portal
Step 3: Collect Your License and Open a Bank Account
Your commercial license is your legal proof of registration. Use it to open a UAE corporate bank account. You can also use our banking and taxation services for support. Use the cost calculator to compare free zone and mainland costs before you decide.
Commercial License Costs in Dubai
Costs vary by setup type. A free zone license at Dubai South can be issued within days. Mainland licenses carry additional registration, name reservation, and office fees.
Cost factor | Free Zone (DSBH) | Mainland (DET) |
|---|---|---|
License fee | License plus visa and office package (use the cost calculator) | DET registration, trade name, and initial approval fees |
Office | Flexi-desk available – no mandatory lease | Physical office lease required |
Corporate tax | 0% if FTA conditions met; 9% otherwise | 9% on taxable income above AED 375,000 |
Hidden Costs to Plan For
Annual renewal fee
Visa costs per investor or employee
VAT registration once turnover hits AED 375,000 per year
Corporate tax registration once your company exists
Missing the VAT registration deadline costs AED 10,000 in penalties (Federal Tax Authority).
Tax and Compliance After You Get Your License
Once you hold a commercial license, you must:
Register for corporate tax with the Federal Tax Authority
Register for VAT if taxable turnover exceeds AED 375,000 per year
Keep financial records for at least 7 years
Renew your license annually
Free zone companies can pay 0% corporate tax if they meet the Qualifying Free Zone Person conditions. Both mainland and free zone companies must register for VAT and file returns.
Key Benefits of a Commercial License in Dubai
Legal right to import, export, and distribute goods
Ability to sign contracts and open corporate bank accounts
Access to Dubai's logistics network, including Al Maktoum Airport and Jebel Ali Port
Ability to sponsor employee and investor visas
Credibility with banks, suppliers, and customers
Dubai ranked 1st in MENA for ease of doing business (World Bank, 2020).
Common Mistakes to Avoid
Wrong activity code: Trading outside your licensed scope is a breach and can trigger cancellation
Wrong setup location: Free zone companies need a local distributor to sell directly in the UAE
Missing VAT registration: AED 10,000 fine with no grace period
Letting your license lapse: A lapsed license suspends your right to trade
Before you apply, browse the trading business license guide to confirm your activity codes are correct.
References
u.ae (u.ae)
Federal Tax Authority (tax.gov.ae)
World Bank (worldbank.org)
Frequently Asked Questions
