Starting your business in Dubai often begins with applying for a trade license. There are many business licenses in Dubai that you can apply for; however, the most common ones are: general trade, commercial, industrial, professional, tourism, and e-commerce. These trade licenses in Dubai each outline the activities your business is permitted to carry out. The trade license you choose depends on what you sell, how you operate, and whether your business is based on the mainland or inside a free zone. In this blog, we will discuss different types of trade licenses in Dubai in detail which will help you to start your business in Dubai 

What is a Trade License in Dubai?  

A trade license in Dubai is the document that grants permission to carry out specific business activities. For instance, if you plan to start an e-commerce business in Dubai, you can apply for an e-commerce or commercial trade license through the Department of Economy and Tourism (DET) or a free zone authority. The process of applying for a trade license in Dubai involves submitting documents confirming business activities, details of the office space, and shareholder details. 

Different Types of Trade Licenses

Dubai offers several trade licenses, each designed for a particular business activity. Here are some common types of trade licenses in Dubai:  

1. General Trade License 

A general trade license allows businesses to engage in trading activities across sectors. Simply put, this license enables companies to buy, sell, and trade multiple products under a single license, rather than requiring separate licenses for each type of trade. Depending on the goods traded, there may be restrictions, third-party approvals, etc., needed 

A general trade license covers retail and wholesale trading activities, trading across multiple product categories, and operations within a specified jurisdiction or business location according to local zoning laws.  

This license is often the most versatile and suitable for businesses aiming to deal in diverse, unrelated goods or services. 

2. Commercial Trade License

A commercial trade license is for companies engaged in specialised trading activities, such as retail, wholesale, electronics, or the import or export of goods. It is designed for businesses that sell related goods in a specific category. For instance, if you are planning to set up an automobile spare parts sales business, you can apply for a commercial trade license. With this license, you can sell automobile spare parts, operate as a broker to sell spare parts to automobile companies or operate as a logistics service. In short, with a commercial trade license, you can engage in multiple commercial activities within one category.  

You can obtain a commercial trade license by submitting documents such as proof of identity, proof of business premises, and proof of compliance with municipal regulations. Failure to obtain or renew the license can result in fines or the cessation of business operations. 

3. Industrial Trade License

An industrial trade license authorises businesses to carry out industrial or manufacturing activities within a designated area. This license is typically required for companies involved in producing goods, operating factories, or manufacturing units, to ensure compliance with safety, environmental, and labour standards. 

An industrial trade license has more stringent requirements than commercial, general, or other types of trade licenses in Dubai. Companies applying for industrial licenses must comply with strict regulations related to fire safety, environmental protection, and zoning laws specific to industrial activities.  

4. Professional Trade License

A professional license in Dubai is a legal permit that allows individuals or businesses to offer professional services based on their skills and knowledge. This license is intended primarily for service-oriented businesses or professionals, such as consultants, law firms, educators, healthcare professionals, artists, and artisans.  

Unlike a commercial license that allows companies to trade goods, a professional trade license enables them (businesses/individuals) to offer services using their intellect and creative abilities.  

To obtain a professional trade license, applicants must submit proof of qualifications or expertise relevant to their professional activity, along with necessary documents such as passports and visas. 

5. Tourism Trade License

A tourism trade license in Dubai is a specific type of business license that allows companies to operate legally in the travel and tourism sector. This type of trade license is mandatory for travel agencies, tour operators, holiday home rentals, cruise organisers, safari companies, and hospitality services. 

You can get a tourism trade license by submitting a business plan, copies of shareholders' passports, the manager's professional qualifications, a clean criminal record, and a lease for office space for inspection to the DET or a free zone authority, depending on your business setup. 

6. E-Commerce Trade License

An e-commerce trade license in Dubai authorises individuals or companies to conduct commercial activities solely through digital channels such as websites, mobile apps, and social media platforms. This license is issued by the DET or relevant free zone authorities. It is mandatory for businesses operating online, even if they hold physical inventory but do not sell in person or at a physical location. 

You need to submit passport copies, Emirates ID, a detailed business plan, trade name approval, and proof of compliance with cybersecurity and product regulations to the relevant authority for an e-commerce license. 

In addition to these trade licenses, businesses may need a mainland or free zone trade license to operate in Dubai. We will discuss these types of trade licenses in Dubai in the next section. 

Mainland vs Free Zone Trade Licenses

Where you register your business (mainland or free zone) significantly determines the regulatory framework and compliance requirements you must adhere to. For instance, if you opt for a mainland business setup in Dubai, you will need to follow comprehensive local commercial laws, including licensing, taxation, labour laws, and ownership regulations. Moreover, mainland companies need to have office space, adhere to health and safety standards, and comply with the requirements of Dubai Municipality and other governmental authorities. Meanwhile, free zone companies can operate virtually, physical office, or opt for a flexi-desk (co-working) office setup. Furthermore, free zone companies receive tax exemptions and benefits for foreign ownership.  

Therefore, based on your business setup, you can choose between a mainland trade license and a free zone trade license. 

1. Mainland Trade License

A mainland license allows businesses to operate anywhere in the UAE. It offers flexibility to work with government entities and cater to a broad customer base. This choice suits companies planning wider regional expansion.

2. Free Zone Trade Licenses

A free zone trade license offers benefits such as full foreign ownership, simplified setup processes, and customs advantages. Businesses operate within designated zones and can trade internationally without restrictions. However, direct trade within the mainland requires an authorised distributor.

How to Choose the Right Trade License for Your Business

Selecting the right trade license for your business requires a clear understanding of your industry, scale, and operational goals. Here’s how you can choose the right trade license for your business. 

1. Assess Your Business Activities: Define your primary and secondary activities, as licenses depend on these details. 

2. Identify Your Target Market: Your audience determines if a mainland or free zone license suits your needs. 

3. Check Ownership Preferences: Foreign investors seeking full control often prefer free zones, while mainland licenses offer wider market access. 

4. Compare Costs and Compliance: Review application fees, renewal charges, and regulatory commitments for each option. To learn more about the costs of setting up a business in Dubai, contact our team. We will guide you through the process of setting up a business. You can reach out to us on 800-DSHUB (37482) or email us at grow@dubaisouthbh.com. 

Common Mistakes to Avoid When Choosing a Trade License in Dubai

1. Choosing the Wrong Business Activity: Incorrect activity selection can delay approvals. Understanding activity codes ensures your license aligns with your operations. 

2. Ignoring Jurisdiction Requirements: Each jurisdiction has specific conditions. Reviewing mainland and free zone rules helps avoid compliance issues. 

3. Underestimating Office Space Needs: Licenses often require physical office space. Factoring these requirements early prevents last-minute adjustments. 

4. Not Reviewing Ownership Rules: Businesses must understand ownership conditions for each license type. Free zones often allow full ownership, whereas mainland rules vary by activity. 

5. Skipping Professional Guidance: Expert support can simplify the process. Professional advisors help interpret regulations, prepare documents, and minimise delays.   

Conclusion

In the end, understanding different types of business licenses in Dubai helps you choose the most suitable one for your business. However, when choosing a business license, don't forget to review your business activities and seek professional help to make an informed decision. You can book a consultation with us to ease your business setup process. Or you can contact us at 800-DSHUB (37482)or write to us at grow@dubaisouthbh.com with your queries. 

FAQs

What is the most common type of trade license in Dubai?

The commercial license is widely used, especially for trading, retail, and e-commerce businesses offering diverse activities. 

Can I hold 100 percent ownership of my business in Dubai?

Yes. Free zones allow full foreign ownership, and many mainland activities also permit complete ownership for expatriates. 

Can I change my trade license type later?

Yes. You can modify your license if your business activities expand or change, though approvals and additional documents may be required. Moreover, you can amend the trade license via an amendment request or at the time of renewal. 

Is a trade license mandatory for all business activities?

Yes. Operating any business in Dubai requires a valid license to ensure legal compliance. 

How long does it take to obtain a trade license?

Approval time varies by jurisdiction, but many licenses are issued within a few days when documents are complete. At Dubai South Business Hub Free Zone, trade licenses are issued within a day, provided all your documents are approved and no third-party approvals are required. 

Are the license renewal requirements complicated?

Renewals are straightforward if documents are clear and any office rental agreements are updated. 

Is office space mandatory for all license types?

No. You can check with DET or your free zone authority for more information. 

What documents are usually required for a trade license?

Common requirements include passport copies, business activity details, tenancy contracts, and shareholder information. At Dubai South Business Hub Free Zone, you only need a copy of your passport to get started.