Dubai wants to be an E-Commerce hub. In support, The Dubai Department of Economic Development (DED) introduced a number of E-Trading license activities.
Online entrepreneurs can now obtain a specific license for creating online trading platforms. However, the new e-commerce initiative in Dubai triggered questions in relation to whether or not an e-commerce license is mandatory, and what such license permits.
We answer the most important questions here:
Who needs an e-commerce license?
Not every e-commerce business is the same. There are those interested in selling physical products in the UAE through a web-shop. This is a regulated activity in the UAE for which a license is needed. This article contains information about this type of license.
Others, might want to start an e-commerce business in the UAE to sell digital products around the world. For this, no additional license of the DED is needed. One simply needs to set-up the correct free zone company.
What allows the Dubai E-commerce License you to do?
A DED e-commerce license provides you the opportunity to sell to the general public in the UAE over the internet without human interaction, using completely online automated applications.
It allows for the acceptance of payments through payment service providers, which offer online electronic payments by a variety of payment methods including credit card, smart cards and digital money E-cash.
When do I need a DED e-commerce license for my online trading activity?
If you target the local market (your future clients are within the Dubai), such activity requires the DED e-commerce license.
Do I need an office to obtain the license?
A precondition to the a license is to obtain and maintain a registered office.
What are the e-commerce activities introduced by the DED?
Jewellery and precious stones E-Trading;
Garments, Textiles and Gifts E-Trading;
Publications and Media Materials E-Trading;
Household, Professional and Personal Goods E-Trading;
Vehicles and Transport means E-Trading;
Sport and Recreational Events Tickets E-Trading.
Is there an E-commerce equivalent of the General Trading License?
At present there is no general E-commerce activity available, nor do you need it. If the license is obtained by a company with a General Trading License it can undertake all types of trading, whether physically or via an online platform. Typically, if a company is licensed to trade in a particular industry, it cannot trade in another industry online.
E-commerce license in the free zone
Free zones having their own regulations. In addition, they cannot conduct commercial activities in the wider UAE (outside of the free zone). Therefore, for a trader to freely trade and sell its products online, the trader must also obtain a license from the DED.
Some free zones do offer E-Commerce activities. But the scope of a free zone E-Commerce activity is limited to facilitating a sale through an electronic medium, rather than directly conducting retailing activities.
In short, as far as the UAE is concerned, a free zone company with an E-Commerce activity can only act as a middleman, unless it also obtains a license from the DED.
New DED’s E-Trader Scheme
The DED also introduced the ‘e-trader’ scheme whereby online business established via various social media applications such as Instagram, Snap Chat, Whatsapp or Facebook can now be licensed by the DED.
The development was introduced with a view to “promote consumer confidence when shopping for products and services on social networking sites” said Omar Bushahab, Chief Executive of the DED’s Business Registration and Licensing Department.
This license, however, only applies to UAE nationals over the age of 18. The license cannot be used to open a physical store, nor can it issue visas.
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