Without a doubt, Dubai is an extremely attractive destination for foreign investors. Likewise, when a businessman wants to invest in this wonderful business center, he must have a Dubai trade license. Once the company obtains this license, it has an annual validity period. Therefore, before its expiration date, there must be a trade license renewal in Dubai to avoid legal sanctions.
In this article, you will learn about the trade license renewal in Dubai, as well as its cost, the documents necessary for this renewal, and how to renew a trade license in Dubai. Likewise, you will know about the types of trade licenses that exist in Dubai, and the step-by-step process for the renewal of this license.
What are the types of trade licenses that exist in Dubai?
The types of trade licenses that exist in Dubai for a company will depend on its business activity.
- General trade license
The general trade license generally covers all trade activities. That is commercial activities of buying and selling products. This type of license is granted by the Department of Economic Development (DED).
- Industrial trade license
This type of license is granted to those companies whose economic activity is to transform raw materials into useful products for people. Among these companies, we have the manufacturing, assembly, processing, and storage companies, and other industrial companies.
For its part, specifically manufacturing companies, in addition to this license, must obtain approvals from other authorities, such as the UAE Ministry of Interior, the UAE Ministry of Economy, and the Dubai Municipality.
- Professional trade license
This is the correct option for those companies whose economic activity is the provision of professional services, such as consulting companies, law firms, and accounting advisory companies, among others.
- Electronic commerce trade license
The electronic commerce trade license is for companies that operate online and sell products and services through e-commerce platforms. These electronic platforms can be web pages, social networks, cell phone applications, marketplaces, and any other electronic media.
- Trade license for International or Free Zone companies
International companies that wish to establish themselves in a free zone in Dubai can obtain a specific trade license to operate within that free zone. In this sense, the free zone offers special tax and customs benefits for these companies. This makes it more attractive for international companies to operate in the Dubai-free zone.
Required Documents for Trade License Renewal
When the time comes for the trade license renewal in Dubai, the company must have the following documents on hand:
Ejari certificate
For trade license renewal Dubai, the company must have an Ejari certificate. This certificate confirms the existence of a company lease contract.
Current lease agreement
This lease contract must be valid for at least one month or more for the company to qualify for the trade license renewal in Dubai. Likewise, this lease contract must be registered with Ejari.
Photocopy of the expired trade license
When submitting the documents, the applicant for the trade license renewal in Dubai must submit a simple photocopy of the expired trade license. The purpose of providing this document is to demonstrate that the company operates legally in Dubai.
Filling BR/1 Form
This is the name of the form for the trade license renewal in Dubai. In this sense, this form must be completed and must contain the signature of each and every one of the partners of the company.
Simple photocopy of the current passport of each and every one of the shareholders of the applicant company
The company must provide simple photocopies of the current passports of each and every one of its shareholders. However, if it is a sole proprietorship company, the owner must provide a photocopy of his or her current passport.
By having these documents on hand, the company can send them along with the BR/1 to the Department of Economic Development (DED). On the other hand, the trade license renewal in Dubai can be processed online or in person.
Total Cost for a Trade License Renewal
Normally for the trade license renewal in Dubai, the standard fee ranges between 8,000 and 15,000 AED. This is equivalent to approximately 2,200 US dollars to 4,100 US dollars respectively. On the other hand, a factor that determines the cost of the Dubai trade license process will depend on the jurisdiction and economic zone of the applicant company.
Likewise, the company can take advantage of a discount on the renewal fee for its trade license if it has a residential Ejari registration. In addition, the company can also get significant discounts on the general fees of the Dubai Chamber of Commerce.
Step-by-Step Process to Renew Trade License in Dubai 2023
Logically, as the trade license is close to being sold, the company must expedite the procedures to renew it. That is why below we will present step by step the process to renew the trade license in Dubai:
- Review your lease agreement
In order to apply for the trade license renewal in Dubai, the applicant must review the validity of their lease contract and that it is valid for at least one month before the application. Therefore, this may be a part of the Dubai trade license renewal process that may prevent this.
- Complete the BR/1 Form
After completing this form, the applicant must submit it along with all the documents requested for the trade license renewal Dubai and then send them to the Department of Economic Development (DED). In this sense, this department will make the corresponding reviews. If there is a failure, the documents will be returned and the applicant will be notified.
- Reception of payment voucher
Once the application and documents are reviewed, the Department of Economic Development (DED) will send a voucher to the applicant for payment of the fee corresponding to this procedure.
- Make the payment of the fee corresponding to the procedure
After receiving the voucher, the last step is to pay the fee corresponding to the renewal of the trade license. This is the last step. Therefore, in few days the renewal of the trade license will be delivered to the applicant.
Penalties for Failure to Renew Your Trade License in Dubai
The validity of a trade license in Dubai is a key factor for the good development of a company. In this sense, if a company in Dubai operates with a non-current commercial license, it may receive sanctions ranging from fines, prohibitions to operate, and even placement of the company on a blacklist.
Therefore, an important point is to be aware of the validity of not only the trade license but also the company’s lease contract. Consequently, if the company fails to comply with these regulations, these may be some of the sanctions:
Penalties and fines
The Department of Economic Development (DED) has the power to impose fines on businesses that operate with non-valid trade licenses. In this sense, fines can range from 5,000 AED approximately 1,350 US dollars in the case of companies that operate without a trade license, up to a fine of 250 AED approximately 70 dollars, for each month that a company operated with the trade license expired.
Putting the company on a blacklist
This will apply to companies that operate without a trade license or with a non-current trade license. In this sense, depending on the severity of the case, one of the sanctions is the placement of the company on a blacklist. This will inexorably lead to the end of the company’s operations since the company’s reputation will not be the same among customers, suppliers, and business partners.
There is no doubt that no one will want to do business with a company that appears on a blacklist by a UAE government entity.
Prohibition of the company from operating:
If placing the company on the blacklist indirectly brings it to its end, then, this sanction brings it to its end directly. There is no doubt that this is the worst legal sanction since after receiving it; there will be no way for the company to operate again in Dubai.
However, it must also be taken into account that the company’s ban may be total or partial.
Final summary
The first thing to say is that when we talk about Dubai, we are talking about one of the most important business centers in the world. Now, in order to legally operate a company in Dubai, it must comply with a series of regulations, among which the trade license stands out.
For its part, it is important that the businessman who intends to establish his company in Dubai receives correct advice, among other things for choosing the correct type of trade license, as well as for carrying out the procedure to obtain this license. For example, it would be a serious mistake that could lead to legal consequences to work with a general trade license when we have an industrial-type company.
Likewise, almost as important as the validity of the trade license is the validity of the company’s lease contract. In the same way, this is one of the fundamental Dubai trade license renewal requirements. This must be valid for at least one month at the time of carrying out the renewal process.
Another factor to take into account is the cost of this renovation. The cost of this process can range between 8,000 AED and 15,000 AED. This is equivalent to approximately 2,200 US dollars to 4,100 US dollars respectively.
Finally, we must not forget the possible legal consequences for a company if it operates without a trade license in Dubai or if it does so with a non-valid trade license. Consequently, these legal sanctions will depend on the seriousness of the specific case. These can range from fines, to placing the company on a blacklist, to banning the company from operating legally.
Why Connect Group is your best option to establish your company in Dubai?
Thanks to Dubai’s economic prosperity, this emirate is one of the most attractive places in the world to invest. But to do this you must comply with a series of legal and commercial regulations. Therefore, the best option for foreign investors is to have the advice of a leading company, such as Connect Group.
We have the support of years of experience, a large portfolio of prestigious clients, and the best professionals. That is why we are the best option for you who want to establish your business in Dubai.
