A guide about commercial license and professional license

When you are going for company setup in Dubai, you need to get a specific trade license. There are different types of trade licenses such as agricultural, food, commercial, travel license, and professional license in Dubai. It’s common for people to get confused between commercial and professional licenses as all other types are straightforward.

Now if you are unable to make a difference between commercial and professional licenses then it’s time to continue reading and get clarity regarding these two most common types of trade licenses in Dubai.

What is a commercial license in Dubai?

It is a license issued by DED/Department of Economic Development in Dubai to companies and businesses that are involved in trading activities such as retail business, import/export, etc
Whether a business is related to real estate, construction or retail, such business must obtain a commercial license. This license is a must to operate a business legally in Dubai. This license facilitates the trading of products in Dubai.

Once you get a commercial license, you can get approval to conduct different types of trading activities such as electronic trading, software trading or general trading. General and specialized traders of goods, commodities and services can get this commercial license to run trading businesses legally in Dubai and all across the UAE.

Don’t forget to learn about Advertising agency license in Dubai

What is a professional license in Dubai?

It is a license issued by DED to service-based businesses or individuals. These businesses offer services in specific business areas based on their educational background and skills. The best examples of individuals who need a professional license are accountants, auditors, teachers, etc.
Service-oriented companies need to acquire professional licenses before they start offering their service to any client in Dubai or the UAE. Generally, these licenses are issued based on the education and area of expertise of the applicant. Although you get 100 per cent ownership of your company you must hire a local UAE national as your local service agent.

This agent will represent your company and will complete judicial formalities. However, this service agent will not own any share of your company as he is not directly involved in your business. This specific person will only change his fixed annual service fee. Besides, the service agent won’t be liable for your company.

Don’t forget to read in detail about the different types of trade licenses in Dubai. 

Difference between commercial and professional licenses in Dubai

You have got definitions of both types of business licenses, now it’s time to start making some differences between both based on the following points:

Ownership

In the case of a commercial trade license Dubai, you as an expat or foreign investor can hold 49 per cent of the total share in a company while 51% of the shares will be owned by a UAE National. There are certain activities where expats can hold a 100% share of a company without involving any local sensor in their business. In the case of a professional license, you will hold 100% ownership of your company. Although an expat can be the sole owner of his business still there is a need to involve a local service agent/LSA in the license.

Also understand How to get a trade license in Dubai without a local sponsor?

Share capital

If you want to obtain a commercial license and are planning to set up a business then the minimum share capital requirement is around AED 300,000. When you plan to start a business with a professional license, you need less investment such as AED 150000 comparatively. One thing you must know is that this amount is required for documentation, you don’t need to deposit it in the account.

License fee

You need to pay more for a commercial license, which is approximately AED 12,000. On the flip side, you will pay approximately AED 9000 for obtaining a professional license in Dubai. Professional license fee comprises administrative fees, trade name fees, service agent fees, tenancy contract fees, government cultural fees, and some other costs.

Liability

Since you share ownership with a local UAE national in case of a commercial license, thereby your liability remains limited. Liability will be shared by both an expat and a local UAE national A suffix of LLC will be added to your company name. On the other hand, when you start a company as a sole proprietor or a civil company with a professional license, your liability is unlimited.

Benefits

• You get different benefits with both types of trade licenses.
• In case you get a commercial license then you will obtain the following benefits:
• When it comes to choosing the type of company with this license, you will get several options to choose from.
• You can undertake a maximum of ten business activities under one license.
• It allows you to apply for a residence visa for company management and employees.
• You can open corporate bank accounts
• The license renewal fee is cost-effective
• You don’t need an audit before license renewal.
• You are allowed to hire foreign employees.
• The commercial trade license application process is the simplest.
• This license facilitates international trading
• When you obtain a professional license then you can avail following benefits:
• You can apply for a residence visa for your employee.
• Skilled professionals can set up their businesses with this license.
• You will pay a fixed annual fee for professional license renewal.

Commercial license vs professional license: which one do you need?

After reading this post, you won’t have any confusion regarding these two common types of licenses in Dubai. The differences between commercial and professional licenses are straightforward. Both licenses are designed for different sets of business activities.

Traders can acquire a commercial license while educational service-oriented individuals can go with a professional license. Since you get more benefits with a commercial license, its license fee is higher than a professional one.

I have explained the key differences between professional and commercial licenses, yet there is a chance that you don’t know what type of UAE trade license you need to acquire for your business. Sweat not!

Prospr is here to offer you all the guidance and support you need. Our expert staff offer business setup and license consultancy services to all expats out there. We know that technical and legal details are difficult to digest. But we can make this process of company formation in Dubai stress-free for you. Call us now and ask us any questions you have. We are here to help!