Expired trade license penalties & fines – Complete guide
Your trade license is a mandatory document that you need to use to continue conducting business in Dubai. You won’t be allowed to conduct business activities with expired trade license. Many times, businesses decide not to renew a license and continue doing business activities, but non-renewal is a severe offense and may lead to a complete business shutdown.
As you don’t want to experience anything worse in your business operation, understanding what would happen if you don’t renew your UAE trade license is always a good idea. This knowledge will help you avoid legal matters and keep your business environment thriving.
Here are three common penalties you face for not renewing a trade license in UAE:
Expired trade license – Penalty No. 1 monetary fines
The Department of Economic Development of Dubai (DED) is the leading authority that handles all the matters related to your business license. With expired trade license, you can use the online services of DED for quick renewal, and the process takes only a week. When authorities know that you are running a business without legal license renewal or with an expired business license, they will charge AED 5000 as a penalty.
Another penalty of AED 250 will be imposed as a monetary fine for non-renewal of the license. These monetary fines are an extra financial burden you can readily overcome by renewing your license on time.
Here is how you can check the company status and find out whether your license is active. If it’s inactive, you should use DED e-services to expedite the renewal process.
Expired trade license – Penalty No. 2 Blocklisting of the company
Companies often don’t pay attention to their license status and ignore the expiration date, which is a lousy business approach. On the one hand, it will cost you a monetary fine; on the other, it will damage your reputation, and the story doesn’t end here; your company will have a high chance of getting blocked.
And you can’t take that penalty lightly. Some people think that they will pay the fine and renew their license by overlooking license renewal for a very long time. But what if your company gets blocked?
It’s a high-order penal provision from authority, and it may lead to severe repercussions:
- You will miss your renewal chance and won’t be permitted to continue operating your business.
- You will experience a travel ban where business and related visas can be annulled.
- The sponsor won’t provide any service to your company.
- Authorities may deport the company’s management from Dubai.
- Once your company is blocklisted, you can’t renew your license even when the grading period is still there.
Expired trade license – Penalty No.3- Restricting the expansion of business activities
You may overlook license expiry and think that a monetary fine is the cost of this ignorance. The scenario is different. Another cost that you may experience is the expansion restrictions. Let’s say you run a small or medium-scale enterprise and don’t renew your trade license for long.
In that case, your record will be damaged. Next, you renew your license and then plan to expand your business activities, but you won’t be allowed to do this expansion by the authorities. You intend to thrive in the long run with a small business.
Failure to renew trade license Dubai may cause voluntary or involuntary liquidation of business activities.
The documents required for the renewal of business licenses
Here are some documents you need to furnish for renewal of business license in Dubai.
- Passport copy of owners and investors
- Typed form BR/1
- Recent trade license copy
- Tenancy certificate and Ejari registration certificate copy
Here is step-by-step guide on how to renew trade license in Dubai
Other issue
Apart from facing multiple penalties from the government, you will also experience another issue. If your company is blocked, it will harm your reputation. As a result, you may lose the customer’s trust, and the client won’t be ready to continue doing business with you. So, to avoid such circumstances, you need to properly check your company status and try not to jeopardize your business.
Keep Prospr expert at your side to avoid penalties and blocklist due to expired trade license
Setting up a business in Dubai is a big challenge for expats. Prospr’s business experts know this very well. Therefore, we offer expert help to you. Consult our business consultants instead of facing monetary fines and other penalties. We will keep you fully informed of all the rules and regulations and ensure that you don’t have to face any legal issues as they will disrupt your business operation. No matter what question you have in mind, send us inquiries to hello@prosprplus.ae