E-Commerce becomes a necessity
In this era of advanced communication networks, the world has come too close. Everyone and everything is available just a click away. All thanks to the 4G internet accessibility, the rise in usage of smartphones, and an increase in online shopping.
Adding to these, the onset of the deadly Coronavirus has made online dealings and virtual platforms for each and everything a necessity.
E-commerce has also gained high acceptance and all over UAE. Online trading has become a trend. Approximately one-third of the UAE population shop online every month and this fraction is growing swiftly.
E-Commerce and its advantages
E-Commerce means doing business online. The products or services are available online; one can choose from a wide range of products and services. People can quickly search for products, shop online and the product will be delivered with a simple click. It is less time-consuming and covers a large market.
E-Commerce Business in UAE
E-Commerce business in the UAE is growing at a fast rate. Existing business setups in UAE are shifting their focus to online business whereas new entrepreneurs are making it a point to include the E-Commerce aspect in their business setups at the beginning itself.
Requirements for E-Commerce Business License
For initiating an E-Commerce business in UAE one has to apply for an E-Commerce trade license, issued by the Department of Economic Development (DED).
E-Commerce business setup in UAE would for sure prove profitable as the percentage of the population using the internet is above 91%. For setting up an E-Commerce business in UAE, the following steps have to be followed:
# Legal structure: For setting up an E-Commerce business in UAE, firstly the entrepreneur has to decide on the legal structure of the business (whether an LLC or sole proprietorship, a foreign company branch or a representative office). Branches are advantages and the most common type in the UAE.
In Free Zone, with 100% ownership, a company can get an e-commerce business license from the authorities after getting a trading license.
In mainland, the company getting a trade license can sell products through a store or through an online platform. An E-commerce business license is not required.
# Business Activity: The business setup has to decide on which activity to be followed; whether selling products or selling services. Business setup in Free Zones can sell their products in the respective Free Zones.
The business set-ups in the mainland can provide a platform to sell other products also.
# Location of business: The place where we get the license has to be decided.
The entrepreneur has 100% ownership in Free Zone and can sell the products anywhere through an online platform.
If the business license is from the mainland, the entrepreneur has 51% shares in the case of LLC. In the case of foreign business branches, a local service agent has to be appointed.
A company in the mainland can start e-commerce trade with a trade license.
# Trade Name: A suitable trade name has to be selected which can be easily remembered and located in a search. It should not be similar to other names.
# Application of License: E-Commerce License is issued by DED in the mainland. Other licenses for business are commercial, professional, industrial, or tourism licenses according to the business type.
Free Zone Authority issues the E-Commerce license in Free Zones.
Dubai CommerCity (DCC) Free Zone supports the development of E-Commerce in Middle Eat and North Africa.
# Initial Approval Certificate: The E-Commerce business has to apply for NOC from the authorities. It is valid for 6 months and is not renewable.
# Memorandum of Association: Business set-ups in the mainland require the drafting of MOA and Local service agent agreement which has to be submitted with the DED. The MOA specifies ownership agreements and other agreements among partners or agents.
Whereas, no such agreement is required, in the case of business setups in Free Zones.
# Office Space: To set up an E-Commerce business in the UAE mainland, a minimum space as a physical office is necessary. This is mandatory so as to have a legal entity.
Minimum office space required in Abu Dhabi starts at 14 sqm, whereas in Dubai, minimum office space required is 200 sq.ft.
Instant license in Dubai and Tajer License in Abu Dhabi are license policies which don’t require physical space at the early stage of setup of business.
On the other hand, E-Commerce business setups in Free Zones provide Flexi -desk or virtual space benefits. As a result, the requirement for staff visas is less.
# Warehouse: The storage space for the products has to be decided. A warehouse stores the products safely until it is ready to dispatch.
# Final Approval: The business gets the license within 1 to 4 days depending upon the authority.
# Import and Export requirements: The business has to be registered with one of the ports and customs. The business will receive the importer’s code after that. Mainland business setups incur a customs duty of 5%. However, no such duty is levied on business setups in Free Zones.
Opening of bank accounts, selecting the payment gateway, and selecting the suppliers or distributors are the other steps.
In conclusion, by following the above-mentioned steps, the E-Commerce business in UAE can be set up easily. E-Commerce business setups in UAE is a profitable venture which can reap high benefits for the businessmen.