Setting up an online business in Dubai

Setting up an online business in Dubai

- Jamie Harvey

Introduction To Online Businesses in Dubai

Setting up an online business in Dubai can be financially lucrative if done right. Dubai is increasingly becoming a hub for online businesses and e-commerce. In a recent joint study published by Dubai Economy and VISA credit cards; e-commerce transactions reached $16 billion in 2019 and is forecasted to soar with an average 23% annual growth rate up to 2022.

This boom has been exacerbated by our increased dependence on the internet in practically all of our lives, from shopping for groceries to obtaining MBAs. Additionally, as one of the unforeseen outcomes of Covid-19 lockdowns around the world; e-commerce is gradually replacing traditional stores. Online stores are less expensive, far easier to set up and geographically more dispersed allowing them to reach a wider audience.

The fact that the UAE is becoming a surrogate for innovative startups and encouraging smart transactions between tech-savvy consumers and businesses, means that the country is rapidly being positioned as a lucrative market for e-commerce activities. The UAE enjoys a geostrategic location linking three continents supported by state of the art logistics systems and network communications.

Among the advantages of starting your online business in Mainland UAE or one of the Free Zones in Dubai, Abu Dhabi or the wider UAE are:

  • Zero tax fees (except for 5% VAT)
  • No restrictions on currency or capital withdrawal
  • Possibility of obtaining two or three-year resident visas, or investors visas
  • Lower operating expenses
  • 100% ownership of your company – in the Free Zones
  • Absence of import/export duties on e-commerce licenses

For a detailed summary on how to add e-commerce to your existing trade licence in UAE please see our article here www.propartnergroup.com/blog/2020/04/e-commerce-online-business-trade-licence-uae/

To-do list for starting up your online business in Dubai

The process for setting up an online business in Dubai consists of the following steps:

Choosing Your Legal Enterprise

Among the many types of company available in Dubai (Limited Liability Company LLC, a branch of foreign company, representative office, civil company) it is important to select the right legal entity for your business. LLC and subsidiaries are the most common types in Dubai, however, depending on your business and ownership structure, they may not be right for you. It’s always best to seek professional help when setting up your online business in Dubai.

Choosing the Right Jurisdiction

Depending on the nature of your business, choosing between a Free Zone or a Mainland licence will have a significant impact on your market reach and scalability. Mainland licences allow free trade with the local market, while free zone licence requires you to partner up with a mainland distributor.

Determining a Location for a Physical Office

Having a physical office space is mandated to complete registration requirements in most areas, although there are some exceptions, virtual space options and grace periods. It is advisable to pick cost effective office space to begin with, since online stores typically require less office space than traditional stores. Remember it is easier to scale up than it is to scale down.  

Obtaining a Bank Account

As it is mandated by the local regulations, companies are required to open a bank account to register an online company in Dubai. There is a range of good local banking options in the UAE, and navigating the most appropriate bank account for your business is important.  PRO Partner Group (PPG) can assist you in finding the right bank account and assisting with the documentation and bank account set up process as part of the company formation.

Initiating the Trade Licence Application

It is essential to obtain the trade licence pre-approval for operating an online company in Dubai – licence approval is done at the DED. Required documentation includes; passport copies and IDs / Corporate documents of shareholders and Managers and the detailed application forms and submissions. The licence type will depend on business activity and place of registration – Mainland vs Freezone, Dubai vs Abu Dhabi for example.

The completion of the registration process depends on the type of business entity you are setting up, but it can almost always be expedited by using a professional company formation business like PRO Partner Group. It is worth noting that the application process can be delayed by omissions or errors in your application. Therefore, it is recommended to partner with company formation experts during the registration phase. PRO Partner Group can advise you on the most appropriate entity type and activity for your business, we will then liaise fully with authorities on your behalf. Our team of company formation and legal experts will walk you through all aspects of the company formation, including; licensing element and any regulatory approvals, residency and visa requirements, import permits for products (if required).

For more detail on the various set up options in the UAE and the Freezones see our article here www.propartnergroup.com/services/company-setup

For more detail on all the different Freezone options in the UAE please see our article here www.propartnergroup.com/blog/2021/02/free-zones-in-dubai

For more detail on the differences between Freezone vs Mainland options in the UAE please see our article here www.propartnergroup.com/blog/2019/04/mainland-vs-freezone-business-uae/

Things to keep in mind

Starting your online business in Dubai can be incredibly lucrative if you get the service delivery and niche product area right. One of the most important elements to consider is the local resources you’ll need. Defining these resources in advance can help to better define the most appropriate company formation entity for your business. Here are a few things to consider;

Web Design and Launch

Your website is the platform for showcasing products and services, interacting with customers and gaining their loyalty. So spending time to develop, test and deploy your website is always a good investment. If you happen to be in one of the media or technology free zones, you may be able to benefit from cross-collaboration with other businesses who can help you in this regard.

Online Payment Gateway

Providing payment options with secured gateways is essential for ensuring consumer loyalty and quality of service. Most common payment options include; credit card, prepaid card and cash-on-delivery. The payment options you provide to customers will be in part defined by where you intend to ship your products. For example, in the UAE it is common for eCommerce businesses to offer a “cash on delivery” option, which is not as common in other parts of the world.

Supply Chain and Logistics

Storing your inventory and ensuring on-time, efficient delivery is a critical part of setting up a successful online business in Dubai.  Working with trusted logistics and supply chain partners will in part define how successful your online business is. At PRO Partner Group we work with thousands of different businesses across different sectors and one of the advantages of working with us is that we are able to offer a ready-made network of connections to help you get your online business off the ground.

How can PRO Partner Group help?

Whilst setting up an online business in Dubai can be relatively straight forward, there are many pitfalls that can be avoided by seeking professional help. At PRO Partner Group, our team of expert advisors can help you select the correct Free Zone or Mainland jurisdiction for your company as well as assist with other elements of the set up process such as Investor Visas, staff and family Visas, PRO services and HR, Payroll and Company Secretarial Services. Contact us today and we’ll make your move to Dubai as seamless and straightforward as possible. Please get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at info@ppg.ae or complete the contact form below and we will be delighted to assist you.

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