Trade License in Dubai: Difference Between Commercial License in Dubai and Professional License in Dubai
The license required to start a business in UAE can be categorized to have two legal types; professional license and commercial license. The selection of legal type depends on the activity of the business you are planning to start in the UAE. The differences between the two legal types are as below:-
Type of Activity
If the business activity involves selling of tangible products then the legal type of the license will be commercial. For example, general trading, electronic trading, software trading, etc. So, we can simply say that commercial license is related to trading of goods which we can see and touch.
If you want to utilise some special skill set or knowledge and wants to provide service in exchange of a fee then it will be considered as a professional license. For example consultancy, software development, accounting service, etc.
Ownership of the Establishment
In a commercial license, the expat can legally have 49% share and the rest 51% needs to be with an UAE national. However, in a professional license, the expat will have 100% of the ownership and becomes a sole establishment. But if the business with professional license is converted into LLC in near future, then the ownership will be divided between the expat and a UAE national. On the other hand, when a professional company is run by more than one owner then the ownership is distributed and it becomes a civil company.
Share Capital
In a commercial license, the minimum capital amount required is AED 300,000. A professional company with single owner is considered as a sole establishment. Whereas, when a professional company have more than one owner then the ownership is also distributed and will become a civil company. In that scenario the minimum shared capital of the company will be AED 150,000.
Government License Fees
The government cost for both the licenses are different. The professional license can be made at approx AED 11000 whereas for the commercial license the cost will be approx AED 17000. This is the cost where both are having only one expat partner. Whenever the number of expat partners will increase or whenever the license activity will require some additional approval then the cost and charges will change accordingly.
Liability
The commercial license always has the L.L.C. as the suffix. It means the liability of the company is limited. Whereas the professional license generally have the liabilities as unlimited. Only if the professional company wants to convert the license in to an LLC then the liability will become limited. Also, as it will become limited hence the ownership also needs to be divided in between the expat and the UAE National.
The professional and the commercial license both are in high demand as per their activities. As all the consultancy business comes under professional license and any kind of goods trading comes under commercial, it is very important to understand which legal form is required to form a new company.
This blog is written by Ms. Ananya, Business Advisor at Flyingcolour Business Setup, VAT and Accounting Services, Dubai. She specializes in serving clients looking for commercial as well professional license for company formation in Dubai mainland. Please note that the charges mentioned above in the article are as per the UAE Government policy and may vary in future in case of any new amendment is announced. To consult, please contact us at +971 4 4542366 or email us at info[at]flyingcolour[dot]com.
