What are the Differences Between E-Trader License vs E-Commerce License?

Differences Between E-Trader License vs E-Commerce License

When it comes to starting your online business in the United Arab Emirates (UAE), you either need an online trader license or an E-commerce license to legally commence your business. However, the E-trader and E-commerce licenses allow you to start your online business in this country, but both licenses have significant differences. Are you thinking about how both licenses are different from each other? If yes, you must spend some valuable time with us. Here, we are going to discuss the difference between an E-Trader License and an E-Commerce License.

What is the E-Trader License?

When you consider starting your E-Trading License in the UAE, you should obtain a legal license to conduct your online business over social media platforms, like Facebook, Instagram, TikTok, and more. Indeed, you have guessed it right! That license is known as the E-trading license.  The DED issues an E-trader license in the UAE. It is an online business license for small home-based online businesses. This license is for you if you are a small entrepreneur and stay-at-home mom who wants to sell your product online through social media.  Do you know the best part? You don’t need a local sponsor or national service agent to run your e-trading business in the UAE. The day-to-day activities involve selling your products and services on social media platforms. Therefore, you should remember that non-GCC expats can also give professional services, rather than products under their online business.  There are numerous activities you can perform with the E-Trader license. We have outlined the activities covered in the E-trader license below:  

• Selling homemade products online
• Online event management
• IT consultation
• Social media marketing and promotion
• Online services

 

Requirements for getting E-Trader License

To obtain an E-trading license, you should fulfill some E-Trader License requirements. Below are the top requirements you must fulfill to get an E-Trading License:  

• You must have a valid EID
• You must be based in the UAE with the least age of 21
• You must also present your EIJARI and MAKANI number

 

What is the E-Commerce License? 

An E-Commerce business involves selling products to the general public. However, if you want to run your E-commerce business in the UAE, you must obtain an E-Commerce license.  The UAE government provides an E-Commerce License to allow you to conduct business activities relating to the purchase and management of product inventory. This license also enables you to deliver said inventory as well. It was introduced for significant business owners like you who want to manage their E-Commerce business in the country.  You can conduct the E-Commerce business via the means of online platforms, like your own website or social media channels. Like the E-Trader License, the E-Commerce License also permits a few activities. The following are the top activities you can conduct with this license:  

• Delivering products to your customers
• Accepting online payments
• Selling products online
• Selling digital goods
• Starting an E-Commerce website
• Storing physical goods
• Machine, spare parts, and more.
• Sports products, etc.
• Transportation of goods
• Advertising your good online

We recommend you apply for the E-Commerce license in the UAE if you are ready to manage inventory and deliver your products to countless customers. Applying for your E-Commerce license is simple. You can either apply for this license through the relevant authority in your Emirate. However, you don't compulsorily need to rent or purchase an office space to obtain an E-Commerce license.

Requirements for obtaining your E-Commerce License

Similar to the E-Trader License, you must also meet a few requirements to get your E-Commerce License in the UAE. The following are the top requirements you must fulfil to get an E-Commerce license in this country:  

• VAT registration with the FTA
• A designated address for your company's documentation and legal billing.
• Establishing a sole proprietorship or LLC corporation as per the Company Commercial Law 2015.

 

E-Trader License vs E-Commerce License

As you have explored the overview of E-Trader and E-Commerce Licenses before, you must understand that the primary difference between E-Commerce and E-Trader Licenses is that an E-Commerce License is specifically for bigger businesses while the E-Trader License is for small home-based businesses. Apart from this, other factors differentiate both licenses. The following are the top factors that set apart an E-Trader License vs E-Commerce License:

1. Size of Business

As we have discussed above, the E-Trader License is for small startups while the E-Commerce License is for significant companies. Do you need help in determining the right size for your online business? If so, you must remember businesses with an E-Commerce License handle several departments, like sales, delivery, storage, and more.  In contrast, businesses with an E-Trader License can essentially be a solo operation conducted from someone’s basement. However, if your business grows, you can apply for the E-Commerce License whenever you need. 

2. License application process

You might feel shocked after reading that the process for getting the E-Trader License is far easier than the process of obtaining the E-Commerce License. In addition, you must not rent or purchase an office space if you want to apply for the E-Trader License in the UAE as you are allowed to work from home with this license. In contrast, you must obtain an office space in order to apply for an E-Commerce License in the UAE. 

3. Business activities

The business activities allowed by both licenses are what dictate the business size these licenses cater to. For instance, the E-Commerce License mandates you to rent or lease an office space for your business. Therefore, if you want to conduct your business from your house, you cannot obtain an E-Commerce License. In addition, the E-Trading License lets you start an e-trading business with less capital, while the E-Commerce license requires you to have a significant budget.   

How can Flyingcolour Business Setup help you?

As we have discussed in this article, the E–Trader License is for small businesses while the E-Commerce License is for bigger corporations. However, the nation has introduced both licenses for online companies. Deciding which license is suitable for you is a little difficult. Flyingcolour Business Setup can help you understand which license is the right one for you. In addition, our experts will guide you through obtaining an appropriate license process for your online business. To learn more about the differences between an E-Trader License and an E-Commerce License, book a free consultation with one of the Flyingcolour team advisors. Please note that this article was published on  02/07/2024 by the federal policies and updates at the time of writing. For the latest info please talk to our consultant.