company setup

Difference between Commercial and Professional License in UAE

To start a business in the UAE, you need to register for a trade license first. There are multiple types of trade licenses across the various economic zones in the UAE. They vary from one free zone to the next as well. These varieties of trade licenses sometimes cause confusion among entrepreneurs and investors trying to get into the markets of the UAE. To clear some of these confusions, today we are going to look at two of those licenses.

Two of the most popular types of trade licenses in the UAE are the Commercial Trade License and the Professional Trade License. So, what are the differences between these two licenses, and which one should you choose for your business? Well, these two questions have the same answer because you cannot choose a license at random. You must pick the one that fits your specific type of business.

Business Activates in the UAE

The main difference between the various trade licenses in the UAE is the business activities they allow you to perform here. The authorities have recognized over a few thousand business activities as legal in the UAE. A good majority of those business activities are covered by the commercial trade license and the professional trade license. The industrial trade license allows a good portion of the rest of the business activities not covered by the commercial or professional license.

So let us look at the business activities that are allowed by the two licenses we are looking into today:

Commercial Trade License

Professional Trade License

Home appliance trading

Accounting services

Beauty and Skincare essentials trading

Audit services

Animal skin trading

Beauty Salon services

Food and Nutrition supply trading

Medical and Healthcare services

Readymade Garments trading

Educational services

Amusement and leisure equipment trading

Computer and IT services

General Supplies trading

Printing and Publishing Services

Commercial Trade License

In short, the commercial trade license is for businesses that are selling products that are legal in the UAE. This applies to the selling and trading of both tangible and non-tangible products. That means you need a commercial trade license to sell software, applications, and websites in the UAE. For some specialized cases, you can get a commercial trade license for selling or trading services as well.

Businesses in the retail, real estate, and construction sectors also need a commercial trade license in the UAE to perform their business activities. Remember that if you are ever confused if the business activities you are trying to perform are legal in the UAE, you can always contact our consultants. We will also help you decide which trade license will allow the business activities of your business.

Benefits of Commercial Trade License

Here are the benefits your business will receive after you register it for a commercial trade license:

  • You can perform a minimum of ten allowed business activities with one commercial trade license (you need to mention those activities when registering).
  • You can choose from a wide array of company structures for your business.
  • You can choose to form a limited liability company, where your personal properties will be safe in case of liquidation or bankruptcy.
  • You can perform international trade deals and activities from the UAE.
  • You can hire foreign employees and get easy access to employment visas for your employees.
  • You do not need to audit your business annually when you have registered for a commercial license.
  • You will get a 100% exemption from taxes for your business.

These are the main benefits of a commercial trade license. However, remember that you need to mention the business activities you mean to perform and can only perform those activities after the registration is complete.

Professional Trade License

The professional trade license is for entrepreneurs who will sell services that require them to use their intellectual or creative abilities. Usually, to provide specialized services that require extensive knowledge and expertise on the subject, you need to provide certificates that validate your education or expertise about that subject. For example, to provide accounting services, you need sufficient knowledge about the subject, and you need to prove you have that knowledge. Alternatively, your employees can be the experts who provide these services as well.

The UAE mandates that a local services agent completes the judicial formalities for your business when applying for a professional trade license. However, do not worry about sharing equity with the service agent. You will have 100% ownership of your business and retain all of your earnings and profits. Similarly, to the commercial trade license, you need to specify the business activities you mean to perform.

Benefits of Professional Trade License

Here are the benefits your business will receive after you register for a professional trade license:

  • You do not have to pay any additional income tax or corporate tax for your earnings.
  • You can choose from a wide variety of legal forms for your business.
  • You can own 100% of your business that has registered for a professional trade license.
  • The sole proprietorship of a business with a professional trade license is very easy to attain.
  • You will get access to a wide range of clients and lucrative government contracts.
  • Capital requirement for businesses with a professional trade license is very minimal.
  • You can renew your professional trade license at a very affordable cost.

You can get all these benefits very easily with the help of Company Setup professionals. They are experienced in the registration process for the professional trade license.

What can we do for you?

The Department of Economic Development in Dubai is responsible for handling all the trade license registration processes. We understand that as foreigners it is tough for entrepreneurs and investors to deal with the officials in these departments. However, since we have been incorporating businesses in the UAE for so long, we have developed connections with the authorities.

We will set up your business in Dubai and register for the trade license for you so that you are free to focus on making more important decisions. Do not hesitate to contact us regarding any inquiries you might still have about trade licenses in the UAE.

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