Difference Between Commercial License and Professional License in the UAE

Starting a business or establishing a physical company in UAE begins as soon as you apply for a business license from the Department of Economic Development (DED) or the Freezone Authority where you have launched your company. The business licenses offered by the authorities also include commercial licenses or professional licenses. Commercial license Dubai is issued for the businesses or companies that are engaged in trading activities. Professional license Dubai is given to those individuals who possess a certain set of skills or expertise and are willing to offer service in exchange for a fee.

Both these licenses are the most sought-after as they are economical and easy to acquire as well. Depending on the nature and objectives of your business, you need to find the right trade license that you need to apply for. 

Difference between Commercial License and Professional License 

• Type of activity – 

Commercial license UAE is issued to those businesses that are involved in the sale of tangible goods and commodities. For instance, general trading, trading of electronics, software, hardware, land, clothes, and other physical objects. 

Professional License Dubai is a service-oriented license. If an individual has a particular area of expertise or high-end knowledge about anything, he can provide service in UAE in exchange for a fee after acquiring a professional license. For example, consultancy, accounting or software development services, beauty salons, medical representatives, etc. 

• Ownership of formation – 

The commercial license offers ownership of 49% of the total shares to the investor. The remaining 51% is owned by the UAE sponsor or local agent. 

The holder of a professional license enjoys 100% ownership and can become the sole possessor of the company. 

• Share Capital – 

The minimum capital required to get a commercial license is AED 300,000, while a professional license can be acquired with a minimum amount of AED 150,000. 

• Liability – 

A commercial license UAE is issued for a Limited Liability Company(LLC), which means the shareholders have limited liabilities and debts. 

In a professional license, the liability is unlimited and is held by the investors as he/she is the sole owner of the business. 

Benefits of Acquiring a Commercial Trade License 

A commercial license serves as a shield to the trading companies in the UAE. However, in some cases, you also need to obtain special permits and authorizations to carry out specific business activities. 

• The process of procuring a commercial trade license is easy. 
• The owner can carry out ten business activities under one commercial license.
• They can conduct several similar business activities with one license. 
• A commercial license holder has the choice of selecting the type of company he wants to incorporate. 
• The owner of the commercial license UAE enjoys exemptions from corporate taxes and income taxes out of their business revenue. 
• 100% repatriation of capital gains. 
• Companies with a commercial license can hire a large number of foreign employees.
• A businessman can freely trade his goods internationally with a commercial license. 
• Companies that are operating under a commercial license can renew them easily and audit-free. 

Benefits of Acquiring a Professional License 

Professional license Dubai is issued for all service-oriented companies based on the applicant’s educational entitlement and area of expertise. 

• The individual with a professional license enjoys full ownership of the business.
• The annual fee is fixed for a professional license holder. 
• They are legally authorized to provide services to anyone in the UAE. 
• They are exempted from both kinds of additional taxes, corporate and income. 
• The owner gets full support and assistance from the DED for the smooth and secure functioning of the business. 
• Opening a corporate bank account becomes easy for professionals with a professional license.
• Companies operating under professional licenses can apply for visas for their employees. 
• You can renew the license easily
• The individual can participate in activities that are compatible with the area of competence. 

Steps to get a Commercial License 

• Determine the type of business
• Choose the business location – Mainland or Freezone 
• Register for the trading name 
• Get the initial approvals from the concerned departments 
• Submit the required documents to the respective officials 

The following documents need to be submitted while applying for a commercial license- 

• Application form along with Trading name registration approval or certificate 
• Copy of passport of every individual legally associated with the company formation 
• Business plan 
• Copy of bank statement 
• No Objection Certificate(NOC) from the UAE sponsor
• Details of shared capital 

A company formed in the UAE mainland needs to apply for a commercial license with the DED. Freezone companies must seek freezone authorities for their trade license. 

Shuraa business setup will take care of the required documentation and paperwork and help you secure the license for your business in UAE.

Also read: How to Change Local Sponsor in Dubai?

Steps to get a Professional License 

• Present a detailed description of the activities you are planning to perform in your company.
• Choose a trading name 
• Hire a local service agent to take care of all your legal formalities for the company. 
• Get pre-approval from the DED. 
• Submit the requested documents for final approval. 

The documents required to apply for a professional license include : 

• Application form 
• Passport copies of the owner and other partners associated with company formation 
• Copy of UAE Visa/Entry permit 
• Copy of local partner’s Naturalization Book 
• No-Objection Certificate (NOC) from the sponsors
• Proof of residence or Tenancy contract 
• Trade name certificate or approval  

A professional license in Dubai opens numerous possibilities for you in the UAE. Operating your business with an expired license or working without the essential permits can land you in trouble. Therefore, it is necessary to get the required authorisations beforehand and renew the license accordingly as and when needed. 

Conclusion 

Commercial or Professional, both the licenses are equally in demand, are effective and worthy in a diverse country like UAE. UAE is undoubtedly the best place for investing in a venture, businesses to prosper and industries to make recognition for themselves. Other than legal authorization, UAE can offer several other benefits to your business – a solid infrastructure, strong workforce, competitive market, upgraded lifestyle, and hub for networking and connecting with global partners and consumers. 

If you are also planning to set up a company for commercial trading or professional service-providing purposes, it is best to get the guidance and complete information through a reliable and experienced business consultant in Dubai. Shuraa Business Setup has helped over 35,000 companies to set their foot in the UAE market. Our team of seasoned professionals is ready to offer you full-fledged service in license acquisition and establish your business in heart of UAE. 

Talk to us now and find a home for your business in the Emirates! 

To book a free consultation, call on +971 44081900. You can also send a WhatsApp message at +971 50 777 5554. You can also connect over email by sending us your query at info@shuraa.com.