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When establishing a business in the UAE, there are more things that need considering apart from a good business plan and initial capital. Among the first things is the choice of an appropriate business license. There are three different kinds of licenses issued to businesses in the UAE which include commercial licenses, professional licenses, and industrial licenses.
It’s essential to know the kind of licenses necessary for your enterprise before starting your own business. The blog will briefly describe all kinds of UAE business licence types, showing what activities are permitted under each type, so you can select the most appropriate type of licence for your operation.
A business license is a legal permit issued by the UAE government that allow companies to conduct operations within the country. It explains what your business can and cannot do, lists your approved activities, and defines your legal scope of operation.
These licenses are issued by the Department of Economic Development in each emirate, and relevant Free Zone authorities for businesses established in designated zones. You can’t lawfully trade, hire staff, open a corporate bank account, or sponsor employee visas without having the right license.
The type of license that you need to obtain depends fully on the nature of your business activities. These three main categories fit into the broad spectrum of commercial operations across the diverse economy of the UAE.
A commercial license is required for businesses involved in buying, selling, or trading goods. This includes retail shops, wholesalers, distributors, import-export companies, and e-commerce ventures.
What activities does a commercial license cover?
This license type applies to businesses that deal with the exchange of products rather than services or manufacturing. Common activities include:
Key requirements to obtain a commercial license
To get a commercial license, you usually need to submit a business plan, list the products you want to trade, and have a physical office or shop. Some types of trading also need extra approval from government departments.
For example, Food-related businesses must be approved by the Food Safety Department. Pharmaceutical products cannot be traded without permission from the Ministry of Health. Electronics and selected consumer goods may need standardisation certificates.
Professional licenses are issued to businesses that provide services instead of selling goods. These businesses rely on expertise rather than products. Examples include consulting firms, law offices, marketing agencies, IT companies, and training institutes.
What activities does a professional license cover?
If your business revenue comes from expertise, knowledge, or professional services, this is the license you need. Typical activities include:
Key requirements to obtain a professional license
Unlike commercial licenses, professional licenses often require proof of relevant qualifications or industry certifications. For instance, setting up a consultancy may require submission of academic credentials, while healthcare services demand medical licenses and Ministry of Health approval.
The UAE makes sure regulated professions follow the rules. Architects, engineers, lawyers, and medical professionals are required to provide proof of their qualifications and register with the proper professional body.
Limitations to consider while obtaining the license
Professional license holders cannot engage in trading activities. If your business model includes both consultancy and product sales, you may need to apply for a commercial license instead or consider a dual-license structure in certain cases, though this varies by emirate.
For businesses that manufacture, modify, or assemble products, the process requires an industrial business license. Studios, factories, and any form of manufacturing are connected through the processing and costing of raw materials into finished products. Therefore, all industry types fall into this type of licensing.
What activities does an industrial license cover?
This license applies to businesses with physical production capabilities. Common activities include:
Regulatory and environmental approvals
Industrial licenses require multiple approvals. You have to get permission from civil defence, environmental authorities, and industry regulators. Food production needs the Food Safety Authority’s approval. Chemical factories need clearance from environmental and safety agencies. The facility must follow rules for waste, emissions, and worker safety.
Location and infrastructure requirements
Industrial businesses usually must operate in designated industrial zones or specific Free Zones designed for manufacturing. You cannot run a factory from a regular office space.
These zones provide the necessary infrastructure, utilities, and proximity to transport hubs, but come with rules and costs.
Setting up an industrial operation requires a significant capital investment. This includes not only the license fees but also the cost of equipment, facilities, and meeting regulatory requirements.
| Criteria | Commercial Licence | Professional Licence | Industrial Licence |
|---|---|---|---|
| Purpose | For businesses that buy, sell, or trade goods | For businesses that provide expert services | For businesses that manufacture, process, or assemble products |
| Who It’s For | Traders, retailers, wholesalers, importers, exporters, e-commerce companies | Consultants, IT firms, legal offices, marketing agencies, healthcare providers | Factories, production units, processing plants |
| Common Activities | Retail shops, general trading, import/export, supermarkets, property trading | Business consultancy, legal services, marketing, software development, training, event management | Food processing, textile production, chemical or pharmaceutical manufacturing, electronics assembly, metal fabrication |
| Qualifications Needed | Business plan and details of traded goods | Academic degrees, professional certifications, licenses relevant to the field | Technical expertise, safety certificates, environmental approvals |
| Extra Approvals | Depending on the sector: Food Safety Dept for food, Ministry of Health for pharmaceuticals | Registration with professional bodies, Ministry approval for regulated sectors like healthcare, law, or education | Approvals from multiple authorities: Environmental, Civil Defence, Food Safety, and other industry regulators |
| Where You Can Operate | Flexible: commercial areas, free zones, or mainland | Flexible: offices in commercial areas or free zones | Restricted: must be in industrial zones or free zones equipped for manufacturing |
| Infrastructure Requirements | Commercial space with storage | Office space; minimal setup needed | Factory or warehouse space with equipment, utilities, and waste management systems |
| Investment Needed | Moderate | Low to moderate | High, including equipment, facilities, and compliance costs |
| Limits on Operations | Cannot provide professional services or manufacture goods | Cannot sell or manufacture goods | Limited to production; cannot sell directly without separate license |
| Compliance Requirements | Moderate | Moderate to high, depending on the sector | High, including environmental, safety, and operational standards |
| Setup Time | Usually 2–4 weeks | Usually 2–6 weeks; longer for regulated sectors | Usually 1–3 months due to multiple approvals |
| Cost Range | Moderate | Low to moderate | High |
| Mainland or Free Zone | Both available; mainland allows UAE-wide access | Both available; some professions limited by emirate | Both available; industrial zones provide better infrastructure |
| Staff Needed | Sales and operations team | Professionals with required credentials | Technical staff, production workers, safety officers |
| Best For | Businesses focused on physical products and trade | Service-based businesses that rely on knowledge and expertise | Businesses that convert raw materials into finished products |
Choosing the right license is a crucial first step in starting a business in the UAE, as there are various types of licenses available. Commercial licenses are appropriate for trading companies, professional licenses are designed for service providers, and industrial licenses are required for manufacturing purposes.
In order to comprehend the regulatory aspects according to the type of business activities, it is always best to consult UAE advisors such as Stratrich Consulting. This can help you achieve the goal and ensuring the success of your venture from the very beginning.
