Your In-Depth Guide to Obtaining a Business License in Dubai

Dubai is one of the top destinations in the world to start a business. It boasts a strategic location, modern buildings, and a pro-business atmosphere that attracts startups and big brands from around the world. The city saw 3,461 new Emirati businesses getting launched in 2024.

If you’re planning to set up a business in Dubai, getting your license is the first major step. You need the right license to conduct your business operations legally. Without the right business license, you can’t run operations, advertise, or even hire staff.

Dubai offers different licenses for different legal business operations. Whether it’s commercial, professional, or industrial, each one has its own set of rules, costs, and office requirements.

In this detailed guide, you’ll learn everything you need to know about choosing the right license, the process, and how to stay compliant in the UAE business environment.

Let’s get started.

Types of Business Licenses Available in Dubai

The Department of Economic Development (DED) is the body in charge of issuing every type of business license in Dubai. DED provides different licenses based on what your business does. Choosing the right one helps you stay compliant and avoid delays.

Some main business licenses include:

Commercial License

A commercial license is given in Dubai if your business involves buying and selling goods. This includes retail shops, general trading, supermarkets, and electronics stores. It also works for import/export companies and distributors dealing with physical products.

Professional License

Service providers, like consultants, freelancers, IT companies, and marketing agencies, often need a UAE-wide professional license. It allows full foreign ownership and is ideal if you’re offering skills or specialized services to clients.

Industrial License

If you’re setting up a facility for manufacturing, production, or assembly, you’ll need an industrial license in Dubai. It covers food processing units, factories, and packaging businesses. You’ll need a physical warehouse and approval from relevant authorities.

Tourism License

UAE-based travel agencies, hotels, tour guides, and restaurant operators serving visitors require a tourism license. If your business supports Dubai’s tourism industry, this is the license you’ll need.

Agricultural License

You should apply for an agricultural business license in Dubai if you’re going to do farming, fishing, and animal-related businesses. This typically includes businesses like livestock farms, fisheries, or greenhouses.

Crafts License

This license is for skilled professionals like tailors, carpenters, and jewelers. If you produce goods by hand or offer craft services, you’ll need this to operate legally in Dubai. Multiple licenses may be required if you cover more than one sector.

Free Zone Vs Mainland: Choosing Between Jurisdictions

Before you apply for a trade license, you need to choose where to register your business. In Dubai, this usually means picking between Free Zones and the Mainland. Each has its own rules, costs, and benefits. Here’s what you need to know to choose the right setup.

Free Zones

Free Zones are special trade license jurisdictions in Dubai created to attract international businesses. They offer perks like 100% foreign ownership, zero import/export duties, fast setup, and no need for a local sponsor.

That’s why many startups and solopreneurs pick Free Zones. UAE has more than 40 Free Zones, and popular ones include DMCC, Dubai Internet City, and JAFZA. These zones are known for focusing on industries like tech, media, trade, and logistics.

Mainland

Mainland companies are registered with the DED. This means you can do business anywhere in the UAE without restrictions. In the past, a mainland company ownership in Dubai required a UAE national sponsor to hold a 51% stake. But things have changed. Now, many business activities allow 100% foreign ownership, especially in non-restricted sectors.

Deciding Factors: Free Zone Vs Mainland Setup in Dubai

When setting up your business in Dubai, choosing between the Free Zone and the Mainland decides how you operate, grow, and earn. The choice depends on your target market, ownership needs, industry, and long-term goals.

Ownership and Control

If full ownership is a must, Free Zones gives you 100% foreign ownership without requiring a local sponsor. This is ideal for startups, solo founders, or international investors who want to maintain full control of the business.

On the other hand, Mainland business locations in the UAE now also allow 100% ownership in many sectors, thanks to recent reforms. However, a few industries, like defense or legal services, may still need a UAE national as a partner.

Where You Can Trade

This is one of the biggest differences. As a Free Zone business in Dubai, you can only operate within the Free Zone itself or with clients outside the UAE. You cannot sell or trade directly within the UAE Mainland unless you appoint a local distributor or agent.

Mainland businesses, however, can operate anywhere in the UAE and are free to engage with both public and private sectors. So, if your business relies on local retail, hospitality, or services, Mainland is the better pick.

Licensing & Business Activities

Free Zones are industry-specific. For example, Dubai Internet City is ideal for tech startups, while DMCC caters to commodities and trade. You get streamlined licensing, but it’s limited to the Free Zone’s approved sectors.

Mainland licenses are issued by the DED, offering flexibility for allowed activities. However, the process can be more detailed and involve extra approvals.

Office Space and Visa Quotas

In both setups, the size and type of office you rent affect your visa quota. Free Zones offer flexi-desks, coworking, or small private offices, which are cost-effective but come with lower visa quotas.

Mainland businesses in Dubai are required to have a physical office, and visa quotas increase with the space leased. A larger office allows you to sponsor more employees.

Cost of Setup and Operation

Free Zones are budget-friendly for startups. Many offer packages that bundle licensing, visa quotas, and flexi-desks. There’s less paperwork, quicker approvals, and fewer third-party dependencies.

Mainland setup costs are higher. You may need to pay for:

• Larger office space
• Visa fees and deposits
• DED approvals and external clearances
• Local sponsor fees (for certain sectors)

However, these higher upfront costs come with greater flexibility and a wider market reach.

Tax Benefits and VAT

Free Zones offer tax exemptions for a set number of years and in some cases, 0% VAT if your operations are confined within the Free Zone. You also enjoy customs duty exemptions for imports and exports through Free Zone channels. However, mainland companies must register for VAT (5%) and follow UAE’s corporate tax structure.

Government Contracts and Public Sector Access

If you plan to work with government entities or bid for public contracts in Dubai or the wider UAE, you must be registered as a Mainland company. Free Zone businesses are not eligible to participate in public sector tenders.

Ease of Business Setup

Free Zones are known for quick setups. Most zones offer all-in-one service centers to handle licensing, visa processing, and even office fit-outs. You can get up and running in just a few days.

Mainland takes a bit more time, with more paperwork, approvals, and third-party scrutiny. But you get more flexibility and broader reach.

Here’s a Quick Comparison of the Free Zone Vs Mainland Setup in Dubai:

Steps to Obtain a Business License in Dubai

Whether you’re going for a Mainland or Free Zone, the process is pretty straightforward. Here’s a simple breakdown of each step in the license application for a Dubai business.

Step 1: Choose a Business Name

Pick a name that fits the rules. You can’t use offensive terms, religious words, and abbreviations like “LLC” or “Inc.” Make sure your name reflects your activity clearly. In Dubai, you can run a quick trade name registration check to ensure it’s available and not already trademarked.

Step 2: Apply for Initial Approval

This step is your green light to proceed. Submit your business plan and ID documents to the right authority. You typically have to go through the DED license process for a Mainland business and check with the relevant authority for Free Zone licensing in the UAE. Once approved, you can move on with the setup.

Step 3: Select a Business Location

Mainland setups need a physical office space. Free Zones give you more choices, like virtual or coworking office spaces. At GAL Business Center, we offer ready-to-use serviced offices that meet both Free Zone and DED license rules.

Step 4: Obtain External Approvals

Some sectors need extra approvals. For example, restaurants need clearance from the health department, and IT firms may need approval from telecom authorities. These approvals help your business meet all legal and safety standards.

Step 5: Submit the Final Application and Pay the Fees

Get all your paperwork in order, including passport copies, Emirates IDs, tenancy contracts, MOA, and prior approvals. Then, submit your final application and pay the setup fees. You can usually pay online or at a service center.

Step 6: Receive Your Business License

Once approved, you’ll get your business license in a few days, either digitally or as a printed copy. After that, register with the Dubai Chamber of Commerce if required. You’re now ready to start operations legally in the UAE.

How to Get a License for Online Business in UAE

Starting an online business in Dubai is easier than ever, but you still need the right license. Whether you’re selling products or offering services online, here’s how you can get your online business license in UAE.

What’s Considered an Online Business in the UAE

Online businesses are eCommerce stores, digital consultancies, online tutoring, and platforms offering virtual products or services. UAE authorities recognize these under categories like digital services, web-based retail, and virtual marketplaces.

Types of Licenses You Need

Online businesses in the UAE can run under different licenses depending on what they do. Here are the three most common options:

• Professional License: Perfect for service-based businesses like consulting, design, or freelance work. It allows full foreign ownership and is ideal if you’re selling skills, not products.
• eCommerce License: Best for those selling physical or digital products through a website or online marketplace. It’s required for platforms offering online sales and delivery in the UAE.

• Virtual License: A low-cost option for digital-only businesses that don’t need a physical office. Great for solo founders and startups working remotely.

Jurisdiction Options

Mainland allows you to sell anywhere in the UAE, while Free Zones are great if your clients are international. Virtual licenses are cost-effective for solo founders. The right option depends on your market, budget, and whether your digital business setup in UAE also needs a physical office. GAL Business Center offers coworking spaces for digital businesses in Dubai.

Step-by-Step Process to Obtain an Online Business License

The process may be somewhat similar:

• Choose your business activity based on what you plan to sell or offer online.
• Pick a business name that follows UAE rules and check if it’s available.
• Decide if you want to register in the Mainland or a Free Zone.
• Submit your passport copy, Emirates ID (if any), and a simple business plan.
• Apply for initial approval from the DED or the relevant Free Zone authority.
• Arrange a business address, either physical or virtual, to meet setup requirements.
• Complete your final application and pay the licensing fees.
• Get your license issued, usually within a few working days.

Regulatory Compliance

Even if you’re running an online business, you’ll still need to follow local consumer laws, secure customer data, and follow electronic transaction rules. If you’re selling health, financial, or educational services, you should check for extra approvals.

GAL Business Center can help you with choosing the right license, handling all paperwork, and offering virtual office packages that meet UAE rules. Our team also provides PRO services, so you stay fully compliant after launching your business.

Key Factors for Selecting the Right License

While paperwork is critical, choosing the right license in Dubai is also about matching your goals, budget, and setup needs. Here’s what to look at before applying.

Business Activity

Your license must clearly list every activity your business will perform. For example, if you’re doing IT support and software development, both must be on your license. Missing activities can lead to delays, fines, or blocked renewals from licensing authorities.

Market Access

If you want to sell products or services directly in the UAE, you’ll need a Mainland license. Free Zones are better if your business is focused on international clients or online trade. Think of a Mainland setup for local retail and a Free Zone for export-heavy or digital businesses.

Costs and Fees

Mainland setups often come with higher office rent and sponsor-related fees. You can choose a serviced office instead of a traditional lease to lower your overheads. Free Zones offer lower startup packages with flexi-desks and fewer upfront costs. Always compare business license fees in UAE, visa quotas, and renewal costs before choosing.

Ongoing Compliance

Every business in Dubai needs license renewal, VAT registration, and labor rules compliance. Mainland companies often have more government touchpoints. Free Zone companies may deal with fewer but must still have to renew licenses and file documents annually.

Maintain Your Compliance Post-Licensing

Getting your license is just the start. To stay active and avoid penalties, you need to comply with ongoing rules. Here’s what every business must manage after setup.

Annual License Renewal

Your business license must be renewed every year. The trade license renewal in Dubai is a simple but time-sensitive process. You’ll need to submit updated documents, pay renewal fees, and ensure your office contract is still valid. Missing the deadline can lead to fines or a freeze on your license.

Ongoing Legal Obligations

If your Dubai-based business earns more than AED 375,000 per year, VAT registration is mandatory. This applies to both UAE residents and foreign-owned businesses. You must charge 5% VAT on taxable goods or services, file returns regularly, and keep all financial records in order.

Complying with labor laws is just as important. You need legal employment contracts, proper work permits, and visa quotas based on your office space. Mainland and some Free Zone companies must also do annual financial audits and maintain proper bookkeeping as part of standard regulatory requirements in Dubai.

Common Pitfalls to Avoid

Running a business in Dubai comes with clear rules, but many owners overlook small details that can lead to big problems. Staying on top of your documents, renewals, and licensed activities is key to avoiding penalties and delays.

As an owner, you should watch out for these mistakes:

• Missing the deadline for your trade license renewal in Dubai.
• Offering services or products not covered under your current license.
• Not updating key documents like tenancy contracts or Emirates IDs.
• Failing to register for VAT when your revenue crosses the threshold.
• Keeping incomplete financial records or ignoring audit requirements.
• Hiring staff without valid work permits or outside your visa quota.

Whether it’s company formation in Dubai or ensuring ongoing compliance, you can’t afford to make any mistakes. It’s best to consult professionals who can take care of all the deadlines and paperwork while you focus on your core business responsibilities.

Consequences of Non-Compliance

In UAE, ignoring business compliance can land you in hot waters. You might end up getting fined, your license can get suspended, and your business may be shut down. You also risk damaging your reputation, which affects partnerships and future licensing.

GAL Business Center Simplifies Your Business Setup in Dubai

Setting up a business in Dubai doesn’t have to be stressful, not when you have the right help in your corner. At GAL Business Center, we offer everything under one roof to help you get licensed fast, stay compliant, and focus on growth.

Flexible Office Solutions

GAL Business Center offers fully furnished serviced offices and flexible coworking spaces that meet Dubai’s licensing requirements. Whether you need a private office for a Mainland business or a shared desk for a Free Zone setup, we’ve got you covered.

All our workspaces are DED-compliant and visa-friendly. You get high-speed internet, fully-equipped meeting rooms, state-of-the-art business lounges, and a prestigious address with zero setup hassle. It’s the easiest way to fulfill your office requirement and start working right away.

Company Formation Services

We also offer end-to-end business setup services in Dubai. Our experts can help you with everything, from choosing the right license to submitting your application. We prepare your documents, track approvals, and liaise with authorities to save you time. Whether you’re a freelancer, startup, or established business, our goal is to make the process quick and stress-free.

PRO Services

Handling legal paperwork and renewals can slow you down. But with our full-fledged PRO services in Dubai, you can do visa processing, labor contracts, Emirates IDs, license renewals, and more. We deal with the government authorities so you can focus on your business. Our PRO team keeps you updated and ensures all your legal requirements are handled on time.

Whether you’re an established brand or a startup, partnering with a business center is an excellent idea. Business centers, like GAL, offer a robust infrastructure and expert support startups and brands need to set their foot in Dubai.

Start Your Business in Dubai with Expert Licensing Support

Getting the right license lays the foundation for running your business legally. With expert support from GAL Business Center, you can get the right business license in Dubai without stress or delays. We offer everything you need under one roof, including office space, help with company formation, PRO services, and expert guidance for staying compliant.

If you’re looking for reliable business setup services in the UAE, reach out to our team today. Whether you’re a freelancer, startup, or growing company, we’re here to help.

Contact us today to get started.