What is the difference between a professional and a commercial licence
You need to obtain a particular trade licence to set up a company in Dubai. Agribusiness, food, professional, commercial, and travel licences are just a few examples of the various trade licence types. As the other types of licences are simple, it is usual for people to become confused between commercial and professional licences.
Now that you know the difference between a commercial licence and a professional licence, it’s time to read on to learn more about the two most prevalent types of trade licences in Dubai.
A commercial licence: what is it?
It is a licence that the Department of Economic Development (DED) in Dubai issues to businesses and companies that engage in trading activities including import/export, retail, and so forth.
A business must obtain a commercial licence regardless of whether it is involved in retail, construction, or real estate. In Dubai, you cannot lawfully operate a business without this licence. This licence makes it easier to trade goods in Dubai.
You can be authorized to engage in many types of trading activities, including software trading, general trading, and electronic trading, after you have a commercial licence. This commercial licence can be obtained by general and specialized traders of goods, commodities, and services to lawfully operate trading businesses in Dubai and throughout the United Arab Emirates.
A professional licence: what is it?
DED grants this licence to individuals or businesses who provide services. Based on their educational background and expertise, these businesses offer services in particular business fields. Accountants, auditors, instructors, and other professionals are the best examples of individuals who need a professional licence.
Before they begin providing their service to any client in Dubai or the UAE, service-oriented businesses need to acquire professional licences. These licences are often granted in accordance with the applicant’s educational background and field of specialization. You must appoint a local UAE national as your local service agent even though you receive 100% ownership of your company.
This agent will represent your company and will complete judicial processes. Since he is not directly associated with your business, this service agent will not have any equity in your company. Only this individual will alter his fixed yearly service charge. Additionally, your company won’t be held accountable for the service agent.
Dubai’s distinction between professional and commercial licences
Now that you know the definitions of both types of trade licences, it’s time to start defining the difference between them based on the following factors:
Ownership
In the case of a commercial trade licence, an expat or foreign investor can own 49% of the total shares of a company, with a UAE national owning the remaining 51%. Expats can own 100% of a company in some cases without including any local sensors in their business operations.
You will be the only proprietor of your company if you get a professional licence. There is a need to involve a local service agent/LSA in the licence process, even if an expat is the sole proprietor of his business.
Capitalization of shares
The minimum share capital needed is around AED 300,000 if you wish to obtain a commercial licence and set up a business. You only need to invest AED 150000 if you want to set up a company with a professional licence. You should be aware that although you are not obligated to deposit this amount into the account, it is needed for paperwork purposes.
For a commercial licence, which costs about AED 12,000, you will need to pay more. On the other hand, to obtain a professional licence in Dubai, you would need to pay about AED 9000. Administrative fees, trade name fees, service agency fees, tenancy contract fees, government cultural fees, and a few additional expenses are included in the professional licence price.
Liability
In the case of a commercial licence, your liability is restricted because you share ownership with a local national of the United Arab Emirates. Both a local UAE national and an expat will share liability. You will end up with your company name with an LLC suffix. However, your liability is unlimited if you start a business as a sole proprietorship or a civil company with a professional licence.
Benefits
· With both types of trade licences, you receive various benefits.
· You will obtain the following benefits in case you obtain a commercial licence:
· There are various options available when it comes to selecting the type of company that can use this licence.
· A single licence may be used for a maximum of 10 different business endeavors.
· For company management and personnel, it enables you to apply for a resident visa.
· Bank accounts for corporations can be opened.
· The cost of the licence renewal is reasonable.
· Before renewing your licence, you don’t need an audit.
· It is legal for you to engage foreign workers.
· The most straightforward application procedure is for a commercial trade licence.
· This licence makes doing business internationally more accessible.
· When you obtain a professional license, then you can avail of the following benefits:
· Your employee may be eligible to apply for a resident visa.
· With the use of this licence, qualified experts can set up their businesses.
· When renewing your professional licence, you will have to pay a set annual cost.
Which licence do you need, a commercial or a professional one?
You won’t be confused by these two types of licences in Dubai after reading this text. Professional licences and commercial licences have apparent differences. Different sets of business operations are covered under the two licences.
A commercial licence is available to traders, while a professional licence is available to individuals who are focused on providing educational services. A commercial licence costs more than a professional licence since it comes with more benefits.
There’s a good possibility you don’t know what type of trade licence you need to acquire for your business, even though I’ve gone over the main differences between commercial and professional licences. Sweat not!
Prospr is available to provide you with all the advice and assistance you need. All expats can avail the services of our knowledgeable personnel for business setup and licence consulting. As we all know, technical and legal details can be challenging to understand.
However, we can make the process of setting up a company in Dubai hassle-free. Give us a call right now with any queries you may have. We are prepared to assist you!