HOW TO START AN E-COMMERCE BUSINESS IN DUBAI & THE UAE

This article was updated on July 5th, 2023

This article has been researched and written by Scott Cairns and the team at Creation Business Consultants and has not used AI in generating this article.

The internet era changed the dynamics of how businesses interact with their consumers. Applications and platforms in mobile phones or devices are available for use to instantly shop anywhere around the globe. It allows consumers to conduct online payment and the products ordered shipped directly to the selected location and instantly or within a set shipping period. 

E-commerce is defined as the ability of businesses to buy and sell goods and services electronically or over the internet. Amazon, Zomato and Noon are examples of well-established e-commerce platforms. 

KEY FACTS & TRENDS IN THE E-COMMERCE MARKET

• There are currently 5.18 billion internet users which accounts for more than 60% of the global population (As of May 2023 statistics).
• With a Compound Annual Growth Rate (CAGR) of 22.2%, the worldwide food and beverage e-commerce industry is anticipated to increase from $57.09 billion in 2022 to $69.77 billion in 2023.

E-COMMERCE CLIMATE IN THE UAE

If you are planning to establish an e-commerce business in the UAE, you may choose to set up the licenses in one of the many free zones and/or within the mainland depending on your company’s target market. Company licenses in both mainland and free zone offer 100% expatriate ownership and complete control over your company operations and finances. A mainland company will offer better flexibility of operations, reach, ease of logistics, established infrastructure, and accessibility to the local market.

Free zones and mainland offer warehousing and storage facilities depending on the requirements. Certain free zones in Dubai have a larger variety for warehousing compared to others. For example, Jebel Ali Free Zone and Dubai Aviation Corporation offer a wider range of warehousing facilities and have direct access to Jebel Ali port and Al Maktoum International Airport.

On June 2023, the UAE introduced 9% corporate tax which applies to all UAE companies that generate income from providing goods or services to consumers or businesses in the UAE.

HOW TO REGISTER AN E-COMMERCE COMPANY & GET AN E-COMMERCE LICENSE IN DUBAI & THE UAE?

There are no formal qualifications required to set up an e-commerce license in Dubai and the UAE. Creation Business Consultants can guide you through the entire company registration process of your e-commerce business which includes:

• Guiding you on a suitable jurisdiction to set up your e-commerce company (mainland or free zone).
• Drafting and submitting the documentation for your e-commerce company. Including but not limited to the application with the proposed company name, business plan, ownership, and management details to the respective authority.
• After an initial approval from the licensing authority is received, the business will need to select suitable business facilities. The business facility options available include serviced office for digital services companies, functional office or a warehouse for businesses that have a fulfilment centre.
• Following on, the authority will request signatures from the shareholders or authorised company representatives. Once the e-commerce application with the business lease is lodged to the authorities, the e-commerce lease will be issued.
• The next step for your e-commerce company is to apply for a residence permit/ and Emirates ID card of your business manager.
• Upon completion of the requirements, Creation Business Consultants will then assist you in issuing an application to open your business bank account.
• Once bank account is operational, your e-commerce business can apply for a payment gateway (an online payment service integrated into the e-commerce website to collect payments) through companies such as Network International and Magnati or outsource it to other payment gateway service providers like Payfort and CC Avenue.

Thereafter, your e-commerce company can start its operations online. Creation Business Consultants can also assist you with post-company set-up processes including employee sponsorship, financial year set-up, bookkeeping, payroll, Corporate Tax and VAT registration, etc.

TAKEAWAY

Advancements in technology and the post-pandemic environment gave a boost to the future of e-commerce in the UAE. Consumers are preferring the convenience brought forth by e-commerce and it is expected to become part of the norm in the years to follow.

The Corporate Structuring and Tax Advisory Department at Creation Business Consultants provides a wide range of services to assist you in setting up an e-commerce business in the UAE. For a free consultation, email us at [email protected] or call UAE +971 4 878 6240.

Scott Cairns,
Managing Director