Trade License vs. Freelance Permit – UAE Business Setup
With its entrepreneurial culture and booming economy, it’s understandable why many foreign investors are interested to start business in Dubai or in the UAE in general. Starting any type of business in the country would require either a trade license or a freelance permit.
What is a Trade License?
A trade license is a document issued by the Department of Economic Development (DED) that will permit a person or organization to conduct business in the UAE. Major businesses are streamlined under four business trade licenses:
- Commercial License is for companies engaged in buying or selling goods. It covers business activities such as imports, exports, rental services, logistics firms, real estate, trading or products, brokerage firms, etc.
- Industrial License is required for businesses involved in industrial and manufacturing activities, furnishing of products, packaging of products, casing of products, etc.
- Professional License is mandated for service-oriented companies. It covers activities such as management consultancies, marketing and designing, IT services, law firms, educational institutions, medical services, etc.
- Tourism License is to be obtained by businesses involved in the travel and tourism sector. It covers restaurants, travel agencies, hotels, car rental companies, etc.
The process of getting a license involves submitting company formation documents such as a Memorandum of Association and a tenancy contract. For certain categories of business, approval is needed from relevant ministries. For instance, food-related companies require approval from the Food Department of Municipality.
What is a Freelance Permit?
A freelance permit is the document issued by a relevant free zone authority allowing a person to be a sole practitioner of his or her craft. However, it is only available to people working in the fields of media, education, or technology (IT).
Freelancing is fully supported by the UAE government, as long as you have a valid license. A permit is aimed to promote freelancers to gain more acceptance, expand their network, and establish their own companies in the future. It can easily be upgraded to a trade license later on.
To get a freelance permit, you just have to submit your application to the free zone authority where you plan to work. Major free zones that offer freelance permits include RAKEZ, Fujairah Creative City, twofour54, Ajman, and several free zones in Dubai.
Which Should You Go For – UAE Business Setup
Having a freelance permit lets you offer your services as an independent contractor. If you want a one-person business and stay small, it should be enough. It also keeps your costs low. If you are planning to setup business in Dubai, but don’t have the financial means yet, a freelance permit can also serve as your start-up platform.
If you plan to work with big companies or need to hire employees, then you should apply for a trade license. Transactions with corporate clients would require a TRN Number most of the time, and it is not issued to freelancers. A trade license also gives you more credibility when it comes to closing deals.
At Austria Business Center, we will ensure that your license is exactly the one you need. Give us a call now at +971 4 454 9700 and see how our consultancy services can support the growth of your business!