Difference Between E-Commerce and E-Trader License
If you want to invest in the online business in Dubai, then E-Commerce and E-trader license are your choices. The Department of Economic Development (DED) issues the E trader licenses and many free zone offers e-commerce activity.
E-Trader license is a new license in which you can carry out online business by selling your products or services over social media platforms. The e-trader license is issued by the DED . The E-trader license procedure makes the business transparent and reduces the risk of selling fake products along with other malpractices.
In other words, you cannot sell products in Dubai without a legal trade license. The applicants of the license must be residents of UAE to start a business. Under the e-trader license you cannot sell products via online method.
There is no need of any local sponsor to run an e-trading business. Similarly, it is important to note that non-GCC (Gulf Cooperation Council) expats can only offer professional services in their social media business through e-trader license. They cannot sell products using the same license. Only UAE and GCC nationals are allowed to do trading under e-trader license.
E-trading is a very good idea for people who want to operate from their home with low-budget. There is no need to open a physical store or shop as well.
Requirements to obtain an E-Trade license in Dubai:
- The applicant must have UAE visa with a minimum age of 21 years.
- Must present the residential Makani / Ejari number.
- Should have a valid Emirates ID.
After finishing the paperwork, they would need to:
- Firstly decide a trade name.
- Pay the associated fees within 48 hours of payment voucher issuance and completion of the registration process with the Dubai Economy.
- Ensure annual renewal of the license, failing to which the license will be cancelled.
Online shopping is now an important part of everyone’s day to day living. It’s easy, low budget, and gives you lot of options to choose from. An E-Commerce business require selling to the general public and requires you to get an e-commerce license for the same. There are lot E-Commerce license types, and each one is for a different purpose.
You should apply for an e-commerce license if you are ready to maintain product inventories and deliver products to large number of consumers. It is not compulsory to buy or rent an office space for an ecommerce license.
If your e-commerce business is based in any of the free zones, you can sell the products online all over the UAE without any restriction. The main difference between e-trader and ecommerce license is that ecommerce license doesn’t have a restriction for expats and expats can easily incorporate the license and start selling products and services online.
The E-commerce businesses in Dubai are as follows:
- The B2C (Business to Consumer): When you sell your products directly to the consumer via digital media platforms.
- The B2B (Business to Business): The online transaction that happens between two business entities. This is when you sell a product or service to another business.
- The C2C (Consumer to Consumer): The e-commerce business type where a consumer sells to another consumer.
- The C2B (Consumer to Business): The business transaction where an organization get the services or products from the consumer
Requirements to obtain ecommerce license:
- Decide the trade names of the company.
- There is no NOC requirement from sponsor.
- You need to form LLC or sole ownership company under the companies commercial Law 2015.
After finishing the license registration, you can do:
- Open a corporate bank account that suits your business needs.
- Registration with any of the UAE’s ports and custom authorities for import/export activities.
- VAT registration with the Federal Tax Authority can be done upon reaching the threshold of AED 187,500 for voluntarily registration and AED 375,000 for compulsory registration.
E-commerce Vs E-trader Licenses:
Both licenses help online trading but are different. The following are some of the major differences between the two licenses:
- The E-commerce License gives a greater number of business activities compared to the e-trader license.
- The E-trader license is issued only for residential sites (Makani is important)
- Foreign investors can only apply for the e-commerce license. The e-trader is only for the UAE/GCC nationals
- The E-trader license is only for the social media while the e-commerce businesses can sell through their websites as well as other websites like amazon, noon etc.
- With the E-Trader license, sale of products outside Dubai is not possible. Whereas the E-commerce License allows the sale of products anywhere in the UAE.
- The E-trader license is limited only to a sole ownership structure. Whereas, the E-commerce license allows flexibility in selecting the legal structure (LLC can be set up).
- An E-Commerce license costs more than e-trader license. Therefore, if you are an expat and want to offer only services, go for the E-Trading license, which would cost less.
E-commerce or E-trader
Even though the E-Trade and E-Commerce licenses shows the E-Commerce sector in general, the E-Commerce is bigger in scope. While the E-Trader license helps the small-time, home-based businesses, the E-Commerce company is suitable for both small businesses and big corporations.
However, for a foreign investor E-Commerce license is the only option for setting up an online shopping business in Dubai. Businesses in Dubai have seen changes of events in 2020 that made a new normal in the industry. Among the changes brought about by the COVID-19 pandemic, the rise of online business is seen. As a result this has benefitted the E-Commerce industry a whole.