Updated: Apr 4, 2021
A brief market outlook of the UAE eCommerce market and some popular options for setting up an eCommerce company. Read on to learn more.
UAE eCommerce market outlook:
The UAE has one of largest and fastest growing digital economies in the region. Of the nearly 10 million residents in the UAE, 98.98% are active internet users, and 92.17% are active mobile internet users. (Source: GMI)
This carries over well into eCommerce usage numbers, making the UAE a very lucrative eCommerce market. A market study by Visa projected 2022 UAE eCommerce sales to reach US$ 20.08 B.
Naturally this has been a segment that many entrepreneurs and investors have been interested to participate in. With major players like Amazon.ae owning less than a 10% market share of the UAE eCommerce market, much of the market remains open for newer, smaller, locally born eCommerce players to service.
UAE eCommerce License Options:
The UAE has always been keen to maintain a business friendly and innovative environment to do business in and thus local jurisdictions have long had many licensing options for eCommerce businesses.
Some options are solely available for Emirati owned and GCC owned businesses, whilst others for expatriate businessowners. Both mainland and freezone business setup options exist.
We will first cover options available to Emirati and GCC citizens and then explore options available for expats.
eCommerce License options available for Emiratis and GCC Owned businesses:
(1) Tajer Abu Dhabi:
Launched initially in 2017, the Tajer license is issued by Abu Dhabi Department of Economic Development (ADDED) and allows Emirati owned businesses to add online trading activities to their existing business or obtain a new license to carry out eCommerce activities via their website or social media networks.
In 2018, ADDED expanded the license package to include all GCC nationals and UAE residents under three legal forms:
establishment for Emiratis and GCC nationals
one-person company for Emiratis and GCC nationals
limited liability mainland companies for residents in partnership with Emiratis
It also raised the number of eligible activities covered by the license to 1057. All are exempt from having a physical presence or an office.
This is the only mainland licensing option for eCommerce activities in Abu Dhabi, ang the only one in the UAE where expatriates can be part owners of a mainland eCommerce license (provided an Emirati owns the other 51%).
More info on Tajer Abu Dhabi: https://adbc.abudhabi.ae/CitizenAccess/Welcome.aspx
(2) DED eTrader License (Dubai):
Issued by the Dubai Economy (DED), the eTrader license is available to GCC citizens and Emiratis residing in Dubai only. It enables them to practice business activities through various social media networks (particularly promotion and selling of products online).
Legally, this functions like sole establishment license. The eTrader license can be registered under the name of a single owner only. The eTrader cannot open a shop or issue visas and in case of a legal dispute, the licensee alone will be held responsible.
More info on DED eTrader License: https://www.dedtrader.ae/index/
(3) Eitimad domestic license from Sharjah:
The Eitimad domestic license is issued by Sharjah Department of Economic Development (SDED) and grants licenses to Emiratis residing in the Emirate of Sharjah. Licensees must be above the age of 18 to apply and receive an Eitimad license.
The license does not allow recruitment of staff on the company.
More info on Eitimad license: https://eitimad.sedd.gov.ae/
(4) Virtual Merchant License from Ras Al Khaimah:
The Virtual merchant License is issued by the Ras Al Khaimah Department of Economic Development (DED).
Activities that can be licensed online include electronic retail businesses, information technology and computers, commercial and real estate brokerage, advisory, professional and information activities done through technological means.
This license is only issued to Emiratis.
eCommerce License options available for expat owner businesses:
As of current, all mainland eCommerce license options (mentioned above) are restricted to Emirati or GCC owned business, with the exception of Abu Dhabi wherein expat owned businesses with 51% Emirati partners can still apply.
However, this does not imply that expatriates cannot own online businesses.
The recommended option for expats wanting to own an eCommerce license is to look at the freezone options available.
This is often the quicker and cheaper option to obtain such a license in the UAE.
(4) Sharjah Media City (SHAMS) eCommerce License:
Launched in 2017, SHAMS- Sharjah Media City has grown rapidly to be the most popular freezone for innovative digital activities in the UAE.
It is one of the only freezones that provides an eCommerce activity available for ownership by expat businessowners.
It is also the cheapest freezone to setup a business in the UAE, with license packages starting at only AED 11,500.
SHAMS has been a major catalyst to supporting the growth of digital businesses in the UAE in key sectors like media, eCommerce, technology and more.
Of the many innovate digital retail activities available at SHAMS, entrepreneurs can carry out:
retail sale of any kind of product by mail order
retail sale of any kind of product over the Internet
direct sale via television, radio and telephone
internet retail auctions
This enables budding eCommerce entrepreneurs to set up online ecommerce portals, and promote and sell items via a website, social media, telesales channels, and more.
Benefits of doing business in Sharjah Media City:
100% foreign ownership
100% repatriation of profits
cheapest freezone in the UAE
over 200+ innovative activities to chose from (Media, Trading, Services categories)
flexible visa packages (0- 6 visa packages available)
affordable workspaces available (flexi desk only AED 3,675 per year)
To learn more about setting up your business in SHAMS, send us an inquiry.
Other freezones with such options include DAFZA, DMCC, RAKEZ, amongst others.
In conclusion, the available options are plentiful if you look around. What is more important is for you to define your expectations and budgets thoroughly so that you are able to find the right company setup option for your business.
If you are interested to learn more about what factors you should consider before setting up your business in the UAE, please read the following article:
Read this before you set up a freezone company in the UAE. What are some factors to consider? (https://www.gulfvakil.com/post/read-this-before-you-set-up-a-freezone-company-in-the-uae-what-are-some-factors-to-consider)
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