Trade License Renewal, Grace Period, And Penalties in Dubai

trade license renewal

If you are a businessman who is conducting business in Dubai, you should know that at some point you must carry out the trade license renewal. You must do it as soon as its expiration date arrives. This procedure must be carried out regardless of the type of authorization that your company has. In case of not carry out the renewal of your license in the corresponding time, you will have to face various consequences.

In this article, you will see all the information you need to know about the trade license renewal Dubai process. The first thing will be to show you what are the valid license types in Dubai. Then, we will show you all the requirements that you must have when going through this process. In addition, we will give you a step-by-step guide on everything you need to do for your trade license renewal.

1. Do you know the different types of trade licenses?

trade license renewal

There are different types of commercial licenses for which you can opt. For this reason, you can see these licenses below:

1.1 The regular license

This requires the existence of an association memorandum, which can be obtained manually or electronically. In addition, you must have a lease for the premises.

1.2 The instant license

This is issued in just one step and five minutes for those groups of activities that do not need external approvals. They also have the option of being able to issue a deed of incorporation and a virtual place for the first year. The package services that will be seen below are issued simultaneously with this license:

  • Dubai Chamber membership for business activities.
  • A card establishing the general address of residence and immigration.
  • An establishment card from the ministry of human resources and emirates. Here the client will receive a text message where the opening of the establishment card is approved. In addition, a file is also opened automatically for the employment of 3 employees. We can find this license available for different legal forms. Among them are Limited Liability Companies, Sole Proprietorship Limited Liability Companies, unique establishments, and civil companies.

1.3 The DED Trader’s License

This is a single establishment license, which can be obtained by Dubai home-based businesses that were issued under the business name. You can apply for this license through the invest in Dubai platform. It has a fee of AED 1070 which are the license fees and knowledge and innovation fees. In addition, AED 300 of Dubai Chamber membership fees must be added to it.

2. What are the requirements for renewing a trade license in Dubai?

Something important that you should know is that the business license that is granted is valid for only one year with the possibility of renewing it annually. The application for renewal of the business license must be submitted before the month of its expiration. If you do not do so within this time, you may be assessed a late payment penalty of AED 200 for each month you are late. This is without including any other external sanction that may be imposed on you.

It is important to mention that there are around 50 free zones scattered throughout the United Arab Emirates; which each has its unique requirements for the business license renewal process. However, the documents are common in the different areas and below you will see them all.

2.1 Ejari registration

If you need to renew the license, you must have the Ejari registration certificate. If you do not possess an Ejari-approved lease certificate, you will be assessed a fine.

2.2 Tenancy contract that is in force

If you need to renew your trade license, you must have a lease that is valid for at least one month or more. The first thing to do must be to verify your lease. In addition, this contract must be confirmed and signed by Ejari. One of the reasons why your renewal request is rejected due to legal obligations is that your contract is not valid for at least one month.

2.3 A photocopy of the old trade license

A photocopy of the old license must be attached to the application for renewal. Also, without the required permits that allow you to do business in the UAE, you are not allowed to perform trade license renewal.

2.4 BR/1 form

The BR/1 form is the trade license renewal form. To start the whole process, the first thing to do is complete this form. This document must be filled out and submitted with the signature of the existing partners. Once everything is ready, you must send it to the Dubai Department of Economic Development (DED). In addition, you must attach all the documents before submitting this form.

2.5 Photocopy of the passports of all the partners of the company

Another mandatory requirement is a photocopy of each business partner of the company. This is requested to show that the parties involved in the business are interested. If you do not have a partner or business partner, you only have to present yours. Once you have all the documents and the complete renewal form, you are allowed to send everything requested to the DED.

On the other hand, there are two ways to request the renewal, these are online or in person. Furthermore, all regulatory procedures and assessments are done by the governing bodies of Dubai. This is regardless of your application method.

3. How much does it cost to renew a trade license in Dubai?

To renew the business license, we can find a standard fee that varies. Also, it is important to note that the cost of renewing this license will depend on the economic zone and jurisdiction of Dubai that you are located in.

You should know that you will be able to take advantage of the trade license renewal Dubai discount. This will be for accommodation fees if you have a residential Ejari. In addition, you will also be able to obtain considerable discounts on all the general rates of the chamber of commerce.

4. Step-by-step guide to carrying out the trade license renewal in Dubai

trade license renewal

An expired trade license can cause many problems in conducting your trading activities. This renewal process must be carried out to order to ensure that your company meets the desired compliance standard. Next, you will see all the steps you must follow to be able to carry out the trade license renewal in Dubai.

4.1 Carry out the tenancy contract check

To start the trade license renewal process in Dubai, the first thing is to verify your lease. This is to ensure that it is valid for less than 30 days. In case you do not comply with this time, you cannot proceed with the renewal process.

4.2 Fill out and submit your application to the DED

Once you find the BR/1 form, you must fill it in and send it to the Dubai Department of Economic Development. Before sending the form you must attach the necessary documents. The relevant entities will carry out the necessary verifications. When everything is ready they will contact you within a few days.

4.3 Receipt of the payment voucher

After your business license renewal application is verified, the DED will send you proof of payment; so that you can pay the corresponding fees for the renewal.

4.4 Make the corresponding payments

Once you receive the voucher, it is time to make the payment and thus, finish the registration process. This is the last step to carrying out your trade license renewal. After all the steps are done, your business license is like new. It is important that you know that the DED only issues the renewal once the payment is ready. In addition, you can use the mobile application to request a trade license renewal.

5. Do you know the Dubai trade license renewal grace period?

It is important that you know what the grace period is as it can be very beneficial in some cases. A grace period is an extra time that is granted to a person to make the payment of a debt or any type of loan. In this way, you will have additional time than initially established to catch up with payments or renewals.

In mainland Dubai, the grace periods for business license renewals are 30 days. If you have not renewed your business license after this grace period, you will be subject to fines. The fines in these cases start from 250 AED, but can quickly rise to thousands of dirhams.

It is important to note that the grace period takes effect after your business license expires. For this reason, it is important to start the renewal process before expiration so you do not have to pay high-cost penalties. In the same way, you should keep in mind the time that the renewal of your license may take to achieve better planning and avoid future problems.

6. Learn what are the consequences of not renewing your license on time

For a business license to be valid, one of the critical factors is that you have a good business performance in the UAE. If you renew the business license on time you avoid the possibility of banning or blacklisting your company. It is important to always keep a check on your business license and lease agreement. You should know that if you do not renew the license one month before the expiration date, it may have legal consequences. Some of these are mentioned below.

6.1 Fines or penalties

In Dubai, the DED has all the legal rights to place monetary fines on companies that do not renew their business licenses. Institutions that carry out their activities without their trade license are subject to a fine of AED 5,000. In addition, if traders operate after the expiration of the corporate license, a penalty of AED 250 is applied for each month of delay.

6.2 Black list of companies

Another risk that your company can run if you continue to operate with an expired business license is being included in a blacklist. This produces the total and immediate termination of the commercial operations of any company.

6.3 Banning the business

In case you operate your company with an invalid business license in the United Arab Emirates, DED can proceed to close your business at any time. This consequence is serious and the worst thing is that you may not be able to re-establish your company in Dubai.

7. Contact KPM Pro Services to help you renew your business license

As you can see, one of the most important things for companies is the business license. Without it, your company cannot carry out its commercial activities. In addition, you may realize that you should be aware of the expiration date of this document. This is because, in case of not do it, you can face quite serious consequences such as those mentioned above. And this is not the only risk, your trade license renewal may also be rejected for not complying with the requested documents.

In case you need advice and support throughout the process, do not hesitate to contact KPMPro for PRO Services in Dubai. We have in-depth knowledge of government entities in the UAE. In addition, our team of experts has all the necessary experience regarding business licenses; which gives you enough peace of mind to trust us with this process. If you want to contact us, you just have to enter our portal and follow the contact steps.

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