Difference between free zone trading and free zone e-commerce license

Sometimes it gets tricky to identify which type of license is required for your business activity due to the various rules and regulations set down by the UAE Government. The differences shown here between the trading license and the e-commerce license may be of some help in determining the license you need. If you want more assistance, you can visit companysetup.ae.

Free Zone Trading License:

  • Definition: With this trading license, one can import and export a specific quantity or any number of products in the country.
  • Business Operations: Products cannot be sold directly to customers in the mainland. One has to partner with a local distributor or agent.
  • Local Distributor: It is necessary to appoint a local distributor or agent.
  • Payment Gateway: One cannot avail the payment gateway facility directly through the banks.
  • Office Requirement: In order to store the goods, there is a need to lease a warehouse or office of particular measures.
  • Custom Duty: 5% custom duty is levied on any imported goods if they are taken out of the free zone.
  • Operation Cost: The cost may tend to get expensive as one has to lease the office or warehouse or use third party transport services if required.
  • Product Registration: If goods are imported, they first need to be registered with the concerned Municipality.

E-commerce Trading License:

  • Definition: This license provides an online platform for acquiring and selling products of suppliers whose goods are already available in the country.
  • Business Operations: Any trade occurs through the online website of the supplier. There is no direct interaction with the client.
  • Local Distributor: There is no requirement of appointing a local distributor. It is an online trade.
  • Payment Gateway: The Banks offer the payment gateway facility directly.
  • Office Requirement: There is no need for a physical space like an office. The Flexi desk facility allows one to use the resources provided in the free zone if required.
  • Customs Duty: The investor has no need to pay any duty since it is already handled by the supplier.
  • Operation Cost: Trading with this license is cost-effective because there is no additional expenditure on office space or resources.
  • Product Registration: The investor does not have to worry about the registration as he is selling products online that are already registered by the supplier.

 

It is recommended to hire an advisory company to obtain free zone e-commerce license or free zone trading license. For further clarification or queries, visit companysetupae.com.