E-commerce is a lucrative business in the UAE, the fastest-growing MENA region e-commerce market. Several free zones in the United Arab Emirates offer a cost-effective business setup environment for starting an eCommerce business. With an e-commerce license in free zones, companies cannot trade directly with consumers on the mainland. However, e-commerce companies can sell the suppliers’ products already available.
High digital penetration, a digital-savvy population, an increase in mobile wallets, and proactive government policies make the United Arab Emirates one of the best places to start an eCommerce business. However, the recent COVID-19 pandemic has become a blessing in disguise for e-commerce platforms as 184 countries, including the United Arab Emirates, have implemented lockdown measures where people can only go out to buy essentials.
Restrictions to mitigate the spread of the coronavirus have led to a major shift in consumer behavior in the United Arab Emirates, where people have started shopping through e-commerce platforms, and most offices are working from home. And schools have started online classes. There has been an increase in online orders, and the number of new users has also increased. The new trend has added to the profitability of e-commerce businesses in the United Arab Emirates, including e-learning and e-training.
The United Arab Emirates has a vibrant e-commerce market that is forecast to reach $27.1 billion by 2022, according to a recent report in Gulf Today. In terms of size, the UAE eCommerce market ranks 33rd in the world. It is also estimated that more than 80% of the UAE population makes active online purchases. The growth of e-commerce platforms such as Namshi, Noon, and Amazon. Ae (formerly Souq.com), Careem Cab indicates the growing importance of e-commerce companies and increased competition in the market. Uncertainty about COVID-19 also illuminates the business prospects of e-commerce platforms.
Key Aspects to Consider Before Starting an Ecommerce Business in UAE Free Zones
The ajman free zone authority of the respective free zones is the competent authority that issues business licenses for e-commerce companies. After obtaining an e-commerce license, entrepreneurs have an online platform for buying and selling products. The following things should be considered before setting up an e-commerce company in UAE free zones:
Sale of products free zones, companies cannot sell products directly to customers. However, companies agree with suppliers whose products are already available. Free zone companies can list such products for sale on their shopping website. A local distributor or agent is not required under the free zone e-commerce license because the companies sell the suppliers’ products.
- Warehouse requirements
The e-commerce license can be obtained with the Flexi desk facility in the free zones. Therefore, the warehouse or office space requirement is not mandatory. The suppliers with whom the company has an agreement will store the goods if the company deals with consumer products. Since there is no warehouse requirement, the operating cost of the eCommerce license will be lower.
- Registration of products and customs duties
E-commerce companies are not responsible for products registered with concerned local authorities, such as municipalities and health authorities. This is because the companies will deal with the products that are already registered, and the supplier does the registration of the products. Similarly, the supplier already pays customs duties, and the e-commerce company does not need to pay 5% customs duties.
Benefits of setting up an eCommerce company in UAE Free Zones:
- Ability to repatriate profits and capital
- No warehouse requirements
- Not responsible for product registration (provider will take care of it)
- Zero Coin Constraints
- No sponsorship requirement, and 100% ownership benefits
- Zero corporate tax
- Operating costs are minimal
- Import duty exemption on e-commerce licenses
- The benefit of a resident visa for 3 years.
Free zones for e-commerce license in Dubai
- Dubai Commodity Center (DMCC)
- Jebel Ali Free Zone (JAFZA)
- Dubai Airport Free Zone (DAFZA)
Other free zones for e-commerce in the Northern Emirates in the UAE
- Ras Al Khaimah Media City
- Sharjah Media City
- Ajman Media City
- Fujairah Creative City Free Zone
- International Free Zone Authority dubai
- Umm-Al-Quwain Free Trade Zone
United Arab Emirates Free Zone Business Setup Consultants
Entrepreneurs who want to set up a company formation consultant in uae in one of the 40 free zones in the UAE should be aware of the different regulations. Different authorities govern each free zone with a comparatively different set of regulations for the companies operating within the free zones. The mainland business setup requires different requirements, especially the local UAE sponsor, who must own at least 51% of the company’s shares. The pace of company formation depends on how effectively entrepreneurs can execute business setup processes. However, it is almost impossible for foreign businessmen to understand all the laws and regulations, especially if it is their first business venture.
Jitendra Business Consultants (JBC) is one of the leading company formation specialists in the UAE. JBC’s well-qualified business setup consultants have helped several e-commerce entrepreneurs achieve their dream of opening a company in the United Arab Emirates. JBC company formation specialists are well-versed in local laws and regulations. Clients get comprehensive guidance and support at all stages of business setup in Dubai, from registration to incorporation.
Click here for more info!