The remarkable city of Dubai ranks among the top 5 investment destinations for foreign entrepreneurs, small, medium and large scale corporations. Dubai’s flourishing economy present an ideal climate for new business setup. However as much rewarding company formation in UAE is, managing the enterprise is even more challenging and requires more care.
Mainland Business License Renewal in Dubai
All forms of business establishments in Dubai – whether mainland, free zone or offshore companies are allowed to conduct their business operations provided they hold a valid Business Trade License. In order to continue their business, companies are also required by law to renew their trade license annually in Dubai and across UAE.
Department of Economic development in Dubai is the official license issuance authority in Dubai. DED offers multiple options for business license renewal. However, if a company does not renew its license, it will attract several penalties. In this article, we have listed down three major penalties that could be imposed on a Dubai business due to delay in business license renewal.
1. Monetary Fines
According to DED rules and regulations;
- If a company in Dubai is carrying out its operations without a permit, it can be fined AED 5000.
- Further, if the company fails to renew license within the specified time limit, it will be imposed fine of AED 250.
- Similarly, opening an additional office for an existing license without permission will lead to a fine of AED 2000.
2. Blacklisting of Company
In the case that the company continues to break the law by continuing its business activity without renewing trade license and non-conforming to DED’s regulations, the company will be convicted as blacklisted entity. If a company is blacklisted, all its transactional activities will be blocked, visas will be revoked, sponsors will be disassociated and lastly chances are that owner, shareholders, directors, and managers of the company will be deported from UAE.
3. Restriction on business expansion
SMEs in Dubai are most susceptible to license renewal penalties in UAE. Failure to comply with DED rules and non-renewal of business license within legal timeframe will lead to its prohibition to expand its operations in future. It may also result in insolvency, causing the business to either voluntary or compulsory liquidation. Therefore it is extremely important for an SME to have a clean record and maintain full compliance with DED’s license renewal laws if it plans to grow and expand in Dubai.
2018 Relaxation: companies exempted from late license renewal fines
Always keen to facilitate the existing businesses, DED introduced a series of reforms recently, one of which was to provide relaxation to business owners by exempting them from late license renewal fines.
Director General of Economic Development of Dubai, Sami Al Qazmi advised business license holders with financial backlogs to avail this opportunity and accelerate their required procedures to renew their business license before the grace period expires.
Business Setup Dubai
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