The UAE remains one of the most popular ecommerce and business destinations in the region. For many years, UAE has seen an upward trend in ecommerce. Recently, authorities in UAE took various steps to increase ecommerce development in the country.
Recently, the UAE Department of Economic Development updated several laws to consolidate UAE’s position as the regional hub for ecommerce. Individuals and businesses who want to start ecommerce businesses in Dubai will need to be licensed under the new regulations. Many online merchants are now curious about the future prospects for various online activities in UAE after the introduction of licensing requirements.
While trade license regulations can vary depending on online activities, this blog will only be about the future of dropshipping and the legal requirements dropshipping merchants must meet to obtain trade licences in UAE. Let’s get started on our search to find dropshippers in UAE.
Drop Shipping: What does it mean?
Dropshipping, a type of online business where merchants can ship retail products directly from third parties to buyers, is not something you should be unfamiliar with. In this instance, the 3rd party can be either a manufacturer or wholesaler. Dropshipping is about merchants being able to source the highest quality products from different wholesalers or manufacturers.
Dropshipping is a great online business idea because it requires little or no investment upfront. Dropshippers don’t need to purchase, stock or warehouse products. Instead, they are responsible for sourcing the products from third parties and getting them shipped to the customer. It is similar to ordering retail products and having them delivered by the wholesaler. You keep your commission.
The wholesaler who sourced the product will handle shipping and logistics. Merchants have no other responsibility but to source the highest quality products and make profits. Dropshipping is a way to make a living in the UAE. The products you ship to buyers can be either imports or exports.
Do you need a trading license to use Shopify DropShipping in Dubai/UAE?
Yes. Yes. A violation of Article 335 (Commercial Companies Laws) (CCL) can result in financial and administrative penalties for any business that engages in commercial activities.
Dropshipping in the UAE is illegal. You will be fined if you don’t have a trade licence.
When we speak specifically about the Shopify and Dropshipping businesses, it is common for people to believe that because the activity does not require one to be physically located in the country or have employees, they are not subject to any trade license.
This is a serious mistake. The UAE has strict policies that govern all businesses involved in commercial activities. The Federal Tax Authority (FTA), has just released a detailed Public Clarification to help you understand ecommerce and the requirements for trade licenses in the country. Simply put, to begin Shopify dropshipping in UAE you will need a trade licence.
After we have explained the legal requirements, it’s important to note that many Shopify dropshipping companies are operating in UAE/Dubai, without having obtained a valid trade license. These businesses are not new to the country. However, authorities have recently started a crackdown on them and they could be sent to jail or fined if found guilty.
You should probably apply for a valid trade licence if you plan to open a Shopify store in UAE and dropship from there. It is easy to obtain a trade license, as the authorities are supportive and open-minded. You can actually apply online for a trade license through the eportal of the relevant authority. Generally, the license will be available within two weeks.
Dropshipping in UAE: Pros and cons for locals
Dropshipping is an online business that can make a lot of money. It is more lucrative if you live in the country. Because you are a local resident, you will have an even better understanding of the economics, trends, and purchasing preferences of your customers. Dropshipping in UAE is a more lucrative business if you’re a UAE resident.
– You understand the psychology of your customers
The ecommerce industry has a saying that every customer is unique. This is true to an extent. There are common traits that can be shared by people from different countries or groups. This commonality can be defined by the culture of the people, their perceptions of trends, and other characteristics.
Dropshipping in UAE is possible when you are licensed to trade. This allows you to gain a deeper understanding of human psychology and can then use that knowledge to source higher-valued products. Your chances of increasing profitability will increase.
You are familiar with the latest shopping trends in your area
You would be able to not only understand the psychology but also the shopping habits and preferences of local buyers if you are a local resident.
The key to dropshipping success is the ability to source the best products at the highest value. Dropshipping might seem simple, but it is not easy to source the best products at the best price. This is especially true if you don’t know the market preferences.
This will allow you to better understand your market and buyers’ preferences. You will also be able source less high-demand products, which will increase your business profitability.
– You’re good at legal issues
Finally, being a UAE/Dubai resident will make you more familiar with UAE’s legal requirements such as getting a trade licence for dropshipping. Foreigners are often unaware of the legal requirements to operate a business in another country. You would be better equipped to start a dropshipping business in UAE if you were a local.
Dropshipping in UAE: What you need to know
Are you looking to register your dropshipping company in UAE/Dubai
Yes. Yes. Before you start a dropshipping business in UAE, it is important to consult the UAE authorities.
It is important to remember that UAE trade licenses can be very expensive. Trade licenses’ actual value varies depending on the type of business and location. Drop shipping licenses can cost up to $4000.
It is strongly recommended that you obtain a trade permit before starting Shopify dropshipping in UAE. Dropshipping businesses that are not licensed may face severe penalties, which can be as high as $1,500 and $15,000.
What do I need to know more about taxation in the UAE
UAE/Dubai has one of the most transparent tax policies in the world. This means that you don’t need to worry about tax accounting. If you don’t know, UAE has imposed a standard Value Added tax (VAT) of 5% on most commercial activities within the country. For better understanding of the VAT scope and treatment of different activities, the Federal Tax Authority (FTA), is responsible for registration and collection. To better understand the VAT treatment and scope of dropshipping, we recommend that businesses who want to set up Shopify dropshipping in UAE read the FTA’s Public Clarification for Ecommerce Activity.
What is the average time it takes for a UAE trade license to be issued?
The UAE is among the few countries that has a fast and efficient process for obtaining trade licenses. UAE has a single-window licensing process that is transparent. Depending on the process and your ability, you can get your Shopify dropshipping license in UAE within two weeks.
You should also remember that registration and getting a trade licence for your Shopify dropshipping company is not enough. To comply with regulations, you will also need to open a bank account.
Which payment gateways can Shopify dropship in UAE?
You will be able to access all the major ecommerce payment channels for your Shopify dropshipping company as the UAE’s hub for ecommerce. PayPal, BlueSnap and BlueSnap are some of the most popular payment gateways.
Is it possible for UAE to dropship to other countries?
Shopify owners aren’t limited to UAE as a target market. The UAE population is more than 10 million, which is enough to make high profits. However, you don’t have to limit your reach there.
Dropship products worldwide by setting up a Shopify UAE dropshipping business. The world is your limit. Why limit yourself to one country when you can ship products around the globe?
How do I get an online copy of my trade license in Dubai?
You can electronically obtain a trade licence for dropshipping in UAE, as you can with many other trade licenses. To do this, visit the DED website to register on the official electronic portal. Follow the steps on the website to submit your details such as email address, trade name, and project details. After you have submitted all required information and paid the payment, the trade license will be sent electronically.
Dubai: Is Shopify Dropshipper Business a success?
Dubai is still the regional ecommerce and business center. The authorities of Dubai recently made it legal for foreigners to have 100% ownership in a business. Global investors and entrepreneurs will find Dubai’s market more attractive. Dubai is a lucrative market that attracts expats from all over the globe. This makes it a great place to launch a Shopify dropshipping company.
Is it necessary to obtain a trade permit or license to open an online shop in order to dropship products in Dubai, UAE?
Yes. Yes. According to the Ecommerce regulations, dropshipping businesses and all commercial activities must register and get a trade licence to be able sell products in Dubai/UAE.
Are there regulations for dropshipping in the UAE?
Yes. Dropshipping and other Ecommerce activities in the country are subject to specific Ecommerce rules. To get a better understanding about the regulations that govern ecommerce in the country, you should consult a tax expert.