Introduction
The United Arab Emirates (UAE) is rapidly positioning itself as the e-commerce capital of the Middle East. With a projected market value exceeding AED 48.8 billion by 2028, the region offers lucrative opportunities. However, operating an online business in the UAE requires strict adherence to legal frameworks.1 Operating without a license is illegal and can result in severe fines. This guide outlines the step-by-step process, costs and legal requirements for obtaining an e-commerce license in the UAE in 2025.
1. Choosing Your Jurisdiction: Mainland vs. Free Zone.
The most critical decision one will make is choosing between a Mainland and a Free Zone license. This choice decides where one can trade and your operational costs.
1.1 Mainland License (Department of Economic Development - DED).
This is best for businesses that want to sell products directly to consumers anywhere in the UAE without a third-party distributor. The business can trade directly with mainland clients and government entities
- Ownership: As of recent legal reforms, foreign investors can now own 100% of commercial and industrial companies on the mainland, including e-commerce activities, without a local sponsor.2
- Office Requirement: Typically requires a physical office space (minimum 200 ft) verified by an Ejari (tenancy contract).
1.2 Free Zone License.
This is the most viable option for international trade, re-exporting or businesses that primarily use third-party logistics providers for fulfilment. The businesses are technically restricted to trading within the free zone or internationally. To deliver goods to a customer on the UAE mainland, you must use a logistics partner or distributor who holds a mainland license.3 The most popular e-commerce free zones are Dubai CommerCity, EZDubai (Dubai South), and Sharjah Media City (Shams).
- Ownership: 100% foreign ownership is
- Office Requirement: Most free zones offer “flexi-desk” or virtual office packages, which are cheaper than physical mainland offices.
1.3 The "E-Trader" License (Special Category).
For home-based entrepreneurs, the DED E-Trader License allows UAE and GCC nationals (and expats for professional services) to conduct business via social media. However, for expats selling physical goods, a full free zone or mainland license is generally required.
2. Licensing Process
One must register a unique trade name with the relevant authority (DED for mainland or the specific Free Zone Authority). The name must not be offensive, must not reference God or religion, and should not violate existing trademarks. This is followed by submitting the application for “Initial Approval.” This certificate confirms that the government has no objection to you starting a business in the specified activity. Documents required are passport copy, visa copy (if applicable) and a business plan (often required by free zones).
- Draft Legal Documents (MOA/LSA).
- Mainland: You may need to draft a Memorandum of Association (MOA).
- Free Zone: You will sign an agreement with the Free Zone
- Lease an Office (or Flexi-Desk).
- Mainland: Rent an office and register the contract (Ejari) with the Real Estate Regulatory Agency (RERA).
- Free Zone: Select a flexi-desk package if you do not need physical Note: If you hold physical stock, you may need a warehouse lease.
The final step is to submit all documents as the final application and pay the licensing fees.
Estimated Cost:
- Free Zone: AED 12,000 – AED 20,000 (approx. $3,200 – $5,400) depending on visa
- Mainland: AED 15,000 – AED 30,000+ (approx. $4,000 – $8,000) including market fees and office rent.4
3. Critical Operational Requirements.
Opening a corporate bank account is often the most challenging step for startups. Banks in the UAE have strict compliance checks. The requirements are a valid Trade License, MOA, Passport/Visa/Emirates ID of all shareholders and 6 months of personal bank statements. Some digital banks like Wio or Mashreq NeoBiz offer faster onboarding for startups.
1.2 Payment Gateways.
To accept credit card payments, a payment gateway is required. Top providers in the UAE include Stripe, Telr, PayTabs and Network International. A payment gateway cannot be acquired without a valid Trade License and a Corporate Bank Account.
1.3 Customs & Import Duties.
If the business imports goods from outside the UAE:
- Customs Code: Must register for an importer code with Dubai Customs (or the relevant emirate).
- Duty Rates: The general customs duty is 5% on the CIF (Cost, Insurance, Freight) value of goods.
- De Minimis: Personal shipments with a CIF value under AED 300 are generally exempt from customs duty, though VAT still applies [2].
4. Legal Compliance: Consumer Protection & Data Privacy.
Securing the license is just the beginning. The business must comply with federal business consultants to avoid penalties.
4.1 Consumer Protection (Federal Decree-Business Consultant No. 5 of 2023).
Updated in 2023, this business consultant strictly regulates e-commerce.5 The businesses are legally required to:
- Provide a clear, legible invoice to the
- Clearly state the terms of return, exchange, and
- Protect consumer data from unauthorized
- Penalty: Misleading advertisements or failing to protect consumer rights can lead to fines and license suspension.
4.2 Data Protection (Federal Decree-Business Consultant No. 45 of 2021).
This business consultant mirrors the European GDPR. It is required to obtain explicit consent from users before collecting their data for marketing. There must also exist a clear “Privacy Policy” on the website of the business explaining how data is stored and used.6
Conclusion
Obtaining an e-commerce license in the UAE is a streamlined but regulated process. For most startups focusing on international drop-shipping or digital services, a Free Zone license offers the most cost-effective entry point. However, for businesses planning to hold inventory and deliver directly to customers across Dubai and Abu Dhabi, a Mainland license provides the necessary operational freedom. It must always be ensured that the website of the business has compliant Terms & Conditions and Privacy Policies before going live to avoid legal pitfalls.
Sweety Tuli is a legal content writer at Legallands.com, specializing in corporate advisory, legal research, and strategic business compliance. Her work focuses on simplifying complex legal concepts for entrepreneurs, investors, and professionals navigating multi-jurisdictional frameworks, particularly across India and the UAE.
With a keen understanding of corporate business consultant, regulatory affairs, and policy reforms, Sweety contributes insightful analyses on topics such as company formation, CEPA-driven trade policies, taxation frameworks, intellectual property, and digital compliance.
She is passionate about bridging the gap between legal interpretation and business practicality—helping organizations align their operations with legal governance, ethical standards, and global best practices.
Through her articles at LEGALLANDS LLP, Sweety aims to make legal knowledge more accessible, strategic, and actionable for businesses operating in a rapidly evolving regulatory environment.
