Dropshipping in the United Arab Emirates (UAE) is an attractive business idea. To help you get started, we have created a complete guide to starting a dropshipping business in this wealthy Middle Eastern country.
Why Dropshipping?
Dropshipping is an e-commerce business model with low start-up and running costs. Products are sourced from a supplier that handles warehousing and shipping customer orders directly. This means you can focus on marketing, advertising, and customer service.
Why the UAE?
The UAE is known worldwide as an ideal place to establish a business. Dubai, the largest city in the UAE, has impressive advantages for business owners.
- No personal or corporate income tax
- Limited trade restrictions
- Political stability
How to start a dropshipping business in the UAE
Step 1: Plan your dropshipping business
Map out your business plan to establish what you will sell and who you will sell to. Include your competitor research, details of your chosen niche, products you will sell, pricing strategy, and marketing activities.
Find a reputable dropshipping supplier
To start dropshipping in the UAE, you will need a supplier that operates in the country. DropshippingXL is a trusted dropshipping programme with over 90,000 products across home and garden, pet supplies, sports equipment, and children’s toys niches.
With global warehouses, including one in the UAE, your Emirati customers will enjoy high-quality items, fast delivery, and easy returns.
Step 2: Choose the type of business entity
There are three business licensing options in the UAE. These are free zones, mainland, and offshore. They each offer a different business ownership structure.
Free zone
Within the UAE, there are more than 40 free trade zones in Dubai.
- Ownership: 100% business ownership for expatriates and foreign investors.
- Taxes: Benefit from 0% value-added tax (VAT), income tax, corporate tax or customs.
- Business activity: Companies within a free zone cannot trade with the mainland without a local agent.
Mainland (onshore)
Dubai mainland companies operate outside of the free zones. It is an economic zone regulated by the Department of Economic Development (DED).
- Ownership: 100% business ownership for expatriates and foreign investors.
- Taxes: 9% corporate tax on income exceeding AED 375,000.
- Business activity: There are no restrictions on where to do business in the UAE, including the free zones.
Offshore (non-resident)
Offshore companies are registered in Dubai but don’t trade with or have physical office space on the mainland.
● Ownership: 100% business ownership for expatriates and foreign investors. However, the business cannot have a physical presence in the UAE.
- Taxes: Benefit from 0% value-added tax (VAT), income tax, corporate tax, or customs.
- Business activity: There are no restrictions on where to do business in the UAE, including the mainland and free zones.
Step 3: Register your trade name
Registering your trade name is mandatory for a business licence in the UAE. The application requires three name choices according to a few basic rules, such as not using religious or governing authority names or offensive language. Apply for your company name on the Department of Economic Development website.
Step 4: Get a business licence
It’s a legal requirement to obtain a business licence before starting dropshipping or any form of business (online and offline) in the UAE.
There are three options available for e-commerce:
1. eTrader licence
This licence allows you to sell products registered in the UAE. Only UAE or Gulf Cooperation Council (GCC) nationals are eligible. You can go to the Department of Economic Development website to apply online.
2. Portal licence
A portal licence allows you to connect buyers to sellers. It is open to non-UAE nationals and expatriates and is ideal for online businesses that sell on Amazon, Noon, eBay or similar e-marketplaces. To apply, contact the free zone where you want to operate directly. For the mainland, visit the Department of Economic Development website.
3. Virtual company licence
Entrepreneurs living outside of the UAE are eligible for a virtual company licence. This allows the legal conduct of online business in the UAE. It is only applicable to computer programming, design, print and advertising services. Register for this licence via the Dubai Commercial City website.
Step 5: Rent an office space
This step is only relevant to e-commerce businesses that operate in the mainland of UAE. In that case, you’ll need an office space of at least 200 square feet.
Step 6: Open an Emirati business bank account
Finally, you will need to open a business bank account in the UAE. This allows you to monitor your cash flow and business expenses, apply for business loans, and for tax purposes.
Setting up a dropshipping business is worth it in the UAE
By following these steps your dropshipping business will soon be up and running in the UAE. To learn more about dropshippingXL, visit dropshippingXL’s website. Benefit from trending products, 0% sales commission, and 24/7 business support.
