Setting up a business in the UAE can be a rewarding and profitable experience, with its strategic location, investor-friendly environment, and booming economy. One critical aspect of starting a business in the UAE is selecting the appropriate business activities to determine your company’s scope, licensing requirements, and bank account. In this blog, we will explore the importance of the business activity list and guide you in choosing appropriate activities for your company’s success.
A business activity refers to the specific type of operation or service in which a company is licensed. It defines the nature of the business and, to an extent, its target market(for example, wholesale trade, retail trade etc.) and the products or services it offers.
In the UAE, businesses must choose from a predetermined list of business activities when registering their company.
A business activity group is a collection of related business activities classified under a broader category. These groups help streamline identifying and selecting activities that align with a company’s objectives, making it easier for entrepreneurs to set up their businesses.
Business activities in the UAE are grouped into various categories: industrial, commercial, professional, and tourism. These categories are further divided into subcategories to provide more specific and appropriate business options.
A business in the UAE can have multiple business activities under its license. The number of activities depends on the licensing authority’s regulations and the type of license obtained. One can always opt for more activities. But we always recommend our clients be specific to their business, which gives more confidence to other partners, especially banks.
Business can have activities from different subgroups, depending on the license type and the specific regulations of the relevant licensing authority.
But authorities generally do not permit combining activities from main groups. For example, an industrial and professional activity will not be issued in the same trade license.
Adding more activities to your license may increase the license cost, depending on the nature of the added activities and the licensing authority’s fee structure.
Also, up to three activities are included in the licensing cost, and any additional activity will cost extra. In the mainland, the cost is around AED 750 per activity, and it can vary from free zone to free zone. Please confirm with your licensing consultant on the exact amount of cost.
The relevance of business activity lies in its ability to help regulatory authorities identify and categorize businesses based on their services. This classification is crucial in determining the required licenses, approvals, permits, and regulations applicable to a particular business.
For example, suppose you chose an activity related to healthcare. In that case, the licensor will require approval to be obtained from the healthcare regulator before granting the business license and so on.
Some business activities may have additional licensing conditions or requirements, such as obtaining permits from specific authorities or adhering to industry-specific regulations. Researching and compiling with all relevant conditions is essential to ensure smooth business operations.
Further, there can be additional conditions like having a UAE national sponsor (for very few activities in 2023), a requirement to have minimum capital, or a reference letter from banks, etc. Talk to your business set-up consultant before starting the set-up process.
Banks review your company’s business activities when opening a bank account. They assess the risk associated with your chosen activities and may require additional documentation or compliance measures based on their evaluation.
When selecting business activities, consider the following factors:
Even though every licensor does not issue licenses for all activities, these are the activities generally permitted in the UAE. There can be additional activities not covered in this list, such as recent additions related to activities related to blockchain and new technologies etc. Consult your business set-up consultant before you take your decision.
Follow this link to receive the reference activity list in Excel to your email.
Selecting suitable business activities is essential for setting up a successful business in the UAE. By understanding the business activity list and considering factors such as licensing requirements, costs, and target market, entrepreneurs can be assured that the activities they undertake in the UAE are legally valid. If in doubt, reach our business formation consultants to ensure you choose the right licensing activity.