Both types of these licenses can be obtained from the Department of Economic Development (DED) or any of the 45 Free Zones of the UAE. In this article, we would like to outline the difference between Commercial and Professional licenses. 

First, let’s define the two types of licenses. Commercial license mostly implies tangible trading goods. Some licenses fall under the Commercial license classification, although they do not imply tangible trading, those include investments, surveillance, cleaning, advertising services, etc. The main scope of activities includes general trading, real estate, retail, commodities trading, hardware, garments, etc. This type of license is issued under a limited liability company (LLC) by default. Under this type of license, foreign investors usually own up to 49% of shares and the other 51% is owned by the UAE national. However, effective from 1 June 2021, the Ministry of Economy announced the decision on 100% ownership of Mainland Companies.

Professional license, on the other hand, concentrates around the professional skills of the workforce, which define the name of the license’s type. This type of license is acquired in case of conducting such activities like craftsmanship, education, consultancy, beauty salons, or other activity associated with providing services. Under a Professional license, foreign investors can own 100% of shares. This type of license is issued under a Sole Establishment (SO) by default, in case owned by a single individual, or a Civil Company (CC) if owned by several individuals. Both cases require a Local Service Agent (LSA), a UAE national, who does not hold any liabilities to a company’s decision-making, as well as financial processes. 

In terms of liabilities, a Commercial type of license intends limited liabilities, whereas a Professional license intends unlimited liabilities. In case an owner of a Professional license would like to change the legal form of a company from SO to LLC, he is required to change to CC first, applying further to to LLC. In this situation, the ownership will be split between the foreign investor and the UAE national. 

The formal requirement for the minimum paid-up capital for companies registered in Dubai DED with Commercial licenses is AED 300,000, although in practice the minimum capital accepted by Dubai DED was from AED 200,000 to AED 300,000. New requirements for minimum share capital of the company have been reduced to AED 100,000. Despite these requirements, there is no actual proof of payment needed.

For Professional licenses, on the other hand, it is AED 150,000. As mentioned previously, a Commercial license is acquired for an LLC company, which implies limited liabilities. A Professional license, on the other hand, implies unlimited sole responsibility for liabilities and debts. 

To sum up, the difference between Commercial and Professional licenses in the UAE is as follows:

• Commercial license – issued to a company, mostly associated with a range of trading activities;
• Professional license – issued to service providers, craftsmen, professionals;
• Commercial licenses are aimed at trading, whereas Professional licenses are concentrated around the professional skills of the workforce;
• Commercial licenses are issued for LLC companies, and Professional licenses are issued for Sole Establishment and Civil Companies with sole responsibility for liabilities and debts (unlimited).

If you would like advice or assistance concerning the opening LLC, sole-establishment, or registering a 100%-ownership company, kindly contact us. 

Marsel Shadmanov

Head of Corporate Services at Garant Business Consultancy DMCC

Phone +971 4 421 4335