E-commerce in the UAE requires a trade license with activities covering online sales of goods or services, registration for VAT when thresholds trigger, and integration with compliant payment gateways to handle transactions securely. As of February 2026, the framework supports both mainland and free zone setups, with 100 percent foreign ownership available in most cases. Free zones often suit international or dropshipping models through streamlined processes and potential Qualifying Free Zone Person benefits, while mainland provides unrestricted local market access. The key is matching the license scope to actual operations, ensuring customs and payment compliance, and maintaining substance for banking and tax purposes.
Selecting the Appropriate License for E-Commerce
E-commerce activities fall under commercial licenses for selling physical or digital goods, or professional licenses for online services. Mainland licensing through the Department of Economy and Tourism in the relevant emirate includes e-commerce or online trading codes, requiring physical office leasing via Ejari and allowing direct UAE sales. Free zones issue dedicated e-commerce or trading licenses, often with flexi-desk options minimizing initial commitments. Specialized zones like Dubai CommerCity focus on digital commerce, providing ecosystem support including logistics and marketing partners. A dropshipping business targeting GCC and international markets typically chooses a free zone for speed and duty exemptions on re-exports, while a platform selling to UAE consumers prefers mainland to avoid intermediary restrictions.
Activity Wording and Approval Requirements
License applications demand precise activity descriptions aligned with the business model. General trading or e-commerce covers broad online sales, but regulated goods like food, cosmetics, or electronics may require additional approvals from ministries such as health or economy. The Telecommunications and Digital Government Regulatory Authority oversees the e-commerce framework, with some setups needing their nod for online platforms. A business selling consumer electronics verifies HS codes and secures any sector-specific permits early to prevent clearance delays. Mismatched wording leads to amendments, extra fees, and operational halts.
Setup Process and Documentation
Apply digitally in most free zones or through mainland portals: submit passports, entry stamps or visas, business plan outlining products/services and revenue model, and ownership details. Trade name reservation precedes license issuance, often within days in responsive zones. Flexi-desk suffices initially for registration, with upgrades for warehouse needs or visa quotas later. Mainland requires Ejari-verified premises from the start. A startup launching an online fashion store completes formation in a free zone quickly, then focuses on website development and supplier contracts.
VAT Registration and Compliance for Online Sales
VAT registration becomes mandatory when taxable supplies exceed AED 375,000 in the previous 12 months or are expected to in the next 30 days, with voluntary registration possible above AED 187,500. Non-residents supplying digital services register regardless of threshold. Charge 5 percent on taxable UAE supplies, apply zero-rating to exports with evidence, and handle reverse charge on certain imports. Invoicing must include TRN, VAT breakdown, and compliant details, with records retained for five years. An e-commerce platform selling physical goods to UAE customers registers promptly upon growth to reclaim input VAT on inventory and logistics costs.
Payment Gateway Integration and Regulatory Rules
Payment gateways must comply with Central Bank of the UAE regulations, including PCI DSS Level 1 certification, 3D Secure authentication, and anti-money laundering controls. Licensed providers like PayTabs, Telr, Network International, or UAEPGS support local cards, e-wallets, and international options. Gateways require a valid trade license, business documents, and compliance checks for integration. Cash on delivery remains common for UAE consumers but demands robust logistics. A digital goods seller integrates gateways supporting recurring billing, while ensuring refund policies and chargeback handling align with consumer protection rules. Using unlicensed gateways risks penalties or account suspensions.
Customs, Logistics, and Operational Essentials
For physical goods, register with customs for an importer/exporter code post-license to clear shipments. Free zone re-exports avoid duties, while mainland imports incur 5 percent duty and VAT. Partner with licensed logistics providers for fulfillment. Corporate tax applies standard rates, with Qualifying Free Zone Person status potentially securing 0 percent on qualifying international income through substance and de minimis non-qualifying revenue.
Risk Management and Scaling Considerations
Common issues include mismatched licenses causing customs holds, VAT non-registration leading to fines, or gateways rejecting setups without substance proof. Maintain clear records, customer terms, data protection compliance, and UAE presence for banking. Scale by upgrading office for visa quotas or adding mainland access permits.
Partners such as ALand, guided by Dr. Pooyan Ghamari, assist e-commerce founders by selecting jurisdictions and licenses for activity fit, preparing customs and VAT registrations, aligning payment gateway integrations with compliance, ensuring substance for banking and tax preferences, and providing ongoing oversight to manage duties, filings, and growth without disruptions or penalties. UAE e-commerce licenses and payment rules become straightforward when the structure matches sales channels, documentation aligns with operations, and compliance integrates from launch, enabling scalable online trading in a market-oriented jurisdiction.