Why should your Dubai Business License never expire?

September 15, 2023

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Once you have set up your business in Dubai, naturally you do not want to lose it.

Not only it requires a ton of administrative work to get your enterprise registered from the Department of Economic Development (DED) or other concerning authorities in whichever forty-five plus free zone you choose for as base of your operations. But also the hours spent on the incorporation process are too many to count. It might seem like you can at last just focus on your business.

However, Tread carefully in the murky waters doing business in Dubai, as one legal oops such as an expired business license can lead to critical problems for your company.

Here are four key points outlining the need for you to renew your business license to avoid getting yourself into trouble with the authorities and undoing all your hard work:

An Expired Business License can Get Your Company Heavily Fined:

You read it right. If you continue operating a company that has an expired business license, you can be heavily fined for your transgressions.

The DED and other regulatory authorities of the UAE demand that all business licenses are renewed well before their expiration date or else you will be penalized. Approximately two hundred dirhams is charged for every month the fine remains outstanding.

However, it does not end there. Because according to Dubai’s laws, a business that is found working with an expired license is also liable for fines up to five thousand dirhams (AED 5,000). Further adding another two hundred and fifty dirhams (AED 250) if the Company repeatedly fails to renew their expired license and the subsequent documentation within the defined time.

Similarly, a deviating office established without any prior permission that overlaps an existing business license can cause the business owner a fine of Two thousand dirhams (AED 2,000) plus added banking penalties.

What This Means for You as a Business Owner:

Having to part with your hard-earned profit is only a slight inconvenience as compared to the invasive inquiry from the regulatory authorities about your current situation. How and why did your company land in such a stage that led you to get fined? And other such unpleasant questions.

These inquiries are especially problematic if you are running a joint venture or have to report to shareholders. Since having your business Trade license expire and placing your organization in the line of unnecessary financial risk will most certainly make you look careless, unreliable and unprofessional.

Your Company can be Blacklisted:

In case your business license expires, and you continue operations of your Company, facing monetary consequences will be the least of your problems. In some dire circumstances, your business can be blacklisted.

Getting blacklisted is the most severe form of punishment that the regulatory authorities can authorize. Being blacklisted not only include having restrictions placed on all kinds of operations, such as:

  • The Company will not be allowed to participate in any business proceedings.
  • Visa could be annulled with a ban on travel.
  • Sponsors could break away from your Company, leaving you in a lurch.
  • The owner, managers, shareholders and directors in some cases could even be deported from the UAE.
  • What This Means for You as a Business Owner:

You don’t have to panic just yet, as there may be some good news.

The UAE government allows a grace period to all its business owners so that they can get their ducks in a row. During this grace period, you can renew your business license and registration.

Nevertheless, if you still fail to comply with the requirements– and end up on the blacklist– you will find yourself in a tough situation. Continuing your business while being blacklisted is no walk in the park as you will find out if you ever land on the list. Your businesses’ day-to-day tasks will be blocked partially or entirely, and you can even face severe punishments.That means that it is better that you stay on top of your legal duties in the UAE.

You can hire legal advisory services to avoid any consequences.

Your Extension Phase can be Banned:

Starting a business in the UAE is not an easy task. Not only do you have to develop strategies that entice the customers into spending money, but you also have to be on top of the required administrative work simultaneously.

Furthermore, you may be organized at the beginning, but chances are you will start to miss important things in a year or two as your workload starts to increase.

And this is the exact reason in our experience that plays a big role in SMEs and startups downfall. Small businesses are more susceptible to license renewal problems as they require annual renewals. The annual resumption makes it tricky for novice entrepreneurs to stay up-to-date because you have to do it so frequently.

Hence, if you are a little late in renewing of your business license, your business activities will be suspended, and your Company will not be allowed to expand its operations in the future.

What This Means for You as a Business Owner:

For a small business in the first few years of operation, even a trivial inconvenience can throw a wrench in the works and stop you from achieving the success and recognition that you deserve.

Besides the penalties, we have previously addressed, an expired business licence can also cause bankruptcy, making your Company vulnerable to either voluntary or forceful liquidation.

Therefore, it should be avoided at all costs.

An Expired Business License Could Ruin your Company:

As we have already stated, we understand how hard it can be to start a business, get it off the ground and make it successful.

It takes a lot of hard work and determination, along with significant capital investment.

Hence, why put everything on the line by letting your business license expire?

To prevent this, take some measures like mark the expiry date on your business calendar and set a reminder to get it renewed before the deadline. Or you can entrust this responsibility to someone within the organization. Or you can even hire an external agency who can do the job for you. Whichever way you choose, make sure that it works so that your business does not end up inevitable suffering because of it.

Setting up your own business in the UAE has never been easier than it is right now. KWS Middle East take care of all of your licensing needs so that you can focus on what really matters – growing and nurturing your business.

For more information, send an email at:info@kwsme.com

Book your commitment-free consultation call with us today!

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