3 Serious Penalties of Failing To Renew Trade License In Dubai

Like any other business-friendly location in the world, the United Arab Emirates also has some specific rules that must be followed by enterprise owners. One such legal compliance is acquiring the right trade license for starting the business. However, the task does not end once you have got the correct permit. You must not forget to renew trade license in Dubai at the end of its validity period. But ensuring compliance with all the applicable regulations is essential for the bright future of their venture. Failing to do so can cause serious damage to your company’s health and reputation. It goes without saying that non-compliance with the measure will also cause financial losses. In this post, we are discussing the serious penalties that can be imposed on your business if you fail to renew your trade license.

What Is A Trade License In Dubai?

Before we discuss the repercussions of the non-renewal of the permit, it will be pertinent to know what a trade license in Dubai is. The license is issued by the Department of Economic Development Authority. There are three main types of licenses namely, industrial, commercial, and professional. The industrial licenses are meant for organizations that are involved in manufacturing activities. Commercial permits are for all kinds of trading activities. Finally, professionals offering their services for monetary fees have to acquire professional licenses. The Dubai economic department trade license activity list contains detailed information about the eligibility for the licenses. Certain businesses will have to take approvals from different departments before applying for the license. For instance, if you are creating a new business setup in the UAE for manufacturing medical products, then you will need approval from the  Ministry of Health. Moreover, all commercial and industrial enterprises have to be registered with the Chamber of Commerce and Industry in the relevant Emirate.

What Are The Penalties For Not Renewing A Trade License In Dubai?

Let us now take a look at the possible penalties that can be imposed on an enterprise that fails to comply with the legal regulation. Here are three major situations that can arise when you do not renew trade license in Dubai.

1. Serious Monetary Fines Can Be Imposed On The Erring Busines

The Dubai economic department trade license renewal process is a mandatory procedure that eligible businesses have to follow on an annual basis. The body has defined clear rules for organizations that do not complete the process on time. There are serious monetary fines that can be levied on errant entities. A company found to be running its operations in the city without the necessary permit can be fined an amount of AED 5000. In case, the enterprise does not complete the process of renewal within the specified time frame, then it will be fined  AED 250. Another instance that can attract monetary fines is opening an additional office for an existing business license without taking permission from the concerned authorities. This infringement attracts a monetary penalty of AED 2000. You must regularly consult a professional service to ensure you renew trade license in Dubai on time.

2. The Company Failing To Comply With The Regulation Can Be Blacklisted

The process to renew a license is not too difficult. The Department of Economic Development Authority allows users to conduct the process through SMS or the internet. There are provisions for Dubai trade license renewal online payment so that users can pay the fees easily. In such a scenario, the Authority finds it unacceptable that users fail to complete the process within time. It does not shy away from taking harsh steps to penalize the offending parties. In case, an enterprise continues to pursue its business activities without completing the license renewal process, then it can be blacklisted by the agency. Any entity that is blacklisted is not allowed to conduct any transactions. All the visas of the individuals associated with the enterprise are revoked. The sponsorship by local partners is also nullified and in some situations, the overseas investor can be asked to leave the country. This can not only cause severe financial losses but also dent your reputation. This can prevent you from initiating any other venture in the country.

3. Restrictions Can Be Imposed On The Expansion Of The Company

The parties that are at the most risk from non-compliance with the trade license renewal procedure are small and medium enterprises. Most of the owners of such entities have to handle multiple responsibilities at once. Small enterprises may have to conduct the process for trade license renewal in Dubai every year. Due to their extensive workload, business owners can easily fail to complete the process on time. This can force the Authority to impose restrictions on the expansion of the enterprise. This can have a serious impact on the future of the business and in some extreme cases may even lead to insolvency of the investor.

Wrapping Up

Every entrepreneur must renew trade license in Dubai within the specified time frame to avoid these harsh penalties. A failure to do so can cause severe financial losses and even put your enterprise’s future in question. It will be best to hire a professional business setup service in Dubai to ensure compliance with the regulation.