In the business and commerce arena, there are many licenses and permits that individuals can obtain to start their business or professional activity. Among these main licenses, the commercial license and the professional license stand out, each of which represents a different type of features and requirements. Understanding the difference between them is important for anyone planning to start their own business. In this article, we will highlight the difference between a commercial license and a professional license, as we will explain the main differences between them and the different advantages and uses of each.

The difference between a commercial license and a professional license

The difference between a commercial license and a professional license lies in the basic nature of each and in the activity permitted by each type of license. Here is an explanation of the difference between them:

• Commercial license:

A business license is granted to individuals or companies wishing to conduct business and sell goods or services.
A business license is typically used to set up and operate business companies such as limited companies, partnerships and sole proprietorships.
Businesses must obtain business licenses from local authorities and adhere to applicable business laws and regulations.

• Professional license:

A professional license is granted to individuals who wish to practice a specific professional activity such as doctors, lawyers, engineers, accountants, designers, and others.
A professional license allows an individual to practice his or her profession freely and independently without the need to join a company or organization.
Requirements for obtaining a professional license may vary depending on the professional activity, and this includes providing the necessary certificates and vocational training.

Uses of both the commercial license and the professional license

The uses of a business license and a professional license vary depending on the nature of each and the type of business allowed by each type of license. Here are the uses for each:

• Commercial license:

A business license is used to set up and operate commercial companies, including limited companies, partnerships and sole proprietorships.
The trade license can be used to sell goods or services commercially and make a profit through sales and marketing.

• Professional license:

A professional license is used for individuals who practice specific professions such as medicine, law, engineering, accounting, design, etc.
A professional license enables individuals to practice their profession independently and work directly with clients without having to join a company or organization.
For example, law firms can obtain a business license to practice legal business while individual lawyers need a professional license to practice as independent attorneys. In this way, the uses of the commercial license and the professional license vary and depend on the activity to be practiced and the local legal and regulatory conditions.

Steps to issue a commercial license in Dubai

Issuing a business license in Dubai requires following a series of steps. Here are general steps that can be followed to obtain a business license in Dubai:

1. Determine business activity: Determine the type of business activity you wish to practice. The activity must comply with local laws and regulations.
2. Choosing a brand name: Choose an appropriate and unique name for your company, and make sure that it does not conflict with any previously registered trademarks according to local laws.
3. Arrangement of partners and shareholders (if any): If there are partners or shareholders in the company, the partnership relationships must be arranged and the shares of each of them must be determined.
4. Choose the type of company: Decide what type of business you want to establish, such as a sole proprietorship, limited liability company, or partnership.
5. Obtaining the necessary approvals: You may need to obtain prior approvals from the relevant authorities, such as the Dubai Business Regulatory Authority (DED), especially if the business activity requires it.
6. Submitting the application and required documents: Submit an application for a commercial license to the competent authorities, and submit the required documents such as a copy of the partners’ Emirati passport, business plan, and other required documents.
7. Payment of fees: Pay the fees required to issue the trade license and any other related fees.
8. Inspect the site and obtain necessary licenses: You may need to inspect the location where you intend to conduct business, and obtain municipal licenses and environmental approvals if they are required.
9. Receiving the commercial license: After reviewing and verifying the application and documents, you will receive the final commercial license that confirms the legality of establishing your company.
10. Registration with the necessary governmental bodies: Register the company with the relevant governmental bodies such as the General Authority for Statistics and the General Authority for Taxes if this is required.

Papers required to issue commercial licenses

Issuing commercial licenses requires submitting a number of documents proving the company’s identity and details. Here is a list of basic documents you may need when requesting a business license:

1. Commercial license application form: The form must be filled out with the necessary information related to the company and its activity.
2. A copy of the Emirati passport for partners and shareholders: A copy of the identity card or passport must be submitted for each of the partners and shareholders in the company.
3. Business Plan: A document that explains the company\’s goals and its operational, marketing, and financial plans.
4. Articles of Association or Partnership Agreement (if applicable): If the company is owned by a group of partners, you may need to provide a copy of the Articles of Association or Partnership Agreement.
5. Site Plan: A document that shows the business location and the space allocated for the business activity.
6. Certificate of Completion of University Studies (if applicable): In the case of activities that require a specific profession or specialty, you may need to submit a Certificate of Completion of University Studies or related training courses.
7. A copy of the lease agreement (if applicable): If the company intends to rent a space to conduct business, it may need a copy of the lease agreement.
8. A copy of the municipal license (if available): In some cases, local authorities may require a copy of the municipal license for the place of work.

The importance of a professional license in Dubai

The professional license is of great importance in Dubai and in many other countries, for several reasons, including:

• Regulating the profession and protecting consumers: The professional license contributes to regulating the profession and ensuring that it is practiced with a high level of professionalism and quality. It ensures that individuals holding this license have the necessary skills and knowledge to practice the profession effectively, protecting consumers from deception and manipulation.
• Enhancing trust and credibility: The professional license contributes to building trust and credibility for individuals and companies working in a specific field. When a person or company is granted a professional license, this is an indication that they adhere to specific professional standards and are competent and professional in their field of work.
• Facilitating access to government and financial services: A professional license may be required to access some government services or to obtain bank financing. With a professional license, individuals and companies can easily access the services necessary to operate a business legally and efficiently.
• Achieving competitive excellence: A professional license may give individuals and companies practicing in a specific field a competitive advantage, as obtaining this license is considered an indication of professionalism, quality, and commitment to specific industrial standards.

Tax benefits available for both the commercial license and the professional license?

In Dubai and the UAE in general, there are some tax differences between a commercial license and a professional license. Here\’s an overview of some of the tax benefits available for each:

Commercial license:

• No income tax: Companies with a trade license often benefit from the lack of income tax on profits in Dubai and other emirates, whether for individuals or SMEs.
• No corporate tax: Companies with a business license are usually exempt from paying corporate tax on the profits they make, which enhances competitiveness and increases profits.
• Tax Incentives: The local government in Dubai may offer some tax incentives and exemptions to commercial companies to encourage investments and promote economic growth.

Professional license:

• Exemption from Value Added Tax (VAT): Exemption from VAT is applied to services provided by professional license holders, representing additional tax benefits for them.
• Income tax for individuals: In the case of a professional license owned by an individual, the personal income he receives may be exempt from tax according to the limits specified in tax legislation.
• Work-related costs: Professional license holders can deduct the costs associated with conducting their business from the revenues generated before calculating income tax.

Advantages of both the commercial license and the professional license

Both the commercial license and the professional license feature a set of benefits that suit the needs and goals of individuals and companies. Here are some advantages of each type of license:

• Features of a commercial license:

1. Diversity in commercial activities: A commercial license allows companies to practice a wide range of commercial activities and sell a variety of goods and services.
2. Expansion and Growth: Thanks to the commercial nature of the license, commercial companies can expand and grow faster and more effectively by opening new branches and expanding their business.
3. Foreign Investment: A business license attracts foreign investment because of the open business environment and favorable conditions it provides to investors.
4. Large profits: Business companies can achieve large profits as a result of the ability to sell products or services at competitive prices.

• Features of the professional license:

1. Independence: A professional license gives individuals the ability to practice their profession independently without having to join a company or organization.
2. Specialization and professionalism: Individuals can obtain a professional license to practice a specific profession and specialize in it, which increases their credibility and professionalism in their field.
3. Low Costs: The fees and costs associated with obtaining a professional license may be lower than those associated with a commercial license, making it a suitable option for individuals looking for a moderate cost start to their career.
4. Flexibility at work: Obtaining a professional license allows individuals to determine work times and appointments that suit them flexibly, allowing them to better maintain a balance between professional and personal life.

In conclusion, we can emphasize the importance of understanding the difference between a commercial license and a professional license and how to apply them in a business context. A business license demonstrates the ability to engage in commercial activities and sell goods or services in general, while a professional license focuses on practicing a specific profession or providing professional services in a specific field. Individuals and companies must carefully determine their needs and choose the appropriate type of license according to their business and professional goals. By understanding the main differences between these two types of licenses, individuals and companies can determine the most appropriate way to start and successfully develop their business in the market.