Investors and entrepreneurs from across the globe are flocking to Dubai because of its very favorable location, top-class infrastructure, and attractive tax laws. Obtaining an industrial license in Dubai is essential for any business focused on manufacturing, processing and other industrial activities. In this guide we will provide you with more information about an industrial license, the activities covered by it, the application process, the costs involved in getting a license, and your responsibilities after getting your license.
What is an industrial license and who needs it in Dubai?
An industrial license in Dubai is the permit required by any business involved in any industrial activity. This includes manufacturing products from raw materials, assembling machinery and equipment, and the large-scale synthesis or mixing of chemicals. In order to apply for an industrial license, your business must be physically present in Dubai. The license will be issued to qualifying businesses by the Department of Economic Development (DED) or the relevant free zone authority.
Step-by-step guide to getting your industrial license in Dubai
Here is an easy-to-follow, step-by-step guide to getting your industrial license in Dubai.
1. Pick the license type
The first thing you need to do when applying for an industrial license is determine whether you need a light, medium, or heavy license. This will be determined by your planned operations.
Light industrial license: Includes workshops like auto garages and small warehouses below 2000 sq ft in size. Carries low safety and health risks.
Medium industrial license: For larger manufacturing plants and warehouses, larger than 2000 sq ft in size. Carries medium risks.
Heavy industrial license: Suitable for heavy manufacturing, processing and recycling plants. It carries very high health, safety, and environmental risks.
2. Choose a location
The licensing process will be heavily affected by where you choose to set up your industrial business. The government requires all industrial businesses to be established in a designated industrial zone or park. Decide whether to set up your business on the mainland or in a free zone. Take the time to examine the pros and cons of each including the permitted business operations, custom duties, degree of foreign ownership that is allowed, and potential tax exemptions.
3. Determine the legal structure
It is important to select a legal structure for your industrial business in Dubai as it will affect the ownership, liabilities, and various other operational elements. Free zone companies and limited liability companies (LLCs) are both popular choices for industrial businesses. Joint ventures between you and another party/parties may be worth considering if you want to establish a larger industrial operation.
4. Choose your business name
Just like any other business, your industrial business needs a name to be registered. There are a number of things to keep in mind when choosing a business name:
- It must describe the nature of your business
- It should not have any derogatory words/terms or religious mention
- It must be distinctive
It must also be compliant with any other law the DED or relevant free zone authority might impose.
5. Get preliminary approval and secure a lease agreement
Next, you must collect and submit the documents needed to get initial approval with either DED or free zone authority, depending on your location. They will consider your application and determine whether or not the activity you are interested in pursuing is permitted. Once you have the pre-approval, you require a lease contract for your factory, warehouse or other industrial property. If you are from the mainland you will require an Ejari lease agreement. If you are starting your business in a free zone, the applicable authority will issue your lease agreement.
6. Get your industrial license
Once you have your initial approval and lease agreement in place, you need to get the final approvals including environmental clearance and civil defense approvals. Depending on your activity other regulatory approvals may be required. Once all approvals are granted and licensing fees are paid, your final industrial license will be issued and you can start operations.
Types of activities covered under an industrial license
Manufacturing
Manufacturing activities involve the large-scale production of goods by utilizing raw or processed materials, labor, and technology. This includes food products, electrical components and furniture, construction materials and textiles, paper and packaging materials, and plastics.
Assembling
Assembling entails combining different components to produce a finished product. Plants in Dubai generally focus on the assembly of electronic devices, machinery and equipment, household appliances, and automotive vehicles such as cars, trucks, and motorcycles.
Processing
Processing businesses transform raw materials into finished or partially-finished goods. They are heavily regulated by health and environmental standards. Common examples include the processing of food and beverages, chemical synthesis and processing, and refining crude oil and petroleum products.
Packaging
An industrial license allows business owners to legally operate packaging facilities for items ranging from food and beverages to cosmetics and toiletries. Quality packaging is essential for the protection, preserving, and clear branding of products.
Industrial Storage and Distribution
Certain industrial licenses make provision for storage and distribution activities. This will allow you to not only store raw materials or finished products in warehouses but also manage their distribution to export hubs and retailers.
Documents and approvals required for application
To get your industrial license in Dubai, you need to compile various documents and get approvals from the relevant departments:
Business plan: Your business plan provides the details of your proposed industrial operations, your goals, long and short-term financial projections, and your operational and marketing strategies.
Passport and residency documents: Photocopies of shareholders, owners, and managers’ passports. Photocopies of foreign owners’ visas or Emirates IDs.
Lease agreement or proof of premises: Industrial building, warehouse, or office confirmation.
No Objection Certificate (NOC): From relevant authorities or the Ministry of Economy for foreign investors.
Memorandum of Association (MOA): Legal nature, shareholders’ roles, and nature of business.
Bank statement or proof of capital: Shows that you are able to meet the financial obligations of operating an industrial business.
Industrial feasibility study: Confirms market demand and production potential.
Clearances from the relevant authorities: Municipality, Ministry of Economy, Ministry of Labour, Ministry of Electricity & Water, National Media Council, Ministry of Health, Ministry of Interior, Ministry of Environment and Water.
Technical qualifications: Certificates of staff for specialized production.
Trade license & financials: Certified trade license and balance sheets.
Cost of an industrial license in Dubai
The total cost of an industrial licence in Dubai differs from one business to the next. It can be influenced by a number of things like the DED’s requirements and the scope and size of your business.
Key Costs:
- Initial Approving Fee: AED 100 to AED 200
- Trade Name Reservation: AED 600 to AED 2,000
- Company Initial Registration: AED 10,000 to AED 15,000
- Industrial License Fee: AED 7,000 to AED 15,000
- Local Sponsorship Fee (in case requirement is applicable): AED 10,000 to AED 50,000 annually
- Leasing of Warehouse or Factory: AED 50,000 to AED 300,000 annually, depending on size and location
- Further Approvals and Inspections: AED 5,000 to AED 20,000
- Visa Charges: AED 4,000 to AED 6,000 per employee
- Professional or Consultancy Charges: AED 5,000 to AED 20,000
Approximate Total Expense: Around AED 90,000 to AED 400,000 or more depending upon your business size, leasing, and regulatory requirements.
This is an approximate setup cost, licensing, and operations cost to plan your industrial business in Dubai.
Mainland vs free zone: Where to set up your industrial business
Of all the decisions you need to make when setting up your industrial business in Dubai, this is one of the most important. You have two options to choose from:
Free zones
Industrial businesses in Dubai can also be established in free zones such as the JAFZA, DAFZA, and DIC. Despite all the advantages of a free zone, it is important to remember that, when establishing a business in a free zone, your operations will be limited to the zone. If you want to conduct business on the mainland you may require a local partner.
Mainland
If you want full access to both the local UAE market and government contracts, consider establishing a mainland business. These businesses can be entirely foreign owned, although they may need the assistance of a local service agent or sponsor. There may also be deadlines for employees or construction. Some of the benefits include lower utility expenses and access to government financing programs.
Responsibilities after getting an industrial license
There are various ongoing responsibilities you need to keep on top of after getting your industrial license. They include:
- Compliance with Environmental and Safety Regulations: Make sure you comply with safety and environmental standards by maintaining ongoing approval from both civil defence and environmental authorities.
- Periodic Inspections: It is normal for authorities to do periodic inspections to make sure your industrial business complies with health, safety, and industrial regulations.
- License Renewals: Your industrial license through the DED has to be renewed every five years. DET and free zone licenses may need to be renewed annually. The Industrial Production Certificate (MOIAT) must also be updated on an annual or bi-annual basis. If you do not renew your expired licenses within a year, you will have to restart the process and submit a new application.
- Annual Audits (if applicable): Ensure proper record-keeping for financial audits and corporate compliance, including Corporate Tax and VAT obligations depending on your setup.
- Cancellation of License: To cancel, submit an application to DED and settle any outstanding charges. Refunds of initial license fees are not permitted.
By following these responsibilities ensures your industrial business remains fully compliant and avoids penalties.
Frequently asked questions
How much does it cost to get an industrial license in UAE?
Getting an industrial license in Dubai can cost you anywhere from AED 90,000 to AED 400,000 or more. The cost depends on your business scale, leasing, and regulatory needs.
What is the difference between industrial license and commercial license?
An industrial license makes provision for the manufacturing, processing, storage and transportation of goods while a commercial license applies to wholesaling, retailing, and e-commerce.
What is an industrial production license?
An industrial production license is the document that allows you to legally establish and operate an industrial business in Dubai.
What comes under industrial production?
Industrial production is a very broad category. It includes the production of goods using raw or semi-processed materials. Examples are food and beverage items, textile, paper products, and health and beauty items.
About Set Hub
Dubai is a great location to start your industrial business in. Despite numerous benefits that range from full foreign ownership to tax exemption, the set up process may still seem daunting. With over a decade of experience providing our services to more than 25,000 clients, our team is equipped to help you get an industrial license in Dubai with ease. Whether you want to establish a mainland manufacturing business or a processing plant in a free zone, we will be with you every step of the way.