Penalties that May be Incurred on Expired Business License in Dubai

Business establishments in UAE, be it a mainland business, free zone institution or an offshore organization – any of these forms of company are allowed to regulate, provided they hold a?Business Trade License?or constitutional documents validating the entity as well as their existence. On an annual basis, these business entities are required to follow the practice of trade license renewal in Dubai as well as around UAE.

The Dubai Economic Development (DED) offers several options to?renew trade license in Dubai. Also, business setup companies in Dubai offer effective and easy ways to renew business license. However, there are instances when companies still do not renew business license and attract several penalties.

While there are a large number of issues that could be raised because of non-renewal of a business license, the major three are as follows:

Penal Provisions Concerning the Non-Renewal of Business or Trade Licenses

1. Monetary Penalties

The Department of Economic Development has the legal authority to approve business or trade licenses in Dubai. They are responsible for overseeing and monitoring the registration processes of businesses and making sure that they are obtaining business license for legitimate business activities. The Department of Economic Development of Dubai puts forward many avenues that helps business owners with the renewal of business licenses and help in the fast-track processing of the same. A business operating without a license could be penalized with AED 5000, while failure to renew a license within the specified time-limit could cost AED 250, also an additional office for an existing license without permission fines the entity with AED 2000.

2. Blacklisting of the Company

When businesses continue their trading or business activities without the renewal of their license, the establishment can be under the radar of the government authorities and have a higher chance of getting blacklisted. Blacklisting of a company is a high-order penal provision a business entity can come across. It will have severe repercussions on the activities of the company, like:

• The establishment will not be permitted to continue its business procedures.
• Business visas and other types of visas can be annulled with an effective travel ban.
• Sponsors can immediately stop providing their services to your company.
• There could also be scope for the management authority of the company to be deported from Dubai.

These severe measures will only be taken after the businesses fail to renew their license. It is necessary for the business to follow up with renewal dates because an expired license is also a black mark for the company to pursue its business activities with other business counterparts in Dubai.

3. Restricting the expansion of business activities

Small and medium-sized companies or businesses will have an extremely hard time when they fail to renew their?business license in Dubai. Small businesses require year-on-year renewal, which they might fail to keep up with. Failure to renew the business or trade license for small businesses can restrict further business expansion. A clean record of business activities is a must when it comes to the further expansion of business for small and medium enterprises. Failure to renew a business license can also result in the voluntary or involuntary liquidation of business activities. So, if a small or medium-sized business has the intention of thriving in Dubai, it is essential that they follow through with all the rules and regulations.

In 2018, the authorities introduced a series of reforms intended to make Dubai a friendly city for business. The reforms are to incentivize businesses with expert financial and growth assistance, which is much needed to thrive in a highly competitive place like Dubai. There were also rules that helped to ease the penalties for startups and other companies.

In order to have a successful business setup in Dubai, it will be necessary to be aware of the challenges that may come up in the day-to-day course of business. But certain procedures can be kept on schedule, and it doesn’t make any sense to jeopardize the business by not committing to the rules and regulations you were already aware of. It would be ideal to take up the services of a third-party business provider to make sure that you comply with all the necessary rules and regulations for the smooth functioning of the business.

Contact ANUVI Business Solutions today.

For more information, speak/chat with our experts on +971506472494 or email us at [email protected].