The growth and development of businesses in Dubai are major because of the effective business strategies along with the rules and regulations that have been implemented for the fair and progressive conduct of business. A business license is a mandatory document when it comes to conducting business in Dubai. Therefore, the timeline for the renewal of the business or trade license has to be reviewed carefully. Renewal of the business license or trade license can invite untoward events, which may even result in the shutting down of the business.
Read on to find out more about the different penalties and the penal provisions that might come over your business due to an expired business license.
Management of a business in Dubai can be quite a dimensional task with all the strict rules and regulations. But in a way having structured compliances while doing business helps in reducing the number of illegal activities and promotes a good business environment. A business license makes sure that the businesses only do the activity which they have obtained the license for. It is for this reason that there are strict penalties for the failure to renew the business or trade license in Dubai.
Penal Provisions Concerning the Non-Renewal of Business or Trade Licenses
1. Monetary Fines
The DET 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 will help business owners with the renewal of business licenses and help in the fast-track processing of the same. If a business is found operating without valid licenses, then AED 5000 could be levied against it. AED 250 can be considered as a penalty for not renewing the license on time. An establishment that overlaps the existing business license will eventually lead its investor to pay AED 2000 as a fine.
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 even in the grace period provided by the relevant authority. 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.
The documents required for the renewal of business licenses
It will be fitting to have your documents updated and set for renewal every year. The documents include:
- Passport copies of business owners and investors
- Typed form BR/1
- A copy of the recent trade license
- A copy of the tenancy certificate and Ejari registration certificate
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 jeopardise 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.
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