Dubai’s reputation as a global trade and logistics hub has rocketed in the past few years. Thanks to ever-increasing investment in logistics infrastructure and capabilities, Dubai is now a major regional trade gateway and a hub between East and West.
For entrepreneurs looking to start or scale their logistics license in a new market, there has never been a better time to act. To help you take full advantage of every opportunity, Worldwide Formations provides a wide range of fast and seamless company formation services.
This article explores how to set up a logistics company in Dubai. Feel free to reach out to our business advisors for further details and a bespoke quote tailored to your needs. We will discuss the following topics:
- Logistics license Dubai – what is it?
- When is a logistics license required?
- What are the types of logistics business activities available in Dubai, UAE?
- What are the benefits of opening a logistics company in Dubai?
- UAE governmental authorities required for special approvals
- How much does a logistics license cost in Dubai?
- How do I start a logistics company in Dubai?
- How can I get a cargo license in Dubai?
- Is a logistics business profitable in UAE?
- How Worldwide Formations can help
Logistics license Dubai – what is it?
To legally operate a logistics business in the UAE, all businesses require a special permit known as a logistics license. This permit covers a wide range of logistics businesses, from land cargo to freight brokers. You cannot legally run your logistics business in Dubai without a valid license and could face serious penalties if you fail to obtain the correct clearance beforehand.
When is a logistics license required?
You will need to obtain a logistics license in Dubai if your company solely provides services to the logistics and supply chain industry. That means that you will also require a logistics license if you offer services in packaging for transportation, goods storage, goods transportation and port services. It’s important to note that your logistics license allows you to hold an inventory of physical products but does not allow you to purchase or sell goods. To do so requires a separate license.
What are the types of logistics business activities available in Dubai, UAE?
A wide range of logistics activities in Dubai require a logistics and cargo license. These include:
Air cargo transportation
Air cargo transportation includes sorting and packing airfreight, air fleet management and forward leasing.
Customs brokers help prepare customs declarations and present these to the relevant authorities.
This covers businesses that manage fleets of ships, trains, aeroplanes and other transportation.
Freight brokers provide brokerage for sea, land and air freight transportation while handling matters with insurance brokers and customs.
Land cargo transportation
Companies involved in land cargo transport freight overland by rail and road.
Companies specialising in leasing lend or lease vessels, containers and other logistics equipment.
Logistics planners ensure cargo gets to its destination smoothly.
Sea cargo transportation
Sea cargo transportation encompasses sorting and packing, containers, RORO, bulk and forward leasing.
Third-party logistics (3PL)
This covers any service contract that involves storing and shipping a commodity, including warehousing and transportation services. A 3PL company could offer a single service or inventory management, but might also provide a bundle of services that manage a client’s entire supply chain.
Warehouse and storage
Firms offering warehouse facilities manage, pack, load and receive goods.
What are the benefits of opening a logistics company in Dubai?
Dubai is a global trade and logistics hub offering a wide range of benefits for logistics and cargo professionals, including:
- A strategic location – Dubai enjoys global connectivity, being just four hours by air from one-third of the world’s population and eight hours from two-thirds of that potential market.
- World-class infrastructure – Dubai is easily accessible through two international airports, one of which is the busiest in the world. It’s also one of the top five shipping hubs in the world and home to the largest marine terminal in the Middle East.
- Pro-trade government – Dubai’s government is famously pro-market and has introduced a whole string of measures to make the region a competitive place to start a logistics company.
- Generous tax benefits – Logistics companies benefit from one of the most competitive tax regimes in the world, with 0% on corporate profits and personal income tax and just 5% VAT for most categories in the internal market. All business owners are entitled to apply for tax residency in the UAE too.
- Global trade agreements -The UAE has built an extensive network of international trade agreements with countries across the globe, which makes it easier for business owners to trade with partners from every corner of the globe.
UAE governmental authorities required for special approvals
Given the diverse nature of logistics and cargo, you may find that you need to apply for special approvals from a dedicated government authority. A few key government authorities are outlined below:
- Aviation, maritime, roads and transport authorities provide permission for businesses to operate in their specific domain.
- Civil defence oversees the import and re-export of hazardous materials, substances and cargo.
- Customs approve clearance of imports and exports.
- Police approve security systems for warehouses and logistics companies.
- Food control provides accreditations for food stored in Dubai warehouses and foodstuff delivery.
- Ministry of Climate Change covers the import of agricultural goods, live animals, fertilisers and similar goods.
How much does a logistics license cost in Dubai?
You can obtain your logistics license for as little as AED 15,000 per year. However, keep in mind that there will be additional costs based on several factors. For instance, you will probably need to pay for warehouse or storage unit costs. Other factors include the number of business activities, additional visas and value-added services, such as bank account setup.
For a more accurate idea of how much setting up a logistics company in Dubai might cost you, get in touch with Worldwide Formations. Our business advisors will be happy to provide a bespoke quote based on your specific needs and will be able to advise on the most cost-effective way to proceed.
How do I start a logistics company in Dubai?
Starting a logistics company in Dubai is more straightforward than you might think, though you’ll need to ensure you have the right clearances and documents. You will then need to gain initial approval, register the business entity, submit your business plan for approval and incorporate your company.
How can I get a cargo license in Dubai?
To get a cargo license in Dubai, you must ensure all your customs, paperwork and documentation are in order. You will need to define your business activities, choose the jurisdiction and company name, submit your license application and apply for your visa.
Worldwide Formations has helped countless business owners obtain their cargo licenses in Dubai and will guide you through the process from start to finish.
Is a logistics business profitable in UAE?
Yes, logistics businesses offer huge opportunities for business owners to boost their bottom line.
How Worldwide Formations can help
Running a logistics business can open up lucrative opportunities for business owners in Dubai. Entrepreneurs can maximise profits with a competitive tax regime, pro-business legislation and easy access to the world’s busiest transport hubs.
However, setting up a business in a new country can be a daunting process, particularly for those with little knowledge of local laws and regulations. Worldwide Formations are experts in business setup in the UAE. We’ve helped countless entrepreneurs turn their business dreams into reality by guiding them through the entire process, from applying for a license to opening a bank account.
For more information and a personalised quote, please visit Worldwide Formations.