Dubai owes much of its modern success to oil. Without its discovery, it is unlikely that our small fishing village would have transformed into the sprawling metropolis that we inhabit today – certainly not within 30 years.
While successful efforts have been made in recent years to diversify the Dubai economy, oil still accounts for a significant percentage of the emirate’s GDP, at around 65%.
Although the extraction, processing, and sale of oil products is highly regulated in the UAE, there are plenty of other ways for entrepreneurs to benefit from this precious resource. A particularly effective way is to operate as an oil trader.
When you start an oil trading business in Dubai, you can trade, and profit from, oil commodities such as CFDs and futures trades. As part of a regulated industry, there are a few extra hoops to jump through to set up as an oil trader. However, with the right support, you can be up and running within weeks.
Benefits of starting an oil trading company in Dubai
The financial benefits of trading in black gold are incredibly well-known. The added benefit of operating in Dubai is that, with the right setup, you can trade in this valuable commodity while benefiting from the UAE’s low income, corporate, and customs tax rates.
However, it is important to note that you can only set up in this manner if you are trading in overseas oil. If you undertake any commercial activity involving UAE oil reserves, you will need to apply for several additional approvals and will be liable to pay a high rate of tax. Naturally, this route is best avoided.
Another benefit of starting an oil trading company in Dubai is the fast and affordable company incorporation process. Then there is the emirate’s location, with favourable flight times and overlapping time zones with many of the world’s most important oil markets.
Steps to start an oil trading business in Dubai
When you set up in the mainland with a local expert, the company formation process is incredibly straightforward. While there are a couple of additional steps due to working in a highly regulated industry, you can be up and running in no time as long as you know what to expect.
A company setup agent, such as Business Incorporation Zone (BIZ), can assist with every step of the process.
Step 1: Choose your company name
The formation process for an oil trading business starts in the same way as any other – choosing a name.
When choosing a company name in the UAE, you must abide by a strict set of naming conventions.
In short, you should avoid any offensive or blasphemous language. Avoid names of well-known organisations and avoid abbreviations if naming your company after yourself – i.e., Dave Mann Consulting, rather than D Mann Consulting. You must also check that your chosen name is available to register.
Step 2: Find a local sponsor
When operating an oil trading business, you may be required to work closely with government departments and the local UAE market. If this is the case, you will usually require a local sponsor.
Local sponsors can be Emirati individuals or UAE businesses. In both cases, they will hold a 51% stake in your organisation. However, profits are not split along these percentages. In most cases, you retain all decision-making powers and pay the sponsors an annual fee for their services.
Step 3: Make your license application
With these critical early decisions out of the way, you can move on to the most important step in the process: applying for your UAE trade license.
When applying to form a mainland company, this application is made directly to the Dubai DED, or the local equivalent if you choose to set up in another emirate. This process takes place primarily online and can be completed within hours.
We can manage the process for you, informing you as soon as your license is approved, and you are ready to trade.
Step 4: Obtain additional approvals
Your trade license is just the first approval required to start an oil company in the UAE. Depending on the exact nature of your activities, you will also require approval from the Supreme Petroleum Council (SPC).
Once again, BIZ can help you with this step.
Step 5: Make your visa applications
As well as a trade license, you are also required to hold a residency visa to work in the UAE.
The visa application process consists of several steps including biometric scanning, a medical checkup, and a chest x-ray.
As the holder of a UAE business license, you can also sponsor others for their visas. This could be a spouse, parent or child, or a domestic worker such as a housekeeper.
The maximum number of visas you can apply for will depend on the size of your company, your chosen setup and, for dependant visas, your personal earnings.
Step 6: Opening a corporate bank account
Finally, you will need a corporate bank account to trade in the UAE. Obtaining banking services as an overseas investor is not always easy. However, we will take the time to understand your needs before putting you in touch with an institution that is most able to meet them.
Documents required to start an oil trading business in Dubai
When setting up as an oil trader in Dubai, you will be required to produce a few forms of identification, along with several other documents.
Exactly what you need will depend on the nature of your business. In most cases, however, you will be asked to provide completed license application form, a copy of your passport and that of any other shareholders, and two colour passport photos.
In some instances, you may also require a business plan. To ensure all your documents are present and correct, we will liaise with the relevant authorities prior to submitting your application.
Start your oil trading company in Dubai with BIZ
If you’re armed with the right knowledge, setting up an oil trading business in Dubai doesn’t have to be overly complicated.
That being said, it does require a level of prior knowledge of the process. What’s more, it is important to note that the application process is only straightforward if your license application is complete at the time of submission and free from errors.
To help you to ensure that this is the case, it’s a good idea to work with a mainland company formation specialist such as Business Incorporation Zone (BIZ) when establishing a new company in the UAE.
We are a team of company registration professionals who are passionate about bringing the dreams of aspiring entrepreneurs and SMEs to life.
As well as handling your license application, BIZ can also assist with the opening of corporate bank accounts, and advise on the most appropriate financial institution to suit your specific needs.
We also offer visa and immigration services, and can handle all government formalities, permissions, work permits, and visa applications required to trade in the UAE.
In short, our experts can establish your company on your behalf, make your license and visa applications, and take care of all the necessary admin – leaving you free to get on with running your business.