Up to $136,122 fine for selling without licence on social media in UAE

UAE residents risk a fine of up to Dh500,000 for selling items on social media without a licence, including mums who are operating online catering, tailoring and beauty businesses from home, lawyers have warned.

Selling garments, handbags, shoes, accessories and home-made food on Facebook and Instagram Lives, as well as on WhatsApp groups, has become all too common in the past year.

In 2018, the UAE Ministry of Economy had teamed up with the Telecommunications Regulatory Authority to shut down unauthorised e-commerce websites and social media pages.

In the UAE, especially in Dubai, residents are required to have a trade licence in order to carry out any commercial activities online.

"We have come across a number of cases, including online catering and bakery businesses that offer great quality foods to online customers but as a result of not being properly licenced some do not accept card payments as they are unable to procure payment terminals. Furthermore, in the event that their customers face health issues, these businesses would find themselves in a vulnerable position as they are unregulated and therefore, could be exposed to further penalties by the authorities," said Yousif Ahmed, the senior legal consultant at Davidson & Co law firm to Khaleej Times.

And Rhea Bindra, an associate at the same law firm, added: "In another case, some stay-at-home mothers were found to be running garment and beauty businesses where they would sell tailor-made clothes, accessories and beauty products through social media channels without official approval or having a licence. Individuals conducting such business may consider what they are doing as seemingly innocuous, however, they are putting themselves at risk of incurring fines and possible criminal sanctions."

Another lawyer, Kayaan K Unwalla - a Partner and Head of Corporate at DWF Middle East LLP, said that they've seen "an exponential growth" in SME enterprises and individuals who are operating in online sales without holding a valid licence.

He pointed out that residents are also using traditional chat platforms as 'broadcast stores' and image sharing platforms - such as Instagram - are being used as "online window shopping".

"For clients involved in online sales, e-commerce platforms and utilising social media platforms to propagate sales, we advise our clients to be aware of and to comply with UAE commercial licence requirements and as a continuing obligation, track how they conduct business online especially when using social media platforms. Companies failing to obtain the relevant licence to conduct business activities in the UAE may be subject to penalties of up to Dh500,000," Unwalla said.

How do you get a licence?

George SK, an associate at the STA Law Firm, said:

"Article 6 of the Dubai Law Number 13 of 2011 which regulates the conduct of economic activities within Dubai, states that every trading activity shall have a licence. It states that any legal or natural person shall conduct trading activities only with a licence that has been issued by the Department of Economic Development (the DED). Therefore, residents would need to set up a company and obtain the 'e-commerce licence' from the DED in order to sell goods and/ or products online. The DED will determine the requirements, conditions, documents and approvals that must be obtained for issuing the licences. In Abu Dhabi, residents would need to obtain the eCommerce licence (eTajer) from Abu Dhabi Department of Economic Development to conduct online trading."

Stay-at-home moms with online businesses said:

One homemaker who has been running an online tailoring business from home said that she was unaware of the legal requirements.

"I'm home all day long so I thought it would be nice if I could earn some extra money on the side. I'm good at sewing and designing clothes, so I started advertising on social media if anyone needed my services," the Pakistani mother said. "But if it's not allowed, then I will stop immediately."

Another mother has been preparing homemade foods and advertising them for sale on Facebook groups. She said: "I've always been told my cooking is great. I like making different kinds of dishes. We don't have enough funds to open a proper restaurant, so I started selling from home. And these days, selling online is also a very good business. I will stop the sales for now and save up for a licence."