09 Oct 2017

Carrying out industrial activities as a UAE onshore LLC

Authored by: Hadef & Partners, Sector Groups

Carrying out industrial activities as a UAE onshore LLC

We note that a UAE onshore LLC carrying out industrial activities must be licenced by the Department of Economic Development (“DED”). In addition to the DED licence, the UAE onshore LLC may obtain an Industrial Production licence (“IPL”) issued by the UAE Ministry of Economy (“MOE”), entitling it to be exempted from custom duties in respect of its manufactured goods when imported into any GCC country.

The UAE onshore LLC may start to carry out its manufacturing or industrial activities at the time its relevant licence is issued by the DED. Please note that the licence issued by the MOE is not a pre-requisite for the UAE onshore LLC to commence its activities, provided it has obtained the DED licence. This is due to the fact that the IPL issued by the MOE enables the UAE onshore LLC to mainly benefit from custom duties exemptions.

It is worth noting that a UAE onshore LLC which intends to carry out industrial activities may not be eligible to obtain an IPL from the MOE, as it may not be able to satisfy the requirements imposed by the MOE. For example, the MOE may consider that the size of the industrial operation does not require an IPL licence. In such instances, the UAE onshore LLC should submit to the DED a letter issued by the MOE confirming that an IPL licence is not required, and that it has no objection to the DED issuing the licence on that basis.

Upon the initial approval having been issued by the MOE in connection with the incorporation of the UAE onshore LLC (if eligible to obtain an IPL) and completion of the construction of the factory, the DED should issue the relevant licence to the UAE onshore LLC, entitling it to commence its industrial activities without the IPL having been issued by the MOE. After the lapsing of a certain period of time (usually 6 months), the MOE will carry out an inspection at the premises to ensure that all the relevant conditions are satisfied for the purpose of obtaining the IPL. If such inspection is successful, the MOE will then issue the IPL licence on that basis.

For more information, please contact us on sectors@hadefpartners.com.