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Up to Dh500,000 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 homemade food on Facebook and Instagram Lives, as well as on WhatsApp groups, has become too common now.

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, 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, if their customers face health issues, these businesses could find themselves in a vulnerable position as they are unregulated and therefore, could be exposed to further penalties by the authorities," said Yousif Ahmed, senior legal consultant at Davidson & Co law firm

 

Rhea Bindra, an associate at the same law firm, added: "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 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 the corporate at DWF Middle East LLP, said that they have 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 promote sales, we advise our clients to be aware of and to comply with UAE commercial licence requirements. Companies failing to obtain the relevant licence to conduct business activities in the UAE may be slapped with penalties of up to Dh500,000," Unwalla sai.

06/27/2019

Insights