Virtual offices are illegal, says DED

A top official from DED said that getting such a business licence will be a type of fraud. (REUTERS)

A growing number of advertisements offering to set-up businesses in Dubai with ‘virtual’ offices has prompted the Dubai Department of Economic Development (DED) to issue a warning that any business operating from a “virtual office” is illegal.

It has advised potential investors not to be taken in by the advertisements as they would be deemed as having applied for a business licence with fraudulent documentation.

All commercial enterprises in Dubai are required to have a physical address and an actual office.

A large number of advertisements in the daily newspapers offer investors the chance to open a private firm by paying as little as Dh3,000 for a licence and another Dh 6,000 to get an office or shop-lease document.

The business then exists only on paper, but documentation is provided to prove that a physical office space exists.

When this website responded to one of the advertisements, a 'business consultant' assured us saying: “Any request for the DED or Dubai Municipality to inspect the premises is rare. Secondly, if the inspection is necessary, an office will be provided at the physical address mentioned in the documentation just for the inspection.”

The practice allegedly involves building owners as well.

"We charge a rental of Dh6,000 a year as we have to get the lease document from the owner of the building. We have to pay them for the document," the consultant said.

A top official from DED said that getting such a business licence will be a type of fraud.

“In order to open a business, the investors must have a premise from where they operate this business. There should be a place which inspectors from Dubai Municipality can check and examine.”

“Many investors respond to the advertisements. They see these ads in the newspapers and think it is legal to operate in this way. Once the municipality officials have examined and checked the space and investors get the trade licence, they are on their own. They do not know what their physical address is being used for anymore.”

He pointed out that laws do not protect such investors.

“Investors must do their part. They should never look into the benefits and savings which they will make if they get into such practices. They must look at it as a fraud and be aware of the risks,” he stressed.

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