In 2025, digital tools such as Best Solution’s cost calculator have streamlined the business licensing process. However, license issuance can still be unpredictable. Approval depends on Dubai immigration (GDRFA) and regulatory authorities like the Dubai of Economic Development (DED) or Free zones. Thus, you may see “rejected” or “pending” statuses on your application, often for reasons unclear.
Understanding these reasons can help you prepare for a successful application. It also allows you to address potential issues, giving your business a head start.
Understanding the license application process
Dubai follows a structured business licensing process involving the following steps:
1. Initial Approval
2. Reserve Trade Name
3. Submit Office/Lease Agreement
4. Signing Memorandum of Association (MOA)
5. License Payment
6. Third-Party Approval (if applicable)
7. License Issuance
Initial approval is the only stage where applications face outright “rejection” from authorities. If you encounter issues at other stages, your application will have a “pending” status.
Either way, both statuses set back your business operations and require extra effort to resolve
Common Reasons for Application Rejection
Here are common reasons why business license applications get rejected in Dubai:
1.Failure in Due-Diligence Checks
Prior Violations
Legal (Financial/Criminal) Cases Filed
High-Risk Nationality
Dual-Citizenship Concerns
2.Incomplete Documentation
3.Insufficient Financial Proof
4.Signature Mismatch or Forgery
1.Failure in Due-Diligence Checks:
Regulatory authorities, especially free zones, conduct thorough due diligence checks. These checks ensure that you comply with anti-money laundering (AML) regulations and national security measures.
Prior Violations:
Your immigration history—such as overstaying a visa or submitting false documents—can trigger immediate rejection of your license application
Legal (Financial/Criminal) Cases Filed:
The UAE performs strict background checks in alignment with the FATF (Financial Action Task Force) guidelines to combat financial crimes. Free zones often use World-Check databases for this purpose. The database screens you, your shareholders, and your connections for any legal or financial cases in the UAE or abroad.
In one case, an Indian couple applying as shareholders had their application rejected when the database flagged a legal case linked to the wife in India.
High-Risk Nationality:
If you hold Pakistani, Syrian, Jordanian, Algerian, Iraqi, Lebanese, Nigerian, or Yemeni nationality, you are usually classified as high-risk. Authorities base this classification on the risk your nationality may pose to the UAE’s security and financial system.
If you come from these regions, you may face extra scrutiny and higher rejection rates—even without links to crimes or instability. You might have better chances of approval if you apply from inside Dubai rather than from your home country.
Dual Citizenship Concerns:
If you hold two nationalities and one is classified as high-risk, rejection is likely. For example, a US-Syrian applicant initially faced rejection but later succeeded by applying from Dubai, rather than the US
2.Incomplete Documentation:
Neglecting essential documents like identification papers (tourist visa or UID/Emirates ID), passport copies, or a business plan can cause immediate rejection. A business plan is crucial for activities requiring ESR compliance, such as general trading and management consultancy.
Prepare these documents in advance to reduce the risk of rejection or delays.
3.Insufficient Financial Proof:
You must prove financial stability to avoid suspicion of opening shell companies or engaging in fraudulent activities. Missing bank statements, salary certificates, or investment proof can lead to rejection.
However, there are workarounds if you lack financial proof. For example, an Iraqi applicant without a personal bank account secured approval by submitting a financial support letter from a trusted contact.
4.Signature Mismatch or Forgery:
If the application signature differs from your passport or appears forged, authorities will reject the application immediately. Under Federal Decree-Law No. 34 of 2021, forgery can lead to imprisonment and fines from AED 150,000 to 750,000.
Common Reasons for Application Delay (Pending Status)
If the application progresses beyond Initial Approval but remains pending, the delay is typically due to some of the following reasons:
- Third-party Approvals Not Secured/Inspection Fail
- Trade Name Issues
- Office Requirements Not Met
1.Third–party Approvals Not Secured/Inspection Fail:
Some business activities require external approvals or a No-objection certificate (NOC) for license issuance.
For instance, running a restaurant requires securing a No-objection certificate (NOC) from the Dubai Municipality’s Food Safety Department. You must meet the Planning Department’s minimum space requirement of 750 sq feet. You must also pass Dubai Municipality’s final inspection, ensuring adherence to the Dubai Food Code.
Failing to secure these approvals or pass the inspection can delay your license approval.
2.Trade Name Issues:
The trade name must follow the UAE’s naming conventions. If you do not meet these rules, your application may remain pending until you correct the name.
For example, you cannot include Allah’s name or divine attributes (such as ‘eternal’ or ‘Qadim’). The name should not resemble established brands like Starbucks. Finally, the trade name must reflect your business activity. For instance, a consultancy might choose a name like ‘Maliha Project Management Services.’
3.Office Requirements Not Met:
All businesses must have a valid office address for correspondence with authorities.
Most mainland businesses, except those with instant licenses in their first year, need at least 200 sq. ft. of office space. Their lease agreement must be attested by the Real Estate Regulatory Agency (RERA) and registered on the Dubai Land Department’s Ejari system.
If you don’t meet these requirements, the authorities can delay your application.
Conclusion
Dubai has strict regulations that can create uncertainty in the business licensing process. As a result, many license applications encounter challenges right from the start.
Applications can get rejected at the initial stage for several reasons. These include due diligence failures, incomplete documentation, missing financial proof, and signature mismatches. Additionally, delays can occur if you lack external approvals or encounter trade name or office requirement issues.
At Best Solution, we specialize in managing rejected or stalled applications. Our team offers expert guidance on due diligence, documentation, and other challenges. We liaise with regulatory authorities to identify the reasons behind rejections or delays. If needed, we offer alternative solutions, such as helping you reapply in another UAE emirate to improve your approval chances.
