Compliance is very important! Do you really need a license to do cross-border e-commerce in these Middle Eastern countries?

Compliance is very important! Do you really need a license to do cross-border e-commerce in these Middle Eastern countries?

E-commerce in the Middle East and North Africa region involves importing goods from other countries. Currently, two-thirds of consumers purchase goods from overseas, and nearly 90% of goods are imported. There are still many opportunities for cross-border e-commerce here.

This is especially true for consumer goods such as electronics, fashion products, beauty products, groceries, and home products, which account for 98% of e-commerce in the United Arab Emirates and Saudi Arabia, as well as the Egyptian market, which accounts for around 80% of all e-commerce sales in the Middle East and North Africa region.

Saudi Arabia

Compared to other GCC countries, Saudi Arabia has laws and regulations specifically targeting e-commerce, including the Saudi Arabian E-commerce Law (Royal Decree No. M/126 of 2019) and related regulations aimed at regulating transactions involving local or foreign e-commerce providers and their customers.

Although foreign companies engaged in e-commerce in Saudi Arabia do not require specific licenses or permits (i.e. no physical presence in the local area), e-commerce suppliers are still required to comply with Saudi e-commerce laws, such as canceling orders, correcting errors, protecting customer personal data, electronic store disclosure, invoices, and advertising.

The sanctions for violating Saudi e-commerce laws are diverse. They include warnings, fines of up to 1000000 Saudi Riyals, mandatory suspension of activities (temporary or permanent), and in extreme cases, lockdowns on relevant e-commerce platforms.

The United Arab Emirates

In the United Arab Emirates, Federal Law No. (1) of 2006 on e-commerce and transactions (the "UAE E-commerce Law") is widely regarded as the main legislation governing e-commerce.

Article 3 of the UAE E-commerce Law sets out its overall goal, aimed at protecting the rights of individuals conducting business electronically. However, its main focus is on electronic communication. For example, the Electronic Commerce Law of the United Arab Emirates aims to minimize the incidence of forged electronic communications, promote e-government (i.e. submitting necessary documents online), and encourage the use of electronic signatures.

What the UAE E-commerce Law does not do is to discuss what licenses may be required for e-commerce enterprises seeking to access UAE customers.

Article 328 (1) of Federal Law No. (2) of 2015 on Commercial Companies ("UAE Company Law") states that any foreign company wishing to conduct business in the UAE must obtain a license from the Federal Ministry of Economy and other competent authorities, and such a license typically requires the establishment of a local entity.

The less clear definition is precisely the meaning of a company that wishes to conduct business in the United Arab Emirates. Foreign e-commerce enterprises that residents of the United Arab Emirates can access online will not automatically be considered as conducting transactions within the UAE.

However, if an e-commerce company actually hires employees in the UAE or has advertisements specifically targeting domestic customers in the UAE, then the company is likely to be seen as conducting business in the UAE. Sanctions for violating foreign investment and business registration laws in the United Arab Emirates may include a fine of up to 100000 dirhams.

Oman

In Oman, the relevant law governing e-commerce is the Electronic Transactions Act (2008).

Like the corresponding law in the United Arab Emirates, this law focuses on electronic communication rather than e-commerce itself.

Article 1 of the Foreign Investment Law (1994) stipulates that foreign entities shall not engage in commercial business or invest in Oman companies without a license issued by the Ministry of Industry and Commerce. Regardless of the nature of the business conducted in the country, this requirement usually applies - including e-commerce.

The penalties for violating the Electronic Transactions Law include imprisonment for up to one year and/or a fine not exceeding 1500 marks. This of course does not affect any harsher punishment provided by the Omani Criminal Law or any other legal provisions.

Bahrain

In Bahrain, the Electronic Communications and Transactions Act (ECTL) and Personal Data Protection Act of 2018 allow for e-commerce: however, these do not specifically mention the licenses that e-commerce companies should hold.

According to the general laws of Bahrain, individuals or entities operating or providing commercial services in Bahrain must have a legal presence in Bahrain and register with the Ministry of Industry, Commerce, and Tourism. Applications to MOICT require the designation of e-commerce activities.

Strictly speaking, according to Bahrain's Business Registration Law No. 27 of 2015, if an individual or entity engages in e-commerce activities without obtaining a relevant license, they may be fined not more than one year, ranging from Bahraini 1000 to Bahraini 100000.

However, as long as the foreign entity does not assist or participate in the actual delivery of any physical goods in Bahrain, nor does it actually sell its own goods on the platform (i.e. ownership of the aforementioned goods will never transfer to the entity, but only provides a way for users to sell their goods on the platform), It can be said that local entities with a "retail through the internet" license (i.e. e-commerce license) may not be required.

Qatar

The legal framework for managing e-commerce in Qatar is similar to that of Saudi Arabia and the United Arab Emirates.

As in the case of Saudi Arabia, there are specific laws that recognize and regulate e-commerce - and seek to protect all stakeholders. The E-commerce and Transactions Act No. 16 of 2010 is one of the key pieces of legislation. In addition, the Ministry of Transport has also proposed relevant regulations such as the "E-commerce Technical Guidelines 2017/2018" and the "E-commerce Security Guidelines 2017/2018".

As in the case of the United Arab Emirates, e-commerce companies seeking to conduct business in Qatar typically must register with the Ministry of Economy and Commerce in accordance with the Business Registration Act No. 2 of 2005.

Qatar without necessary permits may be sentenced to six months in prison or a fine of 50000 Qatari Riyals. However, foreign companies that do not have employees, IP addresses, and do not explicitly attract Qatari customers (even if they have direct access to this website) in Qatar are not necessarily considered to conduct business in Qatar and do not need to register local entities in Qatar.

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