Complete Guide to Starting a Sole Proprietorship in UAE

The United Arab Emirates is a political and legal entity that comprises 7 states (emirates) in the Persian Gulf. These include Abu Dhabi, Dubai, Sharjah, Ajman, Fujairah, Ras Al Khaimah, and Umm Al Quwain.

Since long The UAE has been a very popular business destination for Indians and people across the globe. The geographical proximity to India and the presence of hundreds of thousands of Indians add to its appeal. If you contemplate starting a business as a sole proprietorship in the UAE, then this article is for you. We will provide you with all the necessary information and factors to be considered so that you are clear about the process and the setting up of your venture becomes as hassle-free as possible.

When you plan to register a sole proprietorship in the UAE, you must know the terms and categories. In the UAE, self-employment, sole establishment, or sole proprietorship is an entity that is 100% owned by an individual with the trade license being in their name. The professions you can engage in as part of the sole proprietorship include providing professional services, such as management, medical, engineering, and IT consultancies or similar services. Such establishments are usually exempt from the local Commercial Companies Law (CCL); however, they need to obtain a professional license from the Department of Economic Development (DED). Foreign entrepreneurs desirous of setting up a sole proprietorship in the UAE require a local sponsor with a residence permit of any of the 7 emirates.

You can expect several benefits when setting up a sole proprietorship in the UAE. In fact, the availability of these advantages is one of the key reasons why the UAE is such a lucrative prospect. Some of the key benefits that you can hope to avail include:

• Self Owned and Self Controlled: As a foreign national starting a sole proprietorship in the UAE, you will completely control your enterprise. Whether operational decisions or long-term strategic ones, they will be solely yours without interference from any other parties or entities. Due to complete ownership, there is also no complication involved in profit sharing. However, the other implication is that you alone will be liable for all obligations and (if any) losses to your sole proprietorship in the UAE. 
• Freedom of Operating: Once you have set up a sole proprietorship in the UAE, you can legally operate from any of the 7 emirates, including all the designated Free Zones that are part of the country.
• Freedom of Choosing Office Location: Based on your comfort, convenience, and affordability, you can decide where to create your office space. This may involve renting a premise or outright purchasing one. This freedom allows you to curtail your expenses and choose the most effective solution.
• Paid Up Capital Requirements: Another significant advantage is that the government has permanently waived any paid-up capital requirements for setting up a sole proprietorship in the UAE. This frees you from any future liabilities and also frees up the rest of your capital to invest in enhancing your enterprise and expanding it.

After knowing the eligibility and benefits of establishing a sole proprietorship in the UAE, it is essential to understand the required documentation. Typically, you will require the following documents: 

• Shareholder’s passport copy
• UAE resident visa copy, if applicable
• No Objection Certificate from current resident visa sponsor in the UAE
• Proof of educational qualification, professional experience, and any other relevant experience

In case of appointment of a General Manager then:

• General Manager’s passport copy
• Certified address proof
• Formal resume of the general manager
• Bank reference or other professional references for the general manager

Do note that this list is indicative only and not exhaustive. This is because additional documents may be required pertaining to the specific nature of your business and other circumstances pertinent to your application process. Moreover, the documents need to be notarized by the relevant state authority and translated into Arabic by an official translator before their submission.

Establishing a solo enterprise in the United Arab Emirates is relatively straightforward. The key to achieving it quickly and smoothly is understanding the various factors and criteria involved. This is largely because the UAE is a law-abiding country and following the rules and regulations is the surest way of getting things done. So, in this vein, it becomes essential to be mindful of the following aspects while setting up your sole proprietorship in the UAE.

• Citizenship Criteria: Only UAE nationals or citizens of Gulf Cooperation Council (GCC) countries can establish solo enterprises for carrying out commercial activities. Foreign nationals or expatriates can start a sole proprietorship to provide professional services only. These include management consulting, medical services, IT, legal and similar domains.
• National Service Agent (NSA): Foreigner-owned establishments need to have an NSA appointed to carry out all liaison activities like procuring various licenses and permits. This NSA is a person or an entity who is a local UAE national with residence in the country. Apart from this purpose, the NSA is not required to have any actual involvement in the business.
• VAT Registration: Another mandatory obligation is registering for VAT for tax reasons. The VAT registration can be done voluntarily for people whose taxable proceeds exceed AED 187,500 per annum.

Now that you know the important factors involved, here are the steps that need to be followed to register a sole proprietorship in the country.

You need to choose the name of your business and get it registered with the authorities. A tip is to choose a unique name that reflects the nature of your business.

• Since you are setting up a sole proprietorship as a legal structure, it will require approval from the Department of Economic Development (DED). 
• Depending on the nature of your enterprise, there may be the need for getting approvals and clearances from other relevant departments as well. This needs to be checked well in advance.
• The application form needs to be filled out and submitted along with all the requisite supporting documents as proof.
• Once the information is verified and the application is processed, you will receive your registration details. This is your green signal to apply for a professional services license.

As you can imagine, while the processes are listed out, there can be unforeseen challenges or roadblocks in the application and registration process. This is where professional guidance can come to your rescue. Moreover, once you have established your enterprise, further operational and transitional challenges will need to be addressed. This is where Multiplier, with its years of experience, can help you in getting the right talent on board and further expansion ambitions that you may have. Connect with our domain experts today to identify how you can use our globally renowned solutions for your benefit.