In Dubai, a Sole Proprietorship operates as a single individual business entity. The sole proprietor has complete control over the company's operations and profits, and bears unlimited responsibility for the company's debts and obligations. As the sole owner, they are fully accountable for any financial commitments and liabilities incurred by the company.
A Sole Proprietorship Company in Dubai is formed only if you are a UAE national of a national of the Gulf Cooperation Council (GCC). If you are non-UAE national, you need to have a residence permit and a local sponsor for establishing a sole Proprietorship company. The sole proprietor must need to obtain the appropriate license to perform a professional or commercial activity.
UAE citizens or citizens from GCC countries can establish a sole proprietorship business in the UAE, subject to certain restrictions and conditions.
- For UAE nationals wishing to invest as a sole proprietor, obtaining a Sole Proprietor License is mandatory. The license application process involves submitting the necessary paperwork and supporting documents to the Department of Economic Development (DED).
- Citizens of GCC countries can engage in industrial, agricultural, livestock, fishery, and contracting businesses in the UAE as long as they have a valid license to conduct such activities in their home country.
- By legal decree, the previous list has been expanded to include retail or wholesale trade, which can be conducted by individuals or legal entities.
- For GCC citizens operating as a legal entity (not as an individual) in the retail or wholesale trade sector, the investor must be in the form of a company where 51% of the shares are owned by one or more UAE nationals.
- In any of the scenarios described above, the investor/proprietor is not permitted to open branches within the UAE.
Advantages of a Sole Proprietorship Firm in Dubai
- Foreign professionals are allowed to hold 100% ownership of a sole trade company.
- The company is legally authorized to provide professional services throughout the UAE and in Free Zones.
- The company is free to purchase or rent office space anywhere without restrictions.
- The government has waived the requirement for any paid-up capital.
Drawbacks of a Sole Proprietorship in Dubai
- The owner bears full responsibility for all business debts and financial obligations.
- Establishing a Free Zone company typically takes 8 to 10 weeks.
- The Department of Economic Development does not recognize virtual offices, and a physical office space is required to establish the company.
Conditions to Set up a Sole Proprietorship in Dubai
- The sole proprietor engaged in providing professional services must hold the necessary educational qualifications for the services they offer.
- There are restrictions on the number of managers that can be appointed under a professional license.
- For a sole proprietorship, there is no requirement for business capital.
- The trade name must be relevant to the commercial activities of the company.
- The main business license for a sole proprietorship can cover multiple branches conducting one or all of the authorized activities.
- The business owner can change the legal form according to procedures set by the Department of Economic Development (DED).
- The owner or manager is required to pass exams administered by the American University in Dubai to support specific economic activities. These exams are mandatory during business setup and for renewal of the license.
Documents are required to establish a Sole Proprietorship in Dubai
- Business & Licensing application form
- Trade name, passport copy and residence permit of the sole proprietor
- Proof of registered company address
- No Objection Certificate (NOC) by the sponsor
For help in establishing a sole proprietorship in the UAE or a Free Zone, please contact Link Up Corporate Services for further information.