How to Register a Sole Proprietorship (Sole Establishment) in the United Arab Emirates

Becoming an independent contractor in the UAE—known locally as a “Sole Establishment”—is a straightforward way to work for yourself. What makes the UAE stand out is its business-friendly environment: you keep all your profits with no personal income tax and face only minimal corporate tax (9% on profits above AED 375,000).

The setup is generally simpler than forming a company, with some restrictions on activities only applied to foreigners. UAE/GCC nationals can register for any type of activity, while foreign professionals are limited to service-based activities (such as consultancy, IT, or healthcare) and must appoint a Local Service Agent (LSA). Most of the process is administrative: applying for a license, submitting paperwork, and, in some cases, arranging office space.

Disclaimer: This article is for informational purposes only and does not substitute legal advice. Always consult official sources or a professional before proceeding.

What is a sole proprietorship in the UAE?

In the UAE, a Sole Establishment (also called a sole proprietorship, sole trader, independent contractor, or self-employed worker) is a business owned and operated by one person without forming a separate legal entity. This means the individual and the business are legally the same, with the owner retaining full control and responsibility for all profits and liabilities.

How does a sole proprietorship (Sole Establishment) work in the UAE?

Sole Establishment vs Limited Liability Company (LLC) in the UAE

An alternative to a Sole Establishment is a Limited Liability Company (LLC). The key difference is that an LLC protects the owner’s personal assets, while a Sole Establishment leaves the individual fully liable. However, an LLC involves higher setup costs, more administrative requirements, and a longer registration process.

Step-by-step guide: How to register a sole proprietorship in the UAE

Step 1: Check your eligibility

First, confirm your eligibility to set up a sole proprietorship in the UAE:

• UAE/GCC nationals can freely register for any business activity: commercial, industrial, professional, tourism, etc.
• Foreign nationals are limited to professional services (like consultancy, IT, and healthcare) and must appoint an LSA, who acts as a liaison

Step 2: Choose your business name

Reserve up to three trade name options via the DED of your chosen emirate.

Step 3: Gather required documents

To register as a sole proprietorship in the UAE, you'll typically need the following documents:

• A copy of your passport
• UAE residence visa or a valid visit visa, if applicable
• A No Objection Certificate (NOC) from the current visa sponsor
• A trade name reservation approval
• Your LSA’s Emirates ID, if applicable
• Proof of educational or professional qualifications
• Manager’s documents if someone else manages the business

Step 4: Register with DED

To formally establish your Sole Establishment, you must complete registration with the DED in your emirate (or use the Basher portal for an integrated federal process).

• Initial approval and trade name: Apply for initial approval of your chosen business activity and trade name

• Local Service Agent (LSA) agreement: If you are a foreign professional, finalize and notarize an agreement with a Local Service Agent (UAE national or 100%-UAE-owned company)

• Office space: Secure a physical office lease (e.g., Ejari in Dubai) to attach to your license application, as virtual offices are generally not accepted

Step 5: Pay fees

Setup costs vary by emirate and activity. Expect to pay a license fee and related administrative fees.

Step 6: Start issuing compliant invoices and stay on top of returns

Once licensed, you must issue invoices in line with UAE tax law. Registered businesses must include their Tax Registration Number (TRN) on VAT invoices and follow the invoicing requirements set out by the Federal Tax Authority (FTA). Watch for updates on e-invoicing, as the UAE is gradually phasing in digital invoicing requirements under the FTA.

Financial and tax obligations for sole proprietors in the UAE

Corporate tax: Since June 2023, a federal corporate tax of 9% applies to business profits above AED 375,000 per year. Profits up to AED 375,000 are exempt. Sole Establishments are included, but individuals pay no personal income tax on business earnings.

VAT: VAT is charged at 5% on most goods and services. You must register for VAT if your annual taxable turnover exceeds AED 375,000 (mandatory), or may register voluntarily if turnover exceeds AED 187,500. VAT returns are generally filed quarterly via the FTA portal.

Record-keeping: Maintain accounting records, invoices, and supporting documents for at least 5 years (longer for real estate activities). Businesses may keep records electronically, but they must be accessible for FTA audits.

Renewals: DED trade licenses must be renewed annually, often requiring proof of office lease and any updated LSA agreements if applicable.

Launch your contracting career and stay compliant with Deel

Registering a sole proprietorship gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential Bookkeeping tools
• Create, send, and sign localised work agreements
• Keep accurate records for tax season
• Access expert tax advice and compliance support
• Get paid through multiple payment and withdrawal methods
• Spend your earnings in USD with the Deel Card
• Access funds early with Deel Advance
• Enjoy contractor perks from 150+ partners

Stay independent, without the admin overload. Sign up to Deel for free today.

FAQs

What is the minimum capital required to start a Sole Establishment in the UAE?
No minimum capital is required.

Do Sole Establishments need to register for VAT/GST?
VAT registration is mandatory if annual taxable turnover exceeds AED 375,000; voluntary from AED 187,500.

How much are the standard setup costs?
Costs typically start around AED 8,500 for professional licenses in 2025, depending on emirate and business activity.

Can a Sole Establishment hire employees?
Yes—you can sponsor employees once your trade license permits it and you're registered with relevant labor authorities.

How long does registration take?
Mainland setup typically takes 8–10 weeks. Some Free Zone setups (with different rules) can be faster.

Can foreign nationals register as Sole Establishments?
Yes, but only for approved professional services and with a Local Service Agent.

Do Sole Establishments need separate business bank accounts?
UAE law does not require Sole Establishments (sole proprietors) to open a dedicated business bank account. Because a Sole Establishment is not a separate legal entity, the business and the owner are legally the same. However, banks, clients, and the Federal Tax Authority strongly encourage or require a separate account for licensing, compliance, and payment purposes, making a business bank account practically essential.

What happens if I stop working as a Sole Establishment?
You must formally deregister your trade license with DED and settle any outstanding tax or VAT obligations.

Are there government incentives for new Sole Establishments?
The UAE supports Small and Medium Enterprises (SMEs) via schemes sucha s the National SME Programme, UAE SME Council, and Operation 300bn, which includes financial support via Emirates Development Bank.

Can I use Deel to get paid as a Sole Establishment in the UAE?
Yes. Deel enables Sole Establishments and freelancers to receive international client payments in multiple currencies, with low fees and transparent exchange rates.

Does Deel generate compliant invoices for Sole Establishments?
Absolutely. Deel automatically produces invoices that meet local legal and tax requirements, helping you stay compliant in the UAE and beyond.

Can Deel help with taxes as a Sole Establishment in the UAE?
Yes. Deel provides downloadable tax reports and payment records that simplify record-keeping and help you file returns—though it’s not a substitute for professional advice.

Does Deel offer contracts for freelancers and Sole Establishments?
Yes. Deel includes locally compliant contract templates so you can engage clients professionally and securely.

Can I access benefits through Deel as a Sole Establishment?
Yes. Deel offers optional perks like health insurance, retirement savings plans, and other benefits typically reserved for employees—giving you extra peace of mind.