Digital Signatures: Simplifying Business in the UAE

According to the UAE government, over 90% of government services have been digitised. This is driving a broader shift toward digitalisation of all industries. As a result, businesses find technological innovations like digital signatures necessary for reducing paperwork and ensuring security. With e-invoicing in UAE expected to be mandated in 2025, the use of digital signatures could shift from being an optional tool for efficiency to a mandatory requirement. 

In fact, this is a must-have requirement for authenticity and making invoicing tamper-proof in GCC countries like KSA.  

But what exactly are digital signatures, how do you create one, and why are they important for UAE businesses? Let’s find out.

What are Digital Signatures?

Digital signatures are electronic signatures that are coded to sign a document and verify the authenticity of digital documents or messages. They use a mathematical algorithm to create a unique virtual fingerprint for an entity or a person. This makes them more secure than any other type of electronic signature because they are cryptographically bound to the document. They are evidence that:

• Documents are signed, and the identity of the signee’s actual signature is validated on paper.
• The document is not been altered since it was signed. 

Digital signatures use a digital certificate issued by a trusted third-party entity to provide the public key that validates the private key associated with the signature. Federal Law 46 of ETTS, governs electronic signatures and digital signatures in UAE.

Types of Digital Signatures  

Typically, there are three main types of digital signatures, each having different levels of security and applicability:

Simple Digital Signature

These are the most basic types, offering minimal security. They rely on a simple electronic process, such as scanning a handwritten signature or clicking an "I agree" button. However, they lack strong verification methods and are usually used for informal agreements.

Advanced Digital Signature 

Advanced signatures are more secure and are linked uniquely to the signer, making them harder to forge. They use cryptographic keys to verify the signer’s identity. It makes sure that any tampering with the document can be detected. Given the additional security, these are naturally used for more formal agreements where authenticity is crucial.

Qualified Digital Signatures

Qualified signatures are the most secure form of digital signature online. They carry a digital certificate issued by an accredited third-party software company or a certificate authority. In the UAE, they offer the highest verification level and legal standing, equivalent to handwritten signatures. Qualified signatures are typically used for high-stakes transactions, legal documents, and government contracts.

Applications of Digital Signatures in UAE Businesses  

From contract signing to compliance, here’s how a digital signature online can be applied across different sectors in the UAE business landscape:

Contract Signing

Digital signatures can be used to sign legally binding contracts in the UAE. They ensure authenticity, integrity, confidentiality, and efficiency. 

Invoicing

Digital signatures are rising in popularity in the UAE, especially in invoicing. There has been a 216% increase in the use of digital signatures in 2023 to authenticate invoices in the UAE. This technology not only ensures the validity of the invoices but also streamlines the invoicing process by reducing time wasted on manual verification, thereby speeding up payments and reducing fraud.

With the anticipated mandate of e-invoicing in the UAE, digital signatures are set to become an essential tool for every business.

Document Approvals

Simple digital signatures can be used for internal company documents, HR documents, marketing material, and even corporate non-sensitive documents, such as:

• Memos
• Reports
• Employee performance reviews
• Non-disclosure agreements (NDAs)
• Service level agreements (SLAs)

Qualified digital signatures in the UAE can be used for highly classified documents. The UAE government recognises a qualified signature as the identity of the signer’s original handwritten signature.

Integration with E-commerce and Payment Systems 

In e-commerce, digital signatures ensure that online transactions and payment authorisations are secure and verified.  By eliminating paper contracts and delays in signing, businesses can close routine agreements in minutes, improving operational efficiency, especially for startups and small businesses.

Intellectual Property Rights

Digital signatures are also crucial for protecting intellectual property (IP) rights. The documents become more easily verifiable and secure by digitally signing them, especially because it is critical in disputes or legal proceedings.

How do you get a digital signature in the UAE?

To obtain a digital signature in the UAE, here are the steps:

1. Select an authorised Digital Signature Certificate Provider (DSCP) in the UAE.
2. Complete the application or login on their website.
3. The provider will conduct a verification process.
4. Once verified, you'll receive the digital certificate, which you can use to sign digital documents securely.

Benefits of Adopting Digital Signatures in the UAE  

From contract approvals to financial transactions, adopting digital signatures has a lot of benefits for a business. They are:

• Digital signatures completely eradicate the need for physical documents
• With the advent of computers, recording and preparing documents became easier. However, paperwork could not be eradicated 100%, as the documents must be stamped and signed for validation. With digital signatures, the whole system is extremely simplified and speeded up.
• Encryption technology ensures authenticity, preventing tampering or fraud, crucial for industries like finance and healthcare.
• Businesses can get quick approvals without expensive courier services, cutting costs.
• Digital signatures meet UAE legal standards, ensuring documents are enforceable and compliant with regulations.
• Going digital reduces paper usage, helping companies meet sustainability goals.

Difference Between Electronic Signatures and Digital Signatures

Most users often confuse electronic signatures to be the same as digital signatures. But here are some major difference

What’s next?

While the benefits of digital signatures are clear, it’s important to consider your business's specific needs. With the UAE set to mandate e-invoicing, adopting digital signatures becomes essential for businesses aiming to meet regulatory and tax standards. Digital signatures not only validate and protect invoice authenticity but are also integral to complying with e-invoicing requirements. 

If you want to start e-invoicing, partnering with platforms like ClearTax can simplify the transition by ensuring your digital signatures meet legal and tax requirements.