Closing a company in the UAE requires owners to settle its outstanding obligations and cancel its registrations with the relevant authorities. This includes the trade licence, tax registrations, employee work permits and residence visas.
The closure itself goes through the authority that issued the trade licence. Dubai mainland companies deal with the Department of Economy and Tourism (DET), while free zone companies apply through their respective free zone authorities. The required steps depend on the company's legal structure and where it is registered.
Tax registrations, employee records and outstanding debts must also be dealt with during the closure. Each has its own requirements and deadlines, so owners should check these before beginning the process.
Corporate Tax Deregistration
A company registered for corporate tax must apply to cancel its registration when it closes. The application must be submitted within three months of the date the company stops its business or is dissolved or liquidated.
Before the Federal Tax Authority (FTA) approves the application, the company must submit all outstanding tax returns, including its final return, and pay any tax and penalties it owes.
The company must continue filing tax returns until its registration is cancelled. Late returns carry a penalty of AED 500 per month for the first 12 months and AED 1,000 per month from the 13th month. A late deregistration application carries a separate penalty of AED 1,000 per month, up to AED 10,000.
VAT Deregistration
A company registered for VAT must also cancel that registration if it meets the conditions for deregistration. For example, a company may be required to deregister after it stops making taxable supplies.
When deregistration is mandatory, the company generally has 30 business days from the date the obligation arises to apply to the FTA. The authority may request documents confirming the closure, such as a liquidation letter or trade licence cancellation certificate.
The company must submit its final VAT return and pay any outstanding VAT within 28 days of the effective deregistration date. Late VAT deregistration applications carry a penalty of AED 1,000 per month, up to AED 10,000.
Employee Work Permits and Residence Visas
A company must cancel the work permits and residence visas it sponsors as part of its closure. Work permits are cancelled through the Ministry of Human Resources and Emiratisation (MOHRE), while residence visas are cancelled through the relevant immigration authority.
Before cancelling an employee's work permit, the company must settle outstanding wages and end-of-service benefits, where applicable. These payments are generally due within 14 days of the employment contract ending.
Investor and partner visas sponsored by the company must also be cancelled. Once all sponsored visas have been cancelled, the company can apply to cancel its immigration establishment card.
Liquidation of a Company
Metropolitan Consulting will assist you with both voluntary and forced liquidation of companies in the UAE.
Cancelling a Dubai Mainland Licence
Companies registered on the Dubai mainland must cancel their trade licences through DET. The procedure depends on the company's legal structure. For a limited liability company (LLC), it generally involves liquidation.
1. Approve the liquidation and appoint a liquidator
The shareholders formally approve the decision to close the company in notarised general assembly minutes. They also appoint a liquidator, who must sign a letter accepting the appointment.
2. Notify creditors
The company publishes a liquidation announcement for one day in two local Arabic-language newspapers. Creditors then have 45 days from the announcement to submit claims for money owed to them.
3. Submit the final liquidation documents
After the 45-day period ends, the liquidator prepares a final report. The company submits it to DET with the original newspaper announcement and a declaration from the liquidator and partners confirming that no objections were received.
DET issues the final licence cancellation once the required documents and clearances have been provided. Other legal structures and emirates may follow different procedures.
Closing a Free Zone Company
A free zone company must cancel its licence through the authority where it is registered. Each free zone sets its own closure requirements, so owners should obtain the relevant instructions and document list directly from that authority.
The process usually begins with a shareholder resolution approving the closure. A liquidator must also be appointed if required by the free zone. The company must then settle outstanding debts and fees, cancel its sponsored visas and complete its tax obligations.
Once these requirements have been met, the company submits its closure application and supporting documents. The free zone authority issues the final cancellation or deregistration certificate after approving the application.
Frequently Asked Questions
How long does it take to close a company in Dubai?
Closing a mainland LLC generally takes at least two months. The liquidation process includes a 45-day period for creditors to submit claims. The company must also complete its tax deregistration, visa cancellations and other required steps. Free zone closures may take less time, depending on the authority's procedures and the company's outstanding obligations.
Does a company that never registered for corporate tax still need to contact the FTA?
Generally, yes, if it was required to register. Most UAE companies must register for corporate tax unless a specific exemption applies. A company that failed to register may need to complete its registration, submit outstanding returns and settle applicable penalties before closing its tax affairs.
Can a company be closed if it still has debts?
A company can generally enter voluntary liquidation if it has enough funds or assets to pay its debts. The liquidator handles outstanding payments as part of the closure.
If the company cannot pay its debts, insolvency procedures under Federal Decree-Law No. 51 of 2023 on Financial Restructuring and Bankruptcy may apply instead.
