How to Close a Company in the UAE: Liquidation, Tax Deregistration and the Right Order of Steps
Closing a UAE company runs on three tracks at once: liquidation with your licensing authority, VAT and corporate tax deregistration with the FTA, and final settlements with your staff. The tax deadlines start on the day the business stops trading, often months before the licence is cancelled, so the order you do things in decides whether penalties build up.
Most owners picture closing a company as a single event: the day the licence is cancelled. The authorities see a set of separate obligations, each with its own clock, and several of those clocks start on the day you stop trading. A company that has stopped working but is still registered with the Federal Tax Authority (FTA) keeps owing returns, and penalties accrue whether or not anyone reads its emails.
This guide sets out how to close a company in the UAE in an order that keeps those clocks under control.
What closing a company involves
Liquidation is the formal process of ending a company’s business: a liquidator collects what the company is owed, pays its creditors, disposes of what is left and reports to the shareholders, after which the licensing authority dissolves the company and cancels its licence. Tax deregistration is a separate application to the FTA, made once for corporate tax and once more for VAT if you are VAT-registered.
The two processes depend on each other awkwardly. For a company closing through liquidation, the FTA asks for the licence cancellation document and financial statements up to the cancellation date, yet its deadlines run from the date the business stops, which usually comes weeks or months earlier. So you plan both from the first day.
How to close a company in the UAE: the right order of steps
- Pass the shareholders’ resolution and appoint a liquidator. On the Dubai mainland, the Department of Economy and Tourism (DET) wants notarised general assembly minutes naming the liquidator, plus the liquidator’s acceptance letter. Free zones have their own forms. Write this date down: the corporate tax clock may start here.
- Stop trading and deal with VAT straight away. You have 20 business days from your last taxable supply to apply for VAT deregistration, and you keep filing VAT returns until the FTA approves it.
- Settle with your staff. Run the final salaries through WPS, calculate end-of-service gratuity, and pay each employee’s dues within 14 days of their contract ending. Then cancel work permits with MoHRE and residence visas with the immigration authority.
- Run the creditor notice period. On the Dubai mainland the liquidation is announced for one day in two local Arabic newspapers, and creditors then have 45 days to submit claims. Use that time to collect receivables, pay suppliers and dispose of the remaining assets.
- Close the books. Prepare financial statements up to the closing date and get the liquidator’s final report.
- Cancel the licence. DET requires your other cancellations with local and federal government entities to be completed first.
- Deregister for corporate tax. Apply within three months of cessation, file the final return for the period up to the cessation date, and pay any tax and penalties due. The FTA will not approve deregistration until all three are done.
- Close the bank account last. Final VAT and corporate tax payments, any VAT refund and the staff settlements all pass through it, so close it only after the FTA has issued both deregistration decisions.
Steps 6 and 7 are where timing gets tight. The 45-day creditor window alone uses half of the three-month corporate tax deadline. If the licence will not be cancelled inside three months, raise it with your tax agent while there is still time, because the late-application penalty starts on the first missed day whatever the reason.
Deadlines and penalties at a glance
| Obligation | Authority | Deadline | Penalty if late | Legal basis |
|---|---|---|---|---|
| VAT deregistration application | FTA | 20 business days after you stop making taxable supplies | AED 1,000, then AED 1,000 on the same date each month, capped at AED 10,000 | VAT Executive Regulation Art. 14; Cabinet Decision 40/2017 as amended by CD 129/2025 |
| Final VAT return and payment | FTA | 28 days after the deregistration effective date | AED 1,000 for late filing (AED 2,000 if repeated within 24 months), plus 14% a year on unpaid tax | FTA VAT deregistration service; CD 40/2017 as amended |
| Employees’ final dues, including gratuity | Employer (MoHRE) | 14 days after each contract ends | Labour claim by the employee | Federal Decree-Law 33/2021, Art. 53 |
| Creditor notice (Dubai mainland) | DET | 45 days from the newspaper announcement | Licence cannot be cancelled until it runs out | DET licence cancellation service |
| Corporate tax deregistration application | FTA | 3 months from cessation, dissolution or liquidation | AED 1,000, then AED 1,000 on the same date each month, capped at AED 10,000 | Decree-Law 47/2022 Art. 52; FTA Decision 6/2023; Cabinet Decision 75/2023 |
| Final corporate tax return and payment | FTA | Before deregistration is approved; the general rule is 9 months after the period ends | AED 500 a month for the first 12 months, AED 1,000 a month after, plus 14% a year on unpaid tax | Decree-Law 47/2022 Arts. 52–53; CD 75/2023 |
| Keeping records after closure | FTA | 7 years (corporate tax), 5 years (VAT) | AED 10,000 per violation, AED 20,000 if repeated within 24 months | Decree-Law 47/2022 Art. 56; Cabinet Decision 74/2023 |
The two deregistration penalties are separate. A company that misses both deadlines can owe up to AED 20,000 before a single return is late.
When does the corporate tax deregistration clock start?
FTA Decision No. 6 of 2023 gives a company three months to apply, counted from the date it ceases to exist, stops its business, is dissolved or goes into liquidation. Because the decision lists several possible starting points, the cautious reading is to count from the earliest one that applies to you, which is usually the shareholders’ resolution or the last day of trading.
The conditions sit in Article 52 of Federal Decree-Law No. 47 of 2022. You are not deregistered until you have filed every return due, including the return for the tax period up to and including the date of cessation, and paid all corporate tax and administrative penalties. Once the FTA approves, deregistration takes effect from the date of cessation unless the FTA sets another date.
The application is free and made on EmaraTax. The FTA quotes 40 working days to process a complete application, and one of the notices it sends along the way asks for the final corporate tax return. If it requests more information and you do not resubmit within 60 calendar days, the application can be rejected.
Going quiet does not close the account either. Article 52 lets the FTA deregister a business on its own initiative, but the penalties for the missed application and any missed returns stay. The return itself is covered in our guide on how to file a corporate tax return.
VAT: apply early and account for what you still own
The VAT Executive Regulation (Article 14) sets 20 business days from the date you stop making taxable supplies. The FTA’s own service page currently quotes 30 business days; plan to the shorter figure, since that is the one in the regulation. The FTA deregisters you from the last day of the tax period in which the conditions were met, and the final return and payment are due within 28 days of that date.
Assets still on the books at that point can create VAT. Goods and services that remain part of the business’s assets are treated as supplied immediately before deregistration, and the VAT on them goes into the final return. If the company still holds laptops, vehicles or stock, decide early whether to sell them or account for them.
For a company whose licence is being cancelled, the FTA’s VAT document list names the licence cancellation certificate, the liquidation letter and the board resolution. Thresholds, voluntary deregistration and the EmaraTax steps are covered in our VAT deregistration guide. Deregistration also does not cancel the FTA’s right to claim VAT or penalties for earlier periods.
Staff, visas and WPS
Employees’ wages, other entitlements and gratuity are due within 14 days of the contract ending. Gratuity is 21 days’ basic wage for each of the first five years and 30 days for each year after; our gratuity and end-of-service guide has the calculation. Salaries for the final months still go through the Wage Protection System, so keep payroll running until the last payment clears.
If your own residence visa is sponsored by the company, decide where it will move before the licence is cancelled.
Mainland and free zone: same logic, different paperwork
On the Dubai mainland, DET runs de-registration in two phases. The first covers the resolution, the liquidator’s acceptance (with the liquidator’s auditor registration certificate), the dissolution certificate (AED 520) and the newspaper announcement. The second needs the original newspaper, the company’s final report, a declaration that no objections arrived within 45 days, and cancelled labour cards. DET lists a licence cancellation fee of AED 1,020 and a dissolution fee of AED 2,520.
Free zones run their own procedures. DMCC’s winding-up guidance (version 4, May 2026) requires cancelled visas, access cards and permits, a liquidation report from the appointed liquidator, and a 14-day publication period run by DMCC. JAFZA’s checklist adds items such as lease termination and customs clearance.
Authorities also differ on whether they want to see FTA paperwork before they cancel. Ask yours at the start, because the answer decides whether tax deregistration or licence cancellation comes first in your case.
Do you need an audit to close a company?
What the authority usually needs is a liquidator’s report, and in practice an auditor prepares it: DET asks for the liquidator’s auditor registration certificate, and DMCC requires a liquidation report from the appointed liquidator. For corporate tax, the final accounts need a full audit only on the usual grounds: revenue above AED 50 million, or Qualifying Free Zone Person status.
That rule comes from Ministerial Decision No. 84 of 2025 and applies to the final tax period like any other. A company with little or no activity still needs a liquidator on the Dubai mainland, because DET’s de-registration route covers all legal forms of commercial company.
Should you keep the company dormant instead of closing it?
Only if you expect to use it again. A dormant company keeps paying licence fees, stays registered for corporate tax and files an annual return every year, even a nil one. If it has stopped making taxable supplies, VAT law also requires it to apply for VAT deregistration, so a dormant company cannot simply hold on to its VAT number.
A late corporate tax return costs AED 500 a month for the first year, nil return or not. Some free zones have a formal status for dormancy; DMCC, for example, offers voluntary suspension of a licence. That status belongs to the free zone, and the FTA registration and filing duties continue alongside it. If the company has no future, closing it costs one round of effort, while dormancy costs fees and filings every year.
After the licence is gone: records
The record-keeping duty outlives the company. Corporate tax records must be kept for seven years after the end of the tax period they relate to, and VAT records for five. The penalty for failing to keep them is AED 10,000 per violation. Before the company disappears, agree in writing which shareholder or director holds the accounting files and the EmaraTax correspondence. Our guide to record-keeping requirements lists what to keep, and the wider penalty framework is in our piece on the 2026 FTA penalty regime.
How QuickTax helps
We handle the tax side of a closure: the closing financial statements, the VAT and corporate tax deregistration applications on EmaraTax, the final returns, and the FTA’s follow-up questions until both deregistrations are approved. We map your deadlines from the day trading stops, so the tax work runs alongside the liquidation from the start.
See how our accounting and tax service works →
This material is for reference and is not legal or tax advice. Liquidation procedures and fees differ by licensing authority and change over time. Always verify current requirements with the FTA, the Dubai Department of Economy and Tourism or your free zone authority.
What this means for you
A company is closed when the authorities have closed every account it holds with them, and the tax clocks start well before the licence goes. Three things to act on:
Start the tax clocks on day one
VAT deregistration is due within 20 business days of your last taxable supply, and corporate tax deregistration within three months of cessation. Each late application costs AED 1,000 a month, capped at AED 10,000, and the two are charged separately.
Run liquidation and tax in parallel
The FTA wants the licence cancellation document and closing financial statements, while the licensing authority runs its own creditor notice and checks. Ask your authority at the start whether it needs FTA paperwork before it cancels.
Close the bank account last
Final VAT and corporate tax payments, any VAT refund and staff settlements all pass through it. Keep it open until both deregistrations are approved, and agree who keeps the records for the next seven years.
Frequently asked questions
How long does it take to close a company in Dubai?
There is no single figure, because several processes overlap. On the Dubai mainland the creditor notice alone runs 45 days from the newspaper announcement. The FTA quotes 40 working days to process a corporate tax deregistration and 30 business days for VAT, each counted from a complete application. Free zones set their own timelines, so ask your authority early.
Can I cancel my trade licence if I still owe VAT or corporate tax?
Cancelling the licence does not clear anything with the FTA. The FTA will not approve a corporate tax deregistration until every return is filed and all tax and penalties are paid, and VAT deregistration does not remove its right to claim tax for earlier periods. Some licensing authorities also ask to see FTA paperwork before they cancel.
What happens if I never deregister a closed company from corporate tax?
The registration stays open and returns keep falling due. A late deregistration application costs AED 1,000, then another AED 1,000 on the same date each month up to AED 10,000, and missed returns carry their own monthly penalties. The FTA can deregister a company on its own initiative, but the penalties already accrued stay on the account.
Does a liquidated company have to keep its accounting records?
Yes. Corporate tax records must be kept for seven years after the end of the tax period they relate to, and VAT records for five years. The penalty for failing to keep required records is AED 10,000 per violation. Before the company is dissolved, agree in writing which shareholder or director will hold the files.
Do I have to pay VAT on company assets when I deregister?
Possibly. Under the VAT Executive Regulation, goods and services that are still part of the business’s assets are treated as supplied immediately before deregistration, and the VAT on them goes into the final return. Equipment, vehicles or stock still held at that point can therefore create output VAT, so plan their sale or transfer early.