Sometimes there are situations when a company ceases to be profitable, does not generate the desired income, has lost its relevance, etc. In this case, it must be closed and deregistered. In the United Arab Emirates (UAE), the process of deregistration and cancellation of a taxpayer registration number (VAT or corporate tax) is regulated by the VAT Law and the Corporate Tax Law, respectively. To complete this procedure in accordance with the law and on time, certain knowledge and experience are required; the best solution for a business is to engage professional business consultants. The Alliance Business Advisors team will help you with deregistration across all UAE jurisdictions, including companies in free zones (FEZ) and on the mainland: Dubai, Abu Dhabi, Sharjah, Ajman, Fujairah, Ras Al Khaimah, and Umm Al Quwain.
When is VAT deregistration required?
VAT deregistration in the UAE can be either mandatory or voluntary, at the business owner's discretion. Here are the circumstances in which this occurs:
| Mandatory deregistration: | Voluntary deregistration: |
|---|---|
| Cessation of supply of goods or services subject to VAT, with no intention to resume such supplies within the next 12 months. | The company's annual turnover for the previous 12 months was less than AED 187,500 (the VAT registration threshold). |
| The company's annual turnover ranges from AED 187,500 to AED 375,000. | If a company that has voluntarily registered as a VAT payer has an annual turnover of less than AED 187,500*. *Such companies may apply for deregistration only 12 months after the date of registration. |
| The company has not been actively engaged in commercial activities for an extended period. | |
| Sale or transfer of the business to a new owner. | |
| Change in legal structure (e.g., transfer of a business or sole proprietorship to a limited liability company). | |
| Joining a VAT tax group (the old number must be canceled). |
Under the law, if mandatory deregistration applies, the business must submit the relevant application within 20 business days of meeting any of the above conditions. Therefore, to avoid administrative penalties (AED 1,000 per month, capped at AED 10,000) for non-compliance with the deadlines, contact the professionals at Alliance Business Advisors. We will help you navigate the VAT deregistration process while ensuring compliance with all UAE Federal Tax Authority (FTA) rules.
Corporate tax in the UAE: registration and deregistration
Since June 2023, all taxable persons, including companies in free zones, have been required to register with the FTA and obtain a Tax Registration Number (TRN). Corporate tax rates in the UAE are:
- 9% if income exceeds AED 375,000.
- 0% if income is below AED 375,000.
Registered companies are required to file tax returns within nine months of the end of the financial year.
For more information, visit our Corporate Taxpayer Registration Services page or contact our experts for detailed information.
Deregistration for corporate tax purposes
A company that has fulfilled all its tax obligations, including submitting all necessary declarations and paying all outstanding amounts, may submit an application for deregistration for corporate tax purposes. Alliance Business Advisors will assist with deregistration for companies that are undergoing:
- Closing or liquidating a business.
- Re-registering due to a sale or merger.
- Transitioning to a group registration form.
Applications for deregistration from corporate tax must be submitted within three months of meeting the relevant application conditions and at least two months before the end of the financial year.
To get professional help with VAT or corporate tax deregistration in the UAE, please complete our request form on our website. Our managers will advise you on your specific issue and explain the process.
Contact us today!
Conclusion
In the UAE, the process of deregistering for VAT and corporate tax is governed by applicable laws, which specify the procedures and deadlines. If you do not comply with these requirements properly, you risk facing fines, penalties, and legal issues imposed by the Federal Tax Authority (FTA). Whether you are deregistering voluntarily or are required to do so by law, the procedure must be completed correctly and on time, and we are here to help you with this. Alliance Business Advisors offers full assistance with the deregistration process, ensuring that all legal requirements are met. You will receive our full expert assistance at every stage.
Frequently asked questions
Can I deregister my company six months after I voluntarily registered?
No, you can only deregister 12 months after voluntary registration. You will need to wait another six months before submitting such an application. If you submit it after 6 months, you are guaranteed to receive a refusal from the FTA.
If my turnover for the last 12 months is below the mandatory VAT threshold of AED 375,000, can I deregister for VAT?
Yes, you can apply for deregistration at your discretion if your annual turnover is below the AED 375,000 threshold and above AED 187,500. Deregistration will be mandatory for companies with an annual turnover of less than AED 187,500. The Alliance Business Advisors team will guide you through the UAE deregistration process from start to finish.
Will I be fined if I submit my deregistration application late?
Yes, the law stipulates a clear timeframe for submitting a deregistration application. If your business is subject to mandatory deregistration (see the table above), you must submit an application within 20 working days. Failure to do so will result in a penalty of AED 10,000 (immediately) and then additional penalties for each month of delay. Contact Alliance Business Advisors to ensure everything is done correctly and on time, and to avoid future penalties and issues.
What does VAT deregistration with prior approval mean?
Preliminary approval indicates that the FTA has accepted your application and, during the verification process, has identified outstanding obligations that must be fulfilled. Once all issues are resolved, your business will be deregistered, and you will receive a certificate confirming the deregistration.
What prerequisites must be met in order for your company to deregister for corporate tax?
To deregister a company for corporate tax, preliminary preparation is required:
- Fulfill all current obligations under existing contracts;
- Submit all tax returns and pay all accrued penalties (if any);
- Dismiss employees and cancel their visas (if necessary);
- Pay rent for premises until the end of the registration process;
- Close corporate bank accounts;
- Obtain documents from local authorities confirming that there are no outstanding debts.
Alliance Business Advisors will help you prepare and meet all requirements for quick, easy deregistration in the UAE.
How long does the FTA deregistration process take?
After submitting the deregistration application and required documents, the FTA will require an average of 20 business days to process the application, provided all requirements are met and there are no outstanding debts.
How to speed up the process of deregistration with the FTA?
The fastest and most cost-effective way to do this is to engage the professionals at Alliance Business Advisors. Our specialists will handle all bureaucratic procedures, allowing you to focus on other priorities while ensuring full compliance with requirements.
What documents are required to deregister with the UAE tax authorities?
In any case, you will need to submit:
- The company's balance sheet and profit and loss statement.
- An audit report (in the case of company liquidation).
- Board of Directors resolution (in case of company liquidation).
In some cases, you may also need documents confirming that the company's income for the year is less than AED 375,000, confirmation that there are no employees, proof of cessation of activities, primary accounting documents, etc.
In any case, our consultant will analyze your situation and advise you on the documents you need to submit.
Is it possible to go through the process of deregistration for VAT and corporate tax together?
In the UAE, tax numbers (TRN) for VAT and corporate tax are not the same. This means one company will have separate VAT and corporate tax numbers and separate registers. Therefore, the deregistration process must be carried out separately.
You don't need to delve into the details of the process; with Alliance Business Advisors, you can get everything done as quickly, easily, and smoothly as possible. Contact us today, and we will tell you how to deregister your business in the UAE.
