Corporate Tax Deregistration in UAE

When a company or business activity in the UAE comes to an end, the taxpayer is required to notify the Federal Tax Authority (FTA) and de-register for Corporate Tax (CT) within three months of that date. Corporate Tax deregistration in UAE is a critical process that allows businesses to cease their liability for paying corporate taxes. It is important to note that a company is still subject to CT paying and filing requirements while it is in the process of being wound up.

The FTA oversees and regulates the deregistration process to ensure compliance with the applicable laws and regulations. Businesses need to navigate this procedure carefully to avoid penalties and ensure seamless closure or restructuring.

Helpful for you: How to Register for Corporate Tax in UAE

Reasons for Corporate Tax Deregistration in UAE

Businesses may need to deregister from corporate tax for several reasons, including:

• Closure of Business – Companies that cease operations due to bankruptcy, insolvency, or strategic decisions to wind up must apply for deregistration.
• Change in Legal Structure – If a company undergoes a merger, acquisition, or conversion to a different entity type, deregistration is necessary.
• Transfer of Ownership – When a company is sold or the ownership is transferred, the new owner assumes responsibility for tax registration, while the previous owner must deregister.
• Miscellaneous Scenarios – A company that did not previously register for CT but is undergoing liquidation must register, file CT returns for all applicable periods, and then apply for deregistration to remain compliant.

When to File an Application for Corporate Tax Deregistration in UAE

The timeline for submitting a CT deregistration application varies based on the type of entity:

• Natural persons (individuals) – Must file the application within three months from the date of cessation of business or business activity.
• Legal persons (corporate entities) – Must file the application within three months from the date the entity ceases to exist, such as in cases of dissolution, liquidation, or other reasons.

Eligibility Criteria for Deregistration

To be eligible for deregistration, a taxpayer must:

• File all required CT returns, including the return for the period up to the cessation of the business.
• Pay all taxes due.
• Settle all administrative penalties as mandated by law.

Penalties for Late Corporate Tax Deregistration

Failure to comply with the stipulated timelines for CT deregistration can result in penalties, as follows:

• A penalty of AED1,000 applies for failing to apply for deregistration within three months of a cessation, dissolution, liquidation, or other termination event.
• An additional penalty of AED1,000 is charged monthly on the same date, up to a maximum of AED10,000. For example, if a company delays deregistration by two months, it may incur a penalty of AED2,000 in addition to the initial fine of AED1,000.
• The FTA reserves the right to deregister entities that violate tax deregistration requirements.

Understanding the Process of Corporate Tax Deregistration in UAE

To deregister from Corporate Tax registration, taxpayers should apply via the EmaraTax portal, the online platform for tax-related services provided by the FTA.

To complete the application form, different documents are required depending on the reason for deregistration:

• Sale of Business – Documentary evidence proving the sale of the business.
• Merger of Business – Documentary evidence proving the merger of the business.
• Re-domiciliation of the Business – Documentary evidence proving the re-domiciliation of the business.
• Cessation of Business – Documentary evidence proving the cessation of the business.

Once the taxpayer has completed and submitted the online application form, the FTA may take up to 30 business days from that date to process the application. In cases where additional information is required, the FTA may take additional time. If an application is not resubmitted within 60 calendar days from the date the FTA requests additional information, the application may be rejected.

If an application to de-register is successful, the FTA will issue a tax clearance certificate.

Why Choose Audit Firms in UAE for Corporate Tax Deregistration?

Corporate tax deregistration can be a complex process, but professional audit firms in UAE provide expert guidance to ensure a seamless and efficient experience. With their deep understanding of tax regulations and compliance requirements, they help businesses complete deregistration smoothly while minimizing risks and ensuring full FTA compliance.

• Expert Knowledge – Their team of qualified and experienced professionals have a deep understanding of UAE corporate tax regulations and the deregistration process.
• Comprehensive Support – They can handle every aspect of deregistration, from filing applications to ensuring compliance with all legal requirements.

FAQs

How to Deregister for Corporate Tax in UAE?

To deregister from Corporate Tax (CT) in the UAE, follow these steps:

1. Ensure Eligibility: A business can apply for deregistration if it ceases operations, undergoes liquidation, or no longer meets the criteria for corporate tax registration.
2. Submit an Application: File a corporate tax deregistration request through the EmaraTax platform on the Federal Tax Authority (FTA) website.
3. Clear Tax Obligations: Ensure all outstanding tax liabilities and pending returns are settled before applying.
4. Approval Process: The FTA will review the request, and upon approval, issue a confirmation of deregistration.

When to Deregister for VAT in UAE?

VAT deregistration in the UAE applies in two cases:

1. Mandatory VAT Deregistration:
   • If the annual turnover falls below AED 187,500 (the voluntary registration threshold).
   • If the business ceases operations or no longer makes taxable supplies.
2. Voluntary VAT Deregistration:
   • If the annual turnover drops below AED 375,000 (the mandatory VAT threshold) but remains above AED 187,500.
   • Businesses can apply through the FTA portal, but they must comply with tax clearance requirements.

Is it Mandatory to Register for Corporate Tax in the UAE?

Yes, corporate tax registration is mandatory for:

• All UAE-based businesses generating taxable income.
• Free Zone entities, even if they qualify for a 0% tax rate under the Free Zone Corporate Tax Regime.
• Foreign companies with a permanent establishment in the UAE.

However, individuals and small businesses earning below AED 375,000 per year are exempt from corporate tax registration.

What is Exempt from Corporate Tax in UAE?

The following are exempt from UAE Corporate Tax (9%):

1. Government entities & government-controlled organizations
2. Public benefit organizations & charities (approved by FTA)
3. Qualifying Free Zone entities (subject to meeting specific conditions)
4. Businesses engaged in natural resource extraction (subject to Emirate-level taxation)
5. Personal income from employment, real estate, and investments (if not conducted under a business license)