A UAE company must apply to deregister from Corporate Tax when it ceases business, is liquidated or has its licence cancelled. Before the FTA approves the application, the company generally has to file its final Corporate Tax return and settle all tax and penalties. Cancelling the licence alone does not close the registration, and late deregistration costs AED 1,000 a month, capped at AED 10,000.
- You are cancelling a trade licence or have let it expire
- Your company is being liquidated or has stopped all business
- You deregistered from VAT and assumed Corporate Tax closed too
- The FTA keeps asking a closed company to file returns
- You received a late deregistration penalty after closing
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When must a company deregister from Corporate Tax?
A company must apply to deregister from Corporate Tax when it stops being a taxable person, which in practice means it has ceased its business, been liquidated or dissolved, or had its licence cancelled. A company that simply had a quiet year does not deregister; it keeps filing.
The table covers the situations owners bring to us, including the ones where deregistration is the wrong answer.
| Situation | Deregister from Corporate Tax? | What else applies |
|---|---|---|
| Licence cancelled and business ended | Yes | Final return, tax and penalties settled first |
| Company liquidated or dissolved | Yes | Final accounts to the liquidation date |
| Business stopped but licence still renewed | Usually not while the company still exists | Keep filing nil returns every year |
| Licence expired and not renewed because the business failed | Yes | The penalty clock does not wait for the paperwork |
| Company registered for VAT and now deregistering VAT | Separate application | VAT and Corporate Tax are deregistered separately |
| Individual who registered while turnover was under AED 1M | Ask the FTA | Individuals only come into Corporate Tax once business turnover exceeds AED 1M in a calendar year |
| Small company under AED 3M revenue | Only if it is closing | Small Business Relief is an election in the return, not a reason to deregister |
Every UAE company registers for Corporate Tax whatever its revenue, so closure is the only normal route out. On the VAT side, registration depends on taxable supplies (mandatory above AED 375,000, voluntary from AED 187,500), and its deregistration rules are explained in our guide to VAT deregistration and cancelling your TRN. If your company will stay alive but dormant, read the nil Corporate Tax return guide instead.
The final Corporate Tax return: what a closing company reports
The final Corporate Tax return covers the last tax period up to the date the business ceased or the liquidation completed. It is built from closing accounts that deal with everything left in the company: assets, debts, amounts owed to or by the owners, and closure costs.
Tax on the final period
The normal rules apply to the final period: 0% on taxable income up to AED 375,000 and 9% above it. A resident company with revenue up to AED 3M may elect Small Business Relief for tax periods ending on or before 31 December 2029. Most failing businesses report a loss, but a company that sells its assets or equipment at a gain can still owe tax.
Owner balances need a clean ending
Small companies often close with years of mixed owner transfers on the books. Settle the balance formally before the final accounts are signed. Our guide to the director loan account explains how those balances are treated.
| Closing item | What to do in the final accounts | Why it matters for the return |
|---|---|---|
| Stock and equipment | Record sales, write-offs or transfers at the date they happen | Gains and losses on disposal affect taxable income |
| Assets taken by the owner | Record them at market value | Transfers to connected persons must be at arm’s length |
| Customer balances | Collect or write off with evidence | Unsupported write-offs weaken the return |
| Supplier and staff balances | Pay or settle, including final salaries and end of service | Closure costs belong in the final period |
| Owner loan account | Repay, capitalise or waive formally | Waived balances can change the result |
| Liquidation and closure fees | Record as expenses of the final period | Supported costs reduce taxable income |
| Cash distributed to shareholders | Record as a distribution, not an expense | Distributions are not deductible |
VAT and Corporate Tax deregistration side by side
VAT and Corporate Tax are separate registrations with separate deregistration applications on EmaraTax, so closing one leaves the other open. Many closed companies receive Corporate Tax reminders months later because only the VAT registration was cancelled.
| VAT | Corporate Tax | |
|---|---|---|
| Trigger | The business stops making taxable supplies or no longer meets the registration conditions | The company ceases business, is liquidated or dissolved |
| Application time limit | Within 20 working days of the trigger for mandatory deregistration | Apply promptly after the business ceases, within the FTA’s time limit |
| Final return | Final VAT return, which can include VAT on business assets and stock still held | Final Corporate Tax return up to the cessation or liquidation date |
| Must be settled first | Outstanding VAT returns, tax and penalties | Outstanding returns, tax and penalties |
| Late deregistration penalty | AED 1,000 a month, capped at AED 10,000 | AED 1,000 a month, capped at AED 10,000 |
| Late return penalty | AED 1,000 first, AED 2,000 repeat within 24 months | AED 500 a month for 12 months, then AED 1,000 a month |
Run both applications in parallel from the same closing accounts, so figures agree across the final VAT and Corporate Tax returns.
Liquidation checklist: closing a UAE company in the right order
Close the tax side before the company disappears, not after. Once the licence is cancelled and the bank account closed, gathering documents and paying final tax becomes much harder.
- Decide and document the closure: a shareholder or board resolution with the cessation date
- Check the licensing authority’s process: mainland and each free zone run their own liquidation steps, so confirm the requirements with yours
- Stop trading and invoice the last supplies: issue final tax invoices within 14 days and credit notes for any refunds
- Settle staff: final salaries, end of service benefits and visa cancellations
- Prepare closing accounts: assets, receivables, payables and owner balances dealt with
- File the final VAT return and apply for VAT deregistration if registered
- File the final Corporate Tax return and apply for Corporate Tax deregistration
- Pay all tax and penalties and keep the FTA’s approval letters
- Cancel the licence and close the bank account once the tax side is settled
- Archive records for 7 years in a place you can still reach
Some licensing authorities ask for evidence of tax deregistration before cancelling a licence, so confirm the sequence with yours. Selling rather than closing? Our UAE business exit guide covers that route.
How to deregister from Corporate Tax on EmaraTax
Deregistration is an EmaraTax application, but the FTA decides it on the state of your account. These steps prepare the account so the application can be approved.
Confirm the cessation date
Fix the date the business stopped or liquidation completed, supported by a resolution, liquidator’s report or licence cancellation document.
Check the account for open items
Log in to EmaraTax and list every Corporate Tax period with its return status, any unpaid tax and any penalties.
File any overdue returns
Submit returns for earlier periods first, including nil returns for quiet years, so the account is complete up to the final period.
Prepare closing accounts and the final return
Deal with assets, owner balances and closure costs, then file the final Corporate Tax return up to the cessation date.
Pay tax and penalties
Settle everything shown on the account. Dispute only penalties with a factual ground, through reconsideration within 40 business days.
Submit the deregistration application
Open the Corporate Tax deregistration application on EmaraTax, enter the reason and date, and upload the supporting documents.
Track approval and keep the records
Respond to any FTA questions, save the approval, and keep the company’s records for 7 years after closure.
Documents to prepare for Corporate Tax deregistration
The FTA can ask for evidence of the cessation date and the final figures, so prepare them before applying.
- Shareholder or board resolution to close or liquidate the company
- Licence cancellation or liquidation documents from the authority
- Liquidator’s report where a liquidator was appointed
- Closing financial statements up to the cessation date
- Final Corporate Tax return submission receipt
- Bank statements up to account closure
- Evidence of asset sales, transfers and write-offs
- Proof of payment of all tax and penalties
- VAT deregistration approval, if the company was VAT registered
- A storage plan for records for the next 7 years
Dates and time limits when closing a company
Closure has several clocks running at once: the deregistration time limits, the final return due dates and any return still outstanding from earlier years, such as a December 2025 year end due on 30 September 2026.
Deregistration still needs the final return filed first, and our Corporate Tax return filing service can prepare it with a fixed quote.
| Item | Time limit | Penalty if missed |
|---|---|---|
| Corporate Tax deregistration application | Within the FTA’s time limit after the business ceases | AED 1,000 a month, capped at AED 10,000 |
| VAT deregistration application | Within 20 working days of the trigger | AED 1,000 a month, capped at AED 10,000 |
| Corporate Tax return for a December 2025 year end | 30 September 2026 | AED 500 a month for 12 months, then AED 1,000 a month |
| Final VAT return | 28th of the month after the final tax period | AED 1,000 first, AED 2,000 repeat |
| Tax invoices for final supplies | Within 14 days of each supply | AED 2,500 per case not issued |
| Challenge to a penalty decision | 40 business days from the decision | Decision stands |
| Record retention after closure | 7 years for Corporate Tax records | AED 10,000 if records are not kept |
Penalties for closing a company without deregistering
A company that disappears without deregistering collects two kinds of penalty: late deregistration and late returns for every period still open. Corporate Tax penalties follow Cabinet Decision 75/2023 as amended.
| Violation | Penalty | How closing companies trigger it |
|---|---|---|
| Late deregistration | AED 1,000 a month, capped at AED 10,000 | Licence cancelled, tax registration left open |
| Late return | AED 500 a month for 12 months, then AED 1,000 a month | Final or earlier returns never filed |
| Late payment | 14% a year, calculated monthly | Tax on a final period gain left unpaid |
| Incorrect return | From AED 500, plus 1% a month on any tax difference | Assets taken by the owner left out of the final accounts |
| Records not kept | AED 10,000, or AED 20,000 for a repeat within 24 months | Records discarded when the office closed |
| Late registration | AED 10,000, waived if the first return was filed within 7 months of the first period end | Company never registered before closing |
Here is how it stacks. A company left open for 12 months after its deregistration and final return were due pays AED 10,000 for late deregistration (capped) and AED 6,000 for the late final return. If the VAT registration was also left open for 10 months, add another AED 10,000. That is AED 26,000 for a company that no longer trades.
Closed the licence but not the tax registrations?
A qualified accountant can check which returns and deregistrations are still open and what they are costing in a free 15-minute review.
6 mistakes owners make when closing a company for tax
The most common and most expensive mistake is cancelling the licence but not the Corporate Tax registration. These are the others.
- Cancelling the licence and stopping there. The registration stays open, returns stay due and late deregistration builds at AED 1,000 a month up to AED 10,000.
- Deregistering VAT and assuming Corporate Tax is closed. They are separate applications, which is why the FTA contacts companies months after their TRN was cancelled.
- Closing the bank account before paying the FTA. Tax and penalties still have to be paid, and doing it without a company account is slow and messy.
- Skipping the final return because the business made a loss. A loss still needs a return, and the late return penalty applies either way.
- Leaving assets and owner balances out of the closing accounts. Equipment or a car taken by the owner must be recorded at market value, or the final return is incorrect.
- Throwing away records at closure. Corporate Tax records must be kept for 7 years, and the AED 10,000 records penalty does not end with the company.
How to close a company without tax penalties
A clean closure is mostly about sequence and records. This checklist keeps both under control.
- Decide the cessation date in writing before you stop trading
- Keep the books current right up to the cessation date
- File any overdue returns for earlier years before starting deregistration
- Decide Small Business Relief or the normal rules for the final period before filing
- Record every asset sale, transfer and write-off with evidence
- Apply for VAT and Corporate Tax deregistration from the same closing accounts
- Keep the bank account open until tax and penalties are paid
- Store records for 7 years somewhere you can access after the office closes
Already closed without deregistering, or penalised after closure?
Apply to deregister now: the late deregistration penalty stops at AED 10,000, but late return penalties do not cap the same way. File the outstanding returns first, using catch-up bookkeeping if the books were never finished, and follow the missed Corporate Tax deadline guide for the first week.
If a penalty was issued even though you applied on time, or used a wrong cessation date, request reconsideration within 40 business days of the decision, then go to the Tax Disputes Resolution Committee if it is refused. Our FTA penalty reconsideration guide shows how to set out the grounds.
If the FTA has opened an audit of the closed company, read how to respond to an FTA tax audit notice before replying.
Is the FTA contacting a company you already closed?
Send us the notice and we will tell you what must still be filed and whether any penalty has grounds for reconsideration.
Worked example: a closed e-commerce company left open on EmaraTax
Take an illustrative RAKEZ e-commerce company that stopped trading and let its licence lapse, without filing its final Corporate Tax return or applying to deregister. For illustration, assume both the deregistration and the final return became overdue in the same month. The table shows how the two penalties grow.
| Months overdue | Late deregistration (AED 1,000 a month, cap AED 10,000) | Late final return | Total |
|---|---|---|---|
| 1 | AED 1,000 | AED 500 | AED 1,500 |
| 3 | AED 3,000 | 3 x AED 500 = AED 1,500 | AED 4,500 |
| 6 | AED 6,000 | 6 x AED 500 = AED 3,000 | AED 9,000 |
| 10 | AED 10,000 | 10 x AED 500 = AED 5,000 | AED 15,000 |
| 12 | AED 10,000 (capped) | 12 x AED 500 = AED 6,000 | AED 16,000 |
| 15 | AED 10,000 (capped) | AED 6,000 + 3 x AED 1,000 = AED 9,000 | AED 19,000 |
After 10 months the deregistration penalty stops growing, but the late return penalty doubles to AED 1,000 a month after month 12. Filing the final return and applying this week keeps the total at AED 1,500 or less; waiting a year turns a failed business into a AED 16,000 tax bill.
Close the company yourself, use a PRO or hire an accounting firm?
A PRO or typing centre can handle licence and visa cancellation well, but the tax side needs closing accounts, final returns and deregistration applications that match. The split below shows who typically covers what.
| Option | Cost | Covers | Risk | Suits |
|---|---|---|---|---|
| DIY | Authority fees only, plus your time | Whatever you manage | High: tax registrations left open | Companies that never traded and never registered for VAT |
| PRO or typing centre | Typical market range: low to moderate for licence and visa work | Licence, visas, authority paperwork | High on the tax side: final accounts and returns rarely included | Owners who already have an accountant for the tax side |
| Accounting firm (Paci) | Fixed quote within 24 hours after a free 15-minute review | Closing accounts, final VAT and Corporate Tax returns, both deregistrations, liquidation support | Lower: one set of figures behind every filing | Trading companies, VAT registered companies, penalties already issued |
For the wider costs of ending a company, see Corporate Tax filing costs. For closure handled end to end, see our company liquidation service.
What owners closing a company ask us
I could not afford to renew my RAKEZ licence or investor visa, and now I have a late Corporate Tax deregistration penalty. Can it be waived?
Late deregistration is AED 1,000 a month, capped at AED 10,000. You can request reconsideration within 40 business days of the penalty decision and go to the Tax Disputes Resolution Committee if it is refused, but it needs a factual ground, such as a wrong cessation date. Financial difficulty alone is a weak ground. Our RAKEZ Corporate Tax guide covers the zone side.
I closed my e-commerce licence and my document clearer cancelled my TRN. Six months later the FTA is asking me to file Corporate Tax. Why?
VAT and Corporate Tax are separate registrations with separate deregistration applications, so cancelling the VAT TRN left the Corporate Tax registration open. The company still needs its final Corporate Tax return and a Corporate Tax deregistration, and late deregistration costs AED 1,000 a month up to AED 10,000.
I am a sole professional on a freelance licence earning under AED 1M, but I registered for Corporate Tax thinking it was compulsory. Can I deregister?
Individuals only come into Corporate Tax once business turnover exceeds AED 1M in a calendar year, then register by 31 March of the following year. Whether a registration made below that level can be cancelled is decided by the FTA on your application, so apply with evidence of your turnover. Our guide to Corporate Tax for freelancers explains the AED 1M test.
My RAKEZ business failed and I had no money to renew the licence. What do I still have to do for Corporate Tax after closing?
File any outstanding returns, then the final Corporate Tax return, and apply to deregister. Waiting costs AED 1,000 a month, capped at AED 10,000, plus late return penalties that do not stop at that cap. Keep the company’s records for 7 years even after it closes.
To close properly, do I really need final accounts and VAT and Corporate Tax deregistration, or can I just cancel the licence?
Cancelling the licence alone does not close the tax side. Corporate Tax needs final accounts, a final return and a deregistration application, and a VAT registered company needs the same on the VAT side. Late deregistration costs AED 1,000 a month up to AED 10,000 for each, and Corporate Tax records must still be kept for 7 years.
Frequently asked questions
How do I cancel my Corporate Tax registration in the UAE?+
Submit a Corporate Tax deregistration application on EmaraTax once the business has ceased, been liquidated or had its licence cancelled. Before approval, file all returns including the final one and pay any tax and penalties. Keep the approval and the records for 7 years.
What is the penalty for late Corporate Tax deregistration?+
AED 1,000 for each month the application is late, capped at AED 10,000, under Cabinet Decision 75/2023 as amended. Late return penalties for any unfiled final return are separate. See our UAE Corporate Tax penalties guide for the full list.
Do I need to file a final Corporate Tax return when closing a company?+
Yes. The final return covers the period up to the cessation or liquidation date, prepared from closing accounts. It is needed even if the company made a loss, and late filing costs AED 500 a month for the first 12 months.
Can the FTA refuse Corporate Tax deregistration?+
The FTA generally will not approve deregistration while returns are outstanding or tax and penalties remain unpaid. Clearing the account first is the fastest route to approval. If you disagree with a decision, request reconsideration within 40 business days.
Does closing a company cancel VAT registration automatically?+
No. VAT deregistration is a separate application, due within 20 working days of the trigger for mandatory cases, with its own final return. Late VAT deregistration also costs AED 1,000 a month, capped at AED 10,000. The UAE VAT penalties guide covers the VAT side.
How long must I keep records after closing a UAE company?+
Keep Corporate Tax records for 7 years, and real estate related VAT records for 15 years. The obligation continues after the company closes, and records not kept can cost AED 10,000.
Should an individual deregister if business income drops below AED 1M?+
Individuals come into Corporate Tax once business turnover exceeds AED 1M in a calendar year. If your business has stopped, apply to deregister; if it continues at a lower level, ask the FTA before assuming you can cancel. Our guide to Corporate Tax for natural persons explains the rules.
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- Federal Tax Authority: EmaraTax
- FTA: Waiver of penalties
- Ministry of Finance: Cabinet Decision No. 40 of 2017 and its amendments
- Ministry of Finance: Small Business Relief decision
- UAE Legislation: Cabinet Resolution 116 of 2022 on natural persons
Checked against these sources on 15 September 2026. This guide is general information for UAE businesses, not advice on your specific facts.