Introduction

The termination of a business operation in the United Arab Emirates will not immediately absolve the company from the obligation to pay corporate taxes. Companies that have stopped trading and thus are now eligible for tax deregistration need to abide by the necessary FTA procedures for closing their corporate tax registration.

UAE Corporate Tax Deregistration refers to the process that businesses need to undergo once they are no longer legally obligated to remain registered. Not adhering to the deadline would mean that the corporation may face administrative penalties regardless of whether it has ceased operations.

This guide will discuss the UAE Corporate Tax Deregistration procedure, including its eligibility criteria, documentation, deadline, penalty, and all other relevant details.

What Is UAE Corporate Tax Deregistration?

The UAE Corporate Tax Deregistration is an official procedure which involves canceling the registration of a corporation’s corporate tax with the FTA in line with UAE Corporate Tax Law.

This term pertains to corporations that are no longer in business, those that are dissolved, or those that qualify for deregistration.

Deregistration does not necessarily absolve corporations from any existing tax liabilities nor does it relieve them of the responsibility to submit the appropriate tax returns.

Who Needs to Apply for Corporate Tax Deregistration in the UAE?

Not all business closures will automatically mean that the company can apply for tax deregistration. It depends on the nature and the circumstances of the company.

The companies which should apply for tax deregistration are:

• Liquidated companies: Businesses undergoing or completing a formal liquidation process.
• Dissolved legal entities: Organizations which have ceased to be in operation under the laws applicable to companies.
• Businesses that have ceased operations: Organizational structures which fit the legal criteria for deregistration.
• Companies undergoing restructuring: Businesses that undergo structural change, merger, etc., impacting their legal or tax registration status.

Even a company which is barred from doing business would still exist legally as an entity that needs to be registered for taxation purposes.

Likewise, just because a business organization is within a free zone does not mean it does not have any corporate taxes to pay.

UAE Corporate Tax Deregistration Process

Process of UAE Corporate Tax Deregistration includes determination of eligibility, documentation of necessary documents, submission of the form and payment of all pending taxes.

Step 1: Confirm Eligibility

Identify whether the business satisfies the legal requirements for deregistration of tax purposes. This involves checking the legal standing of the business, trade license, liquidation or dissolution documents, and any other change of business or ownership.

In case the business is just on hold for the time being, check if the process of deregistration is even legally possible.

Step 2: Review Outstanding Tax Obligations

Before applying for the program, one is supposed to confirm whether there are outstanding corporate tax returns, liabilities, penalties, or anything else.

If necessary, one should ensure that the filing is done and the required amount of tax paid. The FTA may demand that the obligation be fulfilled first before considering the application.

Step 3: Prepare the Required Documents

Gather the paperwork that proves the company’s qualification and provide justification for cancellation of its corporate tax registration.

Depending on the situation of the application and the company, there can be different requirements.

Step 4: Submit the Application Through EmaraTax

Use the EmaraTax platform provided by FTA for accessing the corporate tax registration and deregistration facilities offered to the business.

Ensure that you fill in the application form correctly, include all the necessary information, include all the necessary documents, and then submit your application.

Step 5: Respond to FTA Requests

Monitor the progress of the process and in case FTA needs more information and documentations, make sure to furnish them within the specified time frame. Otherwise, lack of information or discrepancy in the documentations may complicate the whole process.

Step 6: Confirm Deregistration

Upon the FTA approval of the application, ensure to keep a copy of the confirmation and keep updated on the company’s compliance documentation.

Keep copies of the application, documentation, relevant tax filings, payments made, and deregistration confirmation.

UAE Corporate Tax Deregistration Documents

Documents Needed For UAE Corporate Tax Deregistration will vary according to the situation of the corporation and the information sought by the FTA.

Some common documents could include:

• Trade licence or registration details: Evidence of the company’s registered legal identity.
• Liquidation or dissolution documents: Formal records supporting the company’s closure, where applicable.
• Corporate tax registration details: Information needed to identify the company’s existing tax registration.
• Financial and tax records: Relevant corporate tax returns, financial statements, and supporting accounting records.
• Proof of outstanding tax settlement: Evidence of payments or arrangements relating to amounts due, where applicable.
• Authorised representative details: Identification or authorisation documents requested for the person submitting the application.
• Additional supporting evidence: Other documents requested by the FTA based on the application and the company’s circumstances.

This list is just a guideline that one needs to follow in order to prepare oneself for the visa interview. It does not represent a global mandatory checklist.

Corporate Tax Deregistration Deadline in the UAE

Corporate Tax Deregistration Deadline is among the crucial stages of the process due to the possible imposition of administrative sanctions in case of delayed submission of the application.

According to the UAE corporate tax system, a taxable person usually needs to apply for deregistration within three months from the date of cessation of existence of the entity, cessation of its business activity, or another applicable deregistration condition.

The starting date depends on the grounds of deregistration and the relevant provisions of the law. Therefore, it is better to determine the relevant event and the date of the Corporate Tax Deregistration Deadline and not to base on the expiry date of the trading license.

In order to prevent failing the Corporate Tax Deregistration Deadline:

1. Identify the legal event that triggers deregistration.
2. Record the relevant date and calculate the applicable deadline.
3. Prepare supporting documents as early as possible.
4. Submit the application through EmaraTax within the prescribed period.
5. Keep evidence of submission and monitor the application status.

Important: The pertinent deadline must always be compared to the most current FTA guidance as well as the applicable rules governing the specific trade. The possibility of a pending liquidation or licence cancellation could impact the paperwork and the timing of the application process.

UAE Corporate Tax Deregistration Penalties

Failure to adhere to the regulations concerning the deregistration of corporate taxes may result in the organization facing the threat of administrative penalties.

According to the system of administrative penalties in the UAE, failure to file an application for deregistration within the prescribed time would mean a penalty of AED 1,000 per month until a maximum of AED 10,000 has been reached, subject to regulation.

Penalties for deregistration should be separated from other liabilities. Apart from the penalty that arises from deregistration, there may be corporate taxes that remain unpaid after the company has been closed down.

To avoid penalties:

 

• Check the applicable deregistration deadline promptly.
• Submit a complete and accurate application.
• Review outstanding tax returns and payments.
• Respond to FTA requests without unnecessary delay.
• Keep documentary evidence of closure, submission, and payment.

In case a company has failed to meet its deadline, then it needs to examine its situation, see how much it owes and obtain professional advice on what to do.

Common Mistakes to Avoid During Corporate Tax Deregistration UAE

Companies can commit unnecessary errors while registering the closure of their tax accounts.

Thinking that cancellation of the business license will cancel the corporate tax account: Cancellation of the trade license does not automatically result in the cancellation of the corporate tax account.

Forgetting to submit all returns: A company may be required to submit returns.

Filing incomplete documentation: There could be missing evidence of liquidation or company information in the filing.

Calculation of wrong time period: It would depend upon the situation of the company whether it is a limited liability or any other kind.

Throwing away tax documents unnecessarily: This would help the company prove that they are in compliance.

Conclusion

Corporate Tax Deregistration in UAE is one of the vital procedures for a business that meets the conditions of being deregistered. With a proper understanding of the procedure to be followed, correct documentation, the right deadline, and tax obligations, an organization can avoid unnecessary delays and possible penalties.

In case your company is winding up its business, it is important to be aware of the conditions required at an earlier stage rather than at the last minute.

Need help with Corporate Tax Deregistration UAE? Through E-Startup, you can get an idea about the requirements, arrange the documents needed, and go through the whole deregistration process. Feel free to contact E-Startup for more information.

Frequently Asked Questions

1. What is the deadline for UAE Corporate Tax Deregistration?

It is normally three months from the time of the cessation or the qualifying event, whichever comes first. This should be determined since it will help determine the time of filing.

2. What documents are required for corporate tax deregistration in the UAE?

Some of the important documents that are usually required are those related to company registration, liquidation/dissolution, corporation tax details, and tax liability details.

3. What is the penalty for late corporate tax deregistration in the UAE?

The administrative penalty to be imposed will be AED 1,000 per month until it reaches AED 10,000, following the rules applicable in this regard.

4. Can a company deregister if it has outstanding corporate tax?

Unpaid taxes will not be pardoned simply due to the cessation of business. Before the process of deregistration can begin, the firm needs to take into account its returns, tax liability, penalty, and FTA matters.