In the UAE’s changing business environment, there are numerous cases wherein businesses have to grapple with unprecedented circumstances. These may call for change in the legal structure or the termination of their activities. Against such circumstances, the corporate tax deregistration emerges as a beacon of hope, by allowing businesses to cease their liability of paying corporate tax augmented with corporate tax services in the UAE. The process of corporate tax deregistration in UAE is regulated and overseen by the Federal Tax Authority (FTA). Completing the deregistration process is not only compulsory for avoiding legal penalties but also ensures adherence to the guidelines established by the FTA. While this process can be initiated through the EmaraTax portal

What Is Corporate Tax Deregistration in the UAE?

Corporate Tax deregistration is the process through which a taxpayer cancels its Corporate Tax registration with the FTA after it is no longer required to remain registered under the applicable UAE Corporate Tax rules.

A business may need to apply for deregistration when it:

• Permanently closes its business
• Enters liquidation or bankruptcy
• Sells its business
• Merges with another business
• Closes a UAE Permanent Establishment
• Redomiciles outside the UAE
• Changes its place of effective management and control
• Has a duplicate Tax Registration Number
• Experiences another event requiring Corporate Tax deregistration

The appropriate reason and supporting documents depend on the taxpayer's circumstances.

Is Corporate Tax Deregistration Mandatory in the UAE?

Where a taxpayer is required to deregister, it must complete the applicable deregistration process.

A company should not assume that its Corporate Tax obligations end simply because it stops trading or cancels its business licence.

For example, if a company permanently closes its business, it may still have:

• Outstanding Corporate Tax returns
• A final tax return
• Corporate Tax liabilities
• Administrative penalties
• Accounting records that need to be maintained
• Supporting documents required for the deregistration application

The company should complete these obligations as part of its closure process.

Does Cancelling a Trade Licence Automatically Cancel Corporate Tax Registration?

No.

Trade licence cancellation and Corporate Tax deregistration are separate processes.

A business may cancel its commercial licence with the relevant licensing authority, but its Corporate Tax registration with the FTA remains until the required deregistration process is completed.

The FTA's current service requires the taxpayer to apply for Corporate Tax deregistration through its existing FTA account on EmaraTax.

Therefore:

Trade licence cancellation ≠ Corporate Tax deregistration

Businesses should coordinate their licensing, accounting and tax closure procedures.

When Should a Business Deregister From Corporate Tax?

Corporate Tax deregistration may be relevant when the business experiences a qualifying event.

1. Closure of Business

A company that permanently stops its business activities may need to apply for Corporate Tax deregistration.

2. Liquidation or Bankruptcy

A company undergoing liquidation or bankruptcy may need to complete its Corporate Tax obligations before deregistration.

3. Sale of Business

A business sale can result in deregistration depending on the structure of the transaction and the company's resulting status.

4. Merger

When a company merges with another entity and its separate legal or taxable status ends, deregistration may become necessary.

5. Closure of a Permanent Establishment

A foreign business that closes its UAE Permanent Establishment may need to deregister where the applicable conditions are met.

6. Redomiciliation

A business that changes its domicile may have to review whether it continues to have UAE Corporate Tax obligations.

7. Change in Place of Effective Management and Control

A change in where the company is effectively managed and controlled can affect its UAE tax status and may result in a deregistration requirement depending on the circumstances.

The FTA currently lists all of these situations among the eligibility categories for its Corporate Tax deregistration service.

Corporate Tax Deregistration Deadline in UAE

One of the most important aspects of Corporate Tax deregistration is submitting the application within the applicable statutory deadline.

Businesses should identify the date on which the deregistration obligation arises and calculate the relevant deadline from that date.

The applicable timeline is particularly important because late deregistration can result in administrative penalties.

Businesses should therefore avoid waiting until after all other closure procedures are completed before checking their Corporate Tax deregistration deadline.

What Must Be Completed Before Deregistration?

Before applying for deregistration, businesses should review their outstanding Corporate Tax obligations.

This can include:

• Filing all due Corporate Tax returns
• Preparing the final tax return
• Paying Corporate Tax liabilities
• Settling applicable administrative penalties
• Preparing financial statements
• Organising supporting documents
• Confirming the date on which business activity ceased

A company should also reconcile its accounting records before submitting the application.

What Is the Final Corporate Tax Return?

The final Corporate Tax return relates to the final tax period for which the taxpayer is subject to Corporate Tax.

For example, suppose a company stops its business activities during a particular financial year.

The business may need to:

1. Close its accounting records up to the relevant date.
2. Prepare its financial statements.
3. Determine its taxable income.
4. Calculate Corporate Tax.
5. File the applicable final Corporate Tax return.
6. Pay any Corporate Tax due.
7. Apply for Corporate Tax deregistration.

The actual tax period and filing requirements depend on the company's financial year and circumstances.

Can a Company Deregister With Outstanding Corporate Tax?

Businesses should not assume that they can complete deregistration while leaving outstanding Corporate Tax liabilities unresolved.

The taxpayer should ensure that its outstanding returns, tax liabilities and applicable penalties are addressed as part of the deregistration process.

This is one reason why accounting and tax reconciliation should be completed before submitting the application.

Corporate Tax Deregistration Through EmaraTax

The FTA provides Corporate Tax deregistration through EmaraTax.

The current FTA process is:

Step 1: Review your eligibility

Identify the reason for deregistration.

Possible reasons include:

• Closure of business
• Liquidation
• Bankruptcy
• Sale of business
• Merger
• Closure of Permanent Establishment
• Redomiciliation
• Change in effective management and control
• Duplicate TRN/TIN

Step 2: Complete outstanding tax obligations

Review all Corporate Tax returns and outstanding liabilities.

Step 3: Prepare supporting documents

The documents required depend on the selected deregistration reason.

Step 4: Access EmaraTax

Log into the taxpayer's existing FTA account.

Step 5: Submit the deregistration application

Complete the Corporate Tax deregistration application and upload the required documents.

Step 6: Monitor the application

The FTA may review the application and request additional information.

Step 7: Respond to FTA requests

If additional information is requested, it should be submitted within the applicable timeframe.

The FTA's Corporate Tax deregistration service is available through EmaraTax 24 hours a day, seven days a week and is currently free of charge.

Documents Required for Corporate Tax Deregistration

The required documents depend on why the taxpayer is deregistering.

Business Closure

The FTA currently lists:

• Licence cancellation document
• Financial statements up to and including the licence cancellation date
• Other relevant documents, where applicable

Liquidation or Bankruptcy

The FTA currently lists:

• Licence cancellation document
• Financial statements up to and including the licence cancellation date
• Other relevant documents, where applicable

Sale of Business

The required documents can include:

• Sale of Business Agreement or Contract
• Licence cancellation document or amended licence in the new owner's name
• Financial statements up to the licence cancellation or amendment date

Merger

Documents can include:

• Merger Agreement
• Financial statements up to the merger date
• Licence cancellation or amendment

Closure of Permanent Establishment

The FTA lists:

• Licence cancellation document issued by the UAE licensing authority
• Financial statements up to and including the licence cancellation date

Redomiciliation

Documents can include:

• Certificate of continuation from the competent authority
• Signed confirmation regarding the absence of a UAE Permanent Establishment/Nexus and UAE-source income, as applicable
• Financial statements up to and including the redomiciliation date

Change in Place of Effective Management and Control

The FTA currently lists:

• Directors' resolution
• Certificate confirming directors' names and addresses
• Financial statements up to the date of cessation of the UAE place of effective management and control

The FTA may request additional information depending on the application.

How Long Does Corporate Tax Deregistration Take?

The FTA currently states that a completed Corporate Tax deregistration application is processed within 40 working days from the date the Authority receives the completed application.

If additional information is requested, the FTA may take up to another 40 working days after receiving the updated application.

If the taxpayer does not resubmit the requested information within 60 calendar days of the FTA's request, the application may be rejected.

Therefore, businesses should monitor their EmaraTax account after submitting the application.

Is There a Fee for Corporate Tax Deregistration?

The FTA currently lists the Corporate Tax deregistration service as free of charge.

However, businesses may incur professional fees if they use an accountant, tax consultant or business closure service to prepare financial statements, tax returns or supporting documents.

Corporate Tax Deregistration and Accounting

Accounting plays an important role in the deregistration process.

Before closing a business, the company should make sure its financial records are updated.

This can include:

• Sales records
• Purchase records
• Bank statements
• Expense records
• Accounts receivable
• Accounts payable
• Fixed assets
• Loans
• Shareholder transactions
• Related-party transactions
• Financial statements

Accurate accounting makes it easier to prepare the final Corporate Tax calculations and supporting documentation.