Clinical Costing in Healthcare Management for Healthcare Providers
01/01/2026
YOUNG AND RIGHT ACCOUNTING & TAX CONSULTANCY
From corporate tax registration to audits and bookkeeping, Young & Right offers personalized solutions that keep your business compliant and stress-free. Let’s take the complexity off your plate—starting with a free consultation.
Book Your Free Consultation
When a business faces liquidation, it is not just a matter of closing down operations and selling assets. Liquidation involves legal procedures, financial obligations, and, perhaps most importantly, complex tax considerations. In the UAE, ensuring that tax liabilities are settled correctly is vital to avoid heavy penalties and ensure a smooth legal closure.
This guide explores the liquidation tax process for companies in the UAE, focusing on how VAT and corporate tax are handled at each stage, the responsibilities of business owners, and the essential steps for compliance with the Federal Tax Authority (FTA).
Liquidation involves several stages, and each stage brings its own set of tax requirements and obligations. Below, we will discuss the liquidation process and its associated tax considerations.
The first step is the appointment of a liquidator—an insolvency expert who takes charge of the company’s assets and ensures compliance with tax regulations.
Tax Implications:
Notification: The FTA must be notified of the appointment.
Management: The liquidator manages the UAE corporate tax and VAT records through the EmaraTax portal.
Final Tax Return: The liquidator is responsible for preparing the final corporate tax return for the final tax period.
The liquidator identifies all creditors, including the FTA. Tax debts are settled with priority over other unsecured claims.
Tax Implications:
Verifying Tax Claims: The liquidator verifies any outstanding tax registration number (TRN) liabilities or fines.
Reporting: Regular progress reports must include updates on the tax deregistration process.
Compliance: The company remains a taxable person until the deregistration certificate is issued.
As assets are sold, the liquidator must account for the tax impact of these transactions.
Tax Implications:
VAT on Asset Sales: If the company is registered, it must charge VAT on the sale of assets and remit it to the FTA.
Corporate Tax on Profits: Income generated during the winding-up period is considered taxable income under the UAE corporate tax law.
Priority: Outstanding corporation tax and VAT must be paid before stakeholders receive any distribution.
The final stage is the most critical for legal closure.
Tax Implications:
Deregistration Application: The business must apply for deregistration of both VAT and Corporate Tax.
Submission of Tax Returns: A final corporate tax return and final VAT return must be filed.
Deregistration Certificate: The FTA will only issue a deregistration certificate once all tax liabilities and penalties are cleared.
Voluntary liquidation occurs when the company’s shareholders or partners decide to dissolve the business. This might happen due to financial stress, strategic changes, or other operational reasons.
Key Features:
Initiated by the company’s decision
Shareholder approval required
The company’s liquidator is selected by shareholders
Liquidator converts assets to cash and settles creditor obligations
Compulsory liquidation happens when a company is unable to pay its debts and creditors request the court to initiate the process. This can result from a creditor’s petition when the company fails to settle dues.
Key Features:
Court orders liquidation
Liquidator appointed by the court
Company assets are sold to satisfy creditor claims
Usually a more complex process, as it involves legal proceedings
Control: Voluntary liquidation offers more control to the company’s shareholders, while compulsory liquidation is handled by the courts.
Initiation: Voluntary liquidation is self-initiated, whereas compulsory liquidation is initiated by creditors or a court order.
Navigating the corporate tax deregistration process is a critical final step for company liquidation or any significant shift in the business landscape in the UAE. Tax deregistration in the UAE is governed by tax rules and regulations established by the Federal Tax Authority, ensuring all tax obligations are met before an entity ceases to exist. A juridical person or natural person must apply for deregistration within the legally mandated timeline for corporate tax, which typically requires filing the application for corporate tax deregistration within three months of the deregistration and the effective date of business cessation.
To ensure tax compliance, businesses must submit a final tax return and settle all outstanding corporate tax liabilities, including any administrative penalties. The process for corporate tax deregistration involves a formal registration with the Federal Tax portal (EmaraTax), where the reason for deregistration—such as reasons for corporate tax deregistration like insolvency, merger, or cessation of activity—must be clearly documented. Because corporate tax is a direct tax on income, the FTA will not approve the deregistration of corporate tax until all uae corporate tax registration records are reconciled. Navigating the complexities of corporate taxation, including both VAT and corporate tax deregistration, can be a complex task, making professional services in the UAE essential to deregister from the UAE corporate tax system successfully and avoid hefty fines for late submission.
Understanding the corporate tax framework is essential for any business owner, as the process of corporate tax deregistration is just as critical as the initial corporate tax registration requirements. There are several specific reasons for corporate tax deregistration; primarily, a business must deregister from the UAE corporate tax system if the legal entity is being dissolved, liquidated, or has otherwise ceased its business activities. Additionally, if a business no longer meets the criteria that originally made it required to register for corporate tax—such as a change in legal structure or a merger—it must initiate CT deregistration. Because uae can be a complex environment for regulatory compliance, this guide to corporate tax emphasizes that once a trigger event occurs, the taxpayer must apply for deregistration within three months to avoid administrative penalties. Managing corporate tax deregistration in UAE effectively ensures that the company’s record is clean within the UAE corporate tax system, preventing the accrual of future liabilities once operations have officially ended.
Failure to deregister from corporate tax or VAT within the deregistration within the specified timeframe leads to heavy fines. Even if the business in the UAE has no remaining funds, the legal representative may be held responsible for providing notification.
Since the introduction of corporate tax, businesses must reconcile their taxable income for the final partial year. This requires accurate corporate tax returns that reflect the liquidation costs and asset disposals.
The deregistration process in the UAE is conducted online. Business owners must use their UAE Pass or login credentials to access the tax tile on the taxable person's dashboard. Incorrectly submitting a deregistration request can lead to rejection and further delays.
Important Note: A company must first register for corporate tax and obtain a corporate tax registration number even if it is liquidating, provided it was active after the corporate tax law became effective for its financial year.
The corporate tax liquidation process in the UAE involves several critical steps, including corporate tax deregistration and the settlement of all tax liabilities. Whether your company is winding down voluntarily or due to financial distress, it is essential to navigate the tax deregistration process accurately to ensure compliance with UAE tax laws and regulations.
At Young & Right, we provide expert guidance and support throughout the corporate tax deregistration process, helping you meet all your tax obligations during liquidation. Our services are designed to simplify what can otherwise be a complex and time-consuming process, ensuring a smooth closure for your business.
One of the key steps in the corporate tax liquidation process is corporate tax deregistration. Once your company ceases to operate, it is required to apply for deregistration with the Federal Tax Authority (FTA). This process formally removes your company from the tax register, ensuring you are no longer liable for corporate tax.
We guide you through the corporate tax deregistration requirements, helping you comply with all necessary steps, including the settlement of any outstanding VAT liabilities and the completion of the corporate tax registration and deregistration forms. Our team ensures that the process is handled efficiently, and we assist with filing the necessary paperwork to complete your corporate tax deregistration within the prescribed timelines, which is typically within three months from the cessation of business.
In addition to corporate tax deregistration, businesses must also address VAT deregistration if they were previously VAT-registered. VAT deregistration is required when a business ceases its activities, and failure to complete this step can result in penalties from the FTA.
At Young & Right, we support you in filing for VAT deregistration and ensure that all VAT obligations are fully met. Our experts help you understand the reasons for deregistration and ensure that all VAT liabilities are cleared, so your company is fully compliant.
Navigating the uae’s evolving tax landscape during a company closure is a rigorous legal procedure. From the submission of tax returns to obtaining the final deregistration certificate, every step must align with uae tax regulations.
If your business is entering liquidation in the UAE, Young & Right offers expert corporate tax services and tax advisor support. Our tax professionals help you complete the deregistration procedure efficiently, ensuring full compliance with tax laws and a clean exit from the market.
Expert assistance to guide you through every step of liquidation. Whether it's voluntary or compulsory, we ensure your business complies with the law.
Schedule Your Consultation Today
