04 Sep 2025
Closing a DMCC-registered business requires meeting specific tax obligations. By September 2025, the FTA will expect Final Liquidation Reports (FLRs) to provide VAT-related confirmations. Firms in the process of closing down need to have knowledge of the requirements in order to face a smooth closure procedure.
Why VAT Compliance Matters During Liquidation
When a business ceases operations, its VAT compliance during liquidation don’t disappear automatically. The DMCC now requires every FLR to confirm two key points:
• The company has ceased all taxable activities and will remain inactive for a period of at least 12 months.
• All VAT returns have been filed, and any outstanding tax or penalties have been cleared.
If these statements are missing or if the report fails to clearly mention whether VAT deregistration has been completed or is still in process, the application will not be accepted. On the other hand, if the business was never VAT registered, this must also be explicitly stated. In short, compliance is not optional—it is the foundation of a valid liquidation process.
How to File the Final VAT Return in the UAE
Submitting the final VAT return is one of the most crucial steps in company liquidation UAE. This process involves:
1. Filing all pending VAT returns up to the deregistration date.
2. Reporting VAT on any assets retained at the time of liquidation.
3. Applying for VAT deregistration through the FTA portal to confirm that no further obligations will arise.
By completing these steps correctly, businesses avoid unnecessary delays and ensure their final liquidation report VAT meets regulatory requirements.
Ensuring Smooth DMCC Company Closure with AMCA
For businesses closing down in DMCC, VAT compliance UAE is just as important as legal and financial procedures. With the updated FTA procedures, companies must ensure that they properly prepare liquidation documents, submit accurate VAT returns, and complete deregistration. By taking a proactive stance on these procedures, companies can have a problem-free and compliant closure, free of detrimental effects.
Need expert guidance on VAT compliance? Let AMCA handle your final liquidation report, VAT returns, and deregistration with precision and efficiency.
FAQs
1. What must be included in the final liquidation report VAT section?
It must confirm cessation of activities for 12 months and settlement of all tax liabilities.
2. Is the FTA liquidation application mandatory for non-VAT-registered companies?
Yes, but they only need to state clearly that they were never VAT registered.
3. How to file the final VAT return in the UAE before liquidation?
The last VAT return should cover the period up to the date of cessation, with all dues cleared before deregistration.
4. What is the timeline for closing VAT registration in the UAE after liquidation?
As per the FTA VAT guidelines, it must be filed within 20 business days of ceasing taxable activities.
5. What happens if VAT compliance during liquidation is ignored?
The FLR will be refused, which will delay company closure and possibly result in penalties.
