24 Apr 2025
The UAE Corporate Tax regime implements certain compliance obligations for entities conducting business activities within the UAE, including Corporate Tax registration and deregistration procedures. A critical aspect often overlooked during company winding up UAE is the requirement to formally deregister for Corporate Tax within the timeframe and other business closure implications. As per FTA guidelines, a Taxable Person remains subject to Corporate Tax obligations until deregistration is completed, even if cessation occurs during the first Tax Period. Failure to adhere to Corporate Tax compliance may result in administrative penalties under the applicable Cabinet and FTA decisions.
Mandatory Corporate Tax Deregistration Upon Business Cessation
When a taxable person ceases to conduct business activities permanently, it is mandatory to apply for Corporate Tax deregistration. This application must be made within the prescribed timeline and in accordance with the procedural requirements set by the FTA.
Corporate Tax Registration UAE Obligations Still Apply During First Tax Period
Some businesses may commence operations and subsequently decide to cease them during their first tax period. The cessation of a Taxable Person's Business or Business Activities during its first Tax Period does not impact its obligation to register for Corporate Tax.
In other words, if a taxable person carries out any taxable activity, even briefly, they are required to register for corporate tax. This includes cases where the business ceases to operate before the end of the first tax period.
Corporate Tax De-Registration Process
• Step 1: Corporate Tax Registration
A Taxable Person must be registered before applying for company deregistration UAE. This requirement is mandatory, as deregistration cannot proceed without prior registration
If a Taxable Person ceases its business or business activities during its first Tax Period, it must still complete the registration process for Corporate Tax.
• Step 2: Submit Deregistration Application
In accordance with the liquidation process in UAE, once cessation is confirmed, the Taxable Person must file a Deregistration Application within 3 months from the date of cessation of their business or business activities, including dissolution or liquidation through the Emara Tax portal.
• Step 3: Settle Outstanding Liabilities
Before approval of the deregistration, the FTA will verify that all Corporate Tax returns have been filed up to the cessation date and that any outstanding Corporate Tax liabilities, penalties, or interest have been paid.
• Step 4: Approval by the Authority
Upon compliance with all requirements, the FTA will deregister the business from corporate tax obligations, effective from the cessation date or another determined date.
Penalties for Non-Compliance with Corporate Tax Deregistration
The FTA has outlined administrative penalties for violations of corporate tax procedures, including failure to deregister. According to Cabinet Decision No. 75 of 2023, the following penalties may apply:
|
Violation |
Penalty |
|---|---|
|
Failure to submit a deregistration application within the prescribed timeline |
AED 1,000 for the first month of delay, and AED 1,000 for each subsequent month, up to a maximum of AED 10,000 |
|
Failure to file a tax return |
AED 500 per month for the first 12 months of delay. AED 1,000 per month thereafter |
|
Failure to register for tax on time |
AED 10,000 |
Consequences of Failing to Deregister
Neglecting to deregister from corporate tax can have long-term consequences, including:
• Accumulation of monthly administrative penalties.
• Ongoing obligations to file tax returns and maintain tax related records.
• Challenges in future business licensing or compliance activities.
• Potential legal exposure and audits by the FTA.
Failure to comply can result in significant penalties and ongoing compliance burdens. To ensure a clean and compliant cessation of operations, businesses are strongly advised to seek professional assistance in managing their corporate tax deregistration process.
Need Assistance with Tax Deregistration?
At AMCA, we specialize in helping businesses navigate the complexities of company liquidation in Dubai. Our business closure services ensure your business exits the market in full regulatory compliance, saving you time, money, and potential penalties.
Get in touch with AMCA today for expert guidance on Corporate Tax Deregistration in the UAE: +971 4 240 8784
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