UAE Corporate Tax Deregistration Penalty: AED 1,000 Per Month

Corporate tax deregistration is the formal process of removing taxable entities from their future obligations under the UAE Corporate Tax Law.

Deregistration is governed by Article 52 of Federal Decree-Law No. 47 of 2022, together with FTA Decision No. 6 of 2023, which sets the application deadlines.

What happens after business operations stop under Corporate Tax in the UAE?

A business may stop operating for multiple reasons.

Simply canceling a local trade license or stopping commercial activity does not shut down a corporate tax account and the entity remains ‘active’ until formal deregistration is completed.

This means that cancelling a trade licence and deregistering for Corporate Tax are two separate legal processes.

If a business cancels its trade license but fails to deregister for corporate tax within the stipulated time, it may incur penalties for late deregistration, as these are separate processes.

Who needs Corporate Tax Deregistration?

A taxable person ceasing business activities can cancel its license and complete liquidation, yet remain active until the Federal Tax Authority (FTA) approves deregistration.

Business closure may occur for any of the following reasons:

1. Voluntary closure of operations
   • Liquidation process, dissolution, or other reasons
2. Any change in operational status that disqualifies them from being a “taxable person” under UAE Corporate Tax Law
3. License cancellation or expiry linked to genuine cessation of the Business
   • Where the business has actually ceased and the relevant deregistration conditions are met
4. Transferring ownership / sale of business
   • A sale may require Corporate Tax deregistration where the registered Person ceases its Business or the relevant license/business is transferred
   • A change in the shareholders of a company, by itself, does not generally mean that the company should deregister from Corporate Tax
5. Business re-domiciliation
   • Company transfers its legal domicile outside the UAE
   • Documentary evidence required, official FTA category
6. Restructuring (such as mergers or acquisitions)
   • A change in the legal structure of a business, such as mergers or acquisitions, may necessitate deregistration from corporate tax to comply with new regulations

Who must apply (Mainland and Free Zone Companies)?

Both natural persons and juridical persons (or legal persons) that are registered for Corporate Tax must apply to cancel their corporate tax registration within the applicable timeline.

What is a tax deregistration certificate?

Once the FTA approves the Corporate Tax deregistration application, the registration status is changed to “Deregistered” and a Corporate Tax Deregistration Certificate is issued through EmaraTax.

What is the process for Corporate Tax Deregistration in the UAE?

The formal application for tax deregistration typically takes around 20 minutes to complete. The Corporate Tax deregistration service itself is free.

To deregister from corporate tax in the UAE, businesses must submit an application through the EmaraTax portal, which is the online platform for tax-related services provided by the Federal Tax Authority (FTA).

Complete the final Corporate Tax Return and outstanding obligations before deregistration is approved.

A Corporate Tax deregistration application can be submitted before the final return is filed. However, the FTA will not approve deregistration until all required Corporate Tax Returns are filed and outstanding tax and penalties are settled.

Apply for Corporate Tax deregistration with the Federal Tax Authority (FTA)

The FTA generally processes complete deregistration applications within 40 working days. If additional information is requested, a further 40 working days may apply. Failure to resubmit the application within 60 calendar days of the FTA’s request may result in rejection.

1. Access EmaraTax portal here
2. Select Corporate Tax Deregistration
3. Choose the reason for deregistration:
   • Sale
   • Merger
   • Re-domiciliation
   • Cessation
   • Others
4. Upload supporting documents.
5. Submit application

Documents required for CT Deregistration

The necessary documentation for corporate tax deregistration typically includes the trade license cancellation letter, liquidation resolution, or sale agreement, depending on the reason for deregistration.

Make sure that you have the correct documents at hand in order to complete the application form. Accepted file types are (PDF, JPG, PNG, JPEG, XLSX) 
and each individual file size must be 15 MB.

Deregistration Deadline & Avoid Fines under UAE Tax Laws

Any taxable person must deregister within 3 months from cessation of business activity to avoid potential penalties.

Not completing the deregistration process can hinder future business operations, as stakeholders may require proof of proper tax status and compliance before engaging in new ventures or partnerships.

The late deregistration penalty accumulates monthly from the date the three-month deadline is missed, with no waiver program currently available for this penalty.

Failing to apply for corporate tax deregistration within three months of the entity ceasing to exist results in a penalty of AED 1,000 per month, capped at AED 10,000.

Keep in mind that late Tax Return fines for an active business include AED 500 per month for the first 12 months, increasing to AED 1,000 per month from the 13th month onward.

Avoid penalties and keep accurate records under UAE Tax Rules

Corporate tax deregistration is the final step in ending a business’s Corporate Tax obligations in the UAE.

When a business ceases operations, meeting the tax deregistration requirements on time helps avoid unnecessary penalties, maintain accurate records, and keep your compliance status in good standing.

Whatever stage your company is at, Skrooge’s in-house service automation and tax experts have a proven track record of helping business entities navigate UAE tax regulations with ease. Book a call with us to get to know more about our tax advisory services.