Closing a UAE company requires four sequential processes: employee termination and visa cancellation, FTA tax deregistration, trade licence cancellation with the DED or free zone authority, and corporate bank account closure. The full process takes 3 to 6 months and costs approximately AED 5,000 to AED 20,000 in fees, penalties, and advisory. Skipping any step leaves residual liabilities — including ongoing tax obligations, labour complaints, and licence-renewal fines. Last updated: June 2026.
For the UAE setup context, see how to start a business in the UAE: complete guide for foreign founders. For ongoing compliance, see UAE company compliance checklist: what to do after incorporation.
What are the steps to close a UAE company?
| Step | Action | Timeline | Cost |
|---|---|---|---|
| 1 | Board resolution to dissolve (LLCs) or shareholder decision | 1 day | Internal |
| 2 | Employee termination, end-of-service settlement, visa cancellation | 2 to 6 weeks | End-of-service gratuity + notice pay |
| 3 | Dependent visa cancellation | 1 to 2 weeks | AED 200-500 per dependent |
| 4 | FTA corporate tax deregistration | 2 to 4 weeks | Free (but final return required) |
| 5 | FTA VAT deregistration (if registered) | 2 to 4 weeks | Free (final VAT return required) |
| 6 | Settle outstanding fees and fines | 1 to 2 weeks | Variable |
| 7 | Trade licence cancellation with DED or free zone | 2 to 6 weeks | AED 1,000-3,000 |
| 8 | Corporate bank account closure | 2 to 4 weeks | Free (but requires zero balance) |
| 9 | Cancel establishment card | 1 week | AED 200-500 |
| Total | 3 to 6 months | AED 5,000 to AED 20,000+ |
How do you handle employee termination?
Employee termination during company closure follows the standard rules under Federal Decree-Law No. 33 of 2021:
- Notice period — 30 to 90 days as specified in the employment contract
- End-of-service gratuity — 21 days’ basic salary per year (years 1-5), 30 days per year thereafter, capped at 2 years’ total salary
- Outstanding leave — unused annual leave must be paid out at the basic salary rate
- Visa cancellation — each employee’s visa must be formally cancelled through MOHRE and ICP/GDRFA. The employee receives a 30-day grace period to find a new employer, leave the UAE, or switch to a different visa status
Failure to properly terminate employees and cancel visas leaves the company liable for ongoing salary obligations and potential MOHRE complaints. Employees who file labour complaints during an incomplete dissolution can block the licence cancellation.
For labour law details, see UAE labour law basics: what foreign employers need to know.
How does FTA deregistration work?
Every UAE entity registered for corporate tax and/or VAT must deregister with the FTA before the trade licence can be cancelled. The process involves:
Corporate tax deregistration — file a final corporate tax return covering the period from the start of the last tax period to the date of cessation. Any outstanding tax must be paid before deregistration is approved. The return is due within 9 months of the cessation date.
VAT deregistration — file a final VAT return covering all outstanding tax periods. Cancel the VAT registration through the EmaraTax portal. Outstanding VAT liabilities — including VAT on assets retained by the shareholders — must be settled.
The FTA processes deregistration applications within 20 to 30 business days. Deregistration cannot be completed if there are outstanding returns, unpaid tax, or ongoing FTA reviews.
How do you cancel the trade licence?
Mainland companies (DED)
The DED requires submission of:
– Board resolution or shareholder decision to dissolve
– Proof of employee visa cancellations (MOHRE clearance)
– FTA tax deregistration confirmation
– Chamber of Commerce clearance
– Bank account closure confirmation (some Emirates)
– Ejari cancellation or office lease termination evidence
– Publication of dissolution notice in two local newspapers (required for LLCs)
The DED reviews the application and issues a licence cancellation certificate within 2 to 6 weeks.
Free zone companies
Each free zone authority runs its own cancellation process. Common requirements include submission of a cancellation request, FTA clearance, employee visa cancellations, outstanding fee settlement, and return of the establishment card. Processing takes 2 to 4 weeks at most free zones.
DIFC and ADGM have separate winding-up procedures governed by their Companies Laws, including a formal liquidator appointment for entities with creditors.
What are the common pitfalls?
Leaving visas active — every visa sponsored by the company (employees, investors, dependents) must be cancelled before the licence can be cancelled. Open visas block the process indefinitely.
Ignoring FTA obligations — attempting to cancel a licence without FTA deregistration leaves the entity liable for ongoing tax returns and penalties. The FTA can impose late-filing penalties (AED 500-1,000 per return) on entities that stop filing but remain registered.
Outstanding MOHRE obligations — unpaid WPS salaries, unresolved labour complaints, or pending gratuity claims block MOHRE clearance, which blocks licence cancellation.
Bank account premature closure — closing the bank account before settling all FTA, MOHRE, and DED obligations creates payment complications. The bank account should be the last thing closed.
Licence auto-renewal — UAE trade licences auto-renew annually. If the founder stops paying without formally cancelling, fines of AED 250 per month accumulate, and the DED or free zone authority may pursue collection.
What about dormant companies?
A dormant company — one with no active operations, employees, or revenue — still carries ongoing compliance obligations:
- Corporate tax returns must be filed (showing zero income)
- VAT returns must be filed if VAT-registered
- Trade licence renewal fees accrue annually
- Health insurance and visa obligations continue for any active visa holders
If dormancy is intended to be temporary (e.g., the founder plans to reactivate in 6-12 months), maintaining the licence and filing zero returns is the cleanest path. If closure is intended, full deregistration and licence cancellation saves ongoing costs and eliminates residual liabilities.
Frequently asked questions
Can I sell my UAE company instead of closing it?
Yes. A UAE mainland LLC or free zone company can be sold through a share transfer. The buyer acquires the entity — including its trade licence, contracts, and operational history — without the need for a new incorporation. Share transfers require DED or free zone authority approval, MOA amendment, and FTA notification.
How long does the full closure process take?
Typical timeline: 3 to 6 months from the board resolution to final bank account closure. The employee-termination and FTA-deregistration steps are the longest. Companies with no employees and no outstanding tax can close in 6 to 8 weeks.
Do I owe corporate tax on assets distributed to shareholders during closure?
Potentially. If the company distributes assets (cash, property, IP) to shareholders during liquidation, the disposal may trigger a taxable event under the UAE Corporate Tax Law. Consult a tax advisor before distributing assets.
Sources and further reading
- Federal Decree-Law No. 33 of 2021 — UAE Labour Law (termination and gratuity)
- Federal Decree-Law No. 47 of 2022 — UAE Corporate Tax Law (deregistration)
- Dubai DED — Trade licence cancellation procedures (invest.dubai.ae)
- UAE Federal Tax Authority — EmaraTax deregistration portal (tax.gov.ae)
- MOHRE — Employee visa cancellation and clearance (mohre.gov.ae)