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Does Closing a Company Require Deregistration for VAT

When the company's business is liquidated, complete control of the property is transferred to the liquidation officer and is forced to close immediately.  Upon complete completion of the closure, the company owner will be removed from the VAT registration list. However, this process can take a long time, as the UAE imposes some complex steps to begin the company cancellation process to:

  • Close all company accounts
  • Account statements (invoices)
  • Final statement
  • Telecommunications Services

Therefore, Farahat & Co supports its clients in all stages of liquidation.  It is considered one of the most prominent tax consulting offices specializing in registering VAT and canceling its registration in the case of the closure of companies in UAE.  It employs the best-certified tax advisors and agents.

The Necessity of Informing Government Agencies About the Company’s Closure

Upon closing the business and ceasing activity, the commercial license must be officially canceled, to avoid any fines and violations accumulating on the license if:

  • License expiration.
  • Non-renewal.
  • Not officially canceled.
  • Failure to notify the Federal Tax Authority of cancellation of  VAT registration.

If the service applicant is a partner in a joint-stock company, it is necessary to release him financially from any obligations towards creditors and partners, as well as to protect his interests and rights in the company when its activity is dissolved.

The main consequences of liquidating the company are the following points:

  • Its owner will not be able to be a partner in any company in UAE.
  • The ability to continue working will be limited.

Does Closing a Company Require Deregistration for VAT?

Yes, canceling VAT registration is a separate process from liquidating the company, as the registrant’s tax registration is only canceled if:

  • The registrant stops making taxable supplies.
  • The total tax and administrative fines owed by him have been paid
  • Submit all the tax returns that must be submitted for the period in which the registrant was registered as stipulated in tax legislation.
  • Submit a cancellation request within twenty days of fulfilling the cancellation conditions
  • The value of supplies within twelve months was less than the voluntary registration threshold, i.e. AED 187,500.

The UAE tax system is based on voluntary self-compliance by taxable persons in registering, submitting returns, paying due taxes, or canceling registration.

Official closure of the Company in UAE

Many types of companies can be closed in UAE, including:

  • Joint-liability Company
  • Limited Liability Company
  • Simple recommendation company
  • Public joint stock company
  • Private Joint Stock Company (PJSC)

A large part of the procedures for closing companies in Dubai concerns the final compensation of employees.  The company owner or owners must cancel their employees' visas and work permits.  As well as coordination with the General Administration of Residency and Foreigners Affairs in Dubai and the Ministry of Human Resources and Emiratization, as according to the UAE Labor Law, employers are required to give employees two months’ paid notice before terminating contracts.  In many cases, employees can retain residency visas until the company's business license expires.

Our Other Services Accompany the Liquidation of Companies

Farahat & CO, provides VAT registration and de-registration services, as well as tax declaration services and VAT recovery services.  We also provide high-quality services related to:

  • Tax declaration
  • Amending tax registration
  • Register a tax group
  • Cancellation of tax registration
  • Cancel a tax group
  • Determine the tax period and modify its dates
  • Submit a tax return and claim a refund of input tax

Farahat & CO employs experienced VAT specialists who are capable of representing their clients with the Federal Tax Authority in the UAE and defending their interests before the Tax Disputes Committee.

They also attend tax audit sessions that the Federal Tax Authority in UAE may impose on companies.  They prepare defense documents and appeal the decisions of the Federal Tax Authority in the case that it issues unfair rulings against companies.

Farahat & CO provides auditing services related to the company’s transactions with the Federal Tax Authority and certified tax agent services in Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, Fujairah, and the rest of UAE.

 

 

 

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions.
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