May 26, 2022Dated: | Byadmin admin | The United Arab Emirates is a prime destination for businesses and investors. Many hope to make a fortune by promoting their business in the Gulf region but not all succeed in earning profits. The businesses that fail are a liability for the owner if kept afloat. Hence deregistration and the liquidation of such companies become necessary. The outcome of the deregistration and liquidation of a company is that it no longer exists. Hence it involves several formal and legal procedures like company closure, distribution of assets, license cancelation, and VAT deregistration. This post deals with a company’s deregistration and liquidation procedures in UAE and explains the VAT deregistration during Liquidation. Deregistration of a Business in UAE A UAE company deregistration process involves quick and straightforward procedures, including license cancellation and business termination. Although the concepts of deregistration and Liquidation are sometimes confused, there is a significant distinction between the two. There is no UAE regulation to guide businesses through the deregistration procedure. Deregistration Requirements in the UAE The licensing authorities in the UAE pass directives to guide businesses in the deregistration process. The deregistration criteria are as follows: The closing company must pass a resolution to effect its license cancelation and closure. The deregistration process can begin after the business receives approval from the appropriate authorities like SEWA, Telecommunication provider, etc. The company must cancel its Memorandum of Association. Upon completing the above processes, the closing business submits its deregistration application along with the fees to affect the process. On receipt of the same, the licensing authority will issue a final certificate to deregister the business and close it down. Company Liquidation Process in UAE Most companies incorporate specific guidelines in their Memorandum of Association to help in their company’s Liquidation. Federal Law No. 2 of 2015 on Commercial Companies (‘2015 Law’) also regulates the company liquidation process in the UAE. However, if the provisions of the Federal Law differ from those in its Memorandum of Association, the liquidation process will be by the provision in the Article of Association. A company may voluntarily liquidate via a decision and resolution of the shareholders. But if the shareholder(s) disagree, the court initiates the liquidation on the behest of the shareholder(s) by appointing a liquidator. Company Liquidation Requirements in the UAE The company moves a board meeting to resolve to initiate the liquidation process and appoint a liquidator. Applies for clearances from appropriate companies, like telecommunication providers, SEWA, etc.); Before it’s winding up, the company must publish the news of its closure in a minimum of two local dailies, of which at least one should be in Arabic for a specific period of 45 days. The liquidator is responsible for generating and submitting a liquidation report to the licensing authority. The liquidator will submit his report to the licensing authority. The licensing authority will then issue a certification of liquidation and close down the business. VAT Deregistration In Connection With the Deregistration and Liquidity of a Business in UAE Businesses registered for VAT purposes in UAE must now opt for the deregistration within a specific timeframe if: The company stops dealing in taxable merchandise. If the value of taxable supply is less than the criterion for approximately 12 consecutive months. The FTA will permit VAT deregistration only after knowing the completion of VAT returns status, clearance of tax liabilities, and clearance of administrative penalties. To Conclude The deregistration process is simple and only cancels all licenses of the liquidating company. The liquidation process is slightly complex as it involves multiple clearances and distribution of its properties to affect closure after publicizing the same to avoid liabilities in the future. VAT applies only to taxable goods; hence VAT deregistration becomes necessary when a business stops trading. Flyingcolourtax’s tax consultants and VAT technicians can help you carry out all deregistration, liquidation, and VAT deregistration procedures in UAE to help close your business without hassle. Book your free consultation with us to know more about the comprehensive services.