Key takeaways
- A dormant company in the UAE is not exempt from anything: its trade licence, corporate tax registration and any VAT registration stay live until each authority cancels them.
- A UAE company with no income must still file its corporate tax return within nine months of the end of its tax period, because the Federal Tax Authority (FTA) says the duty applies regardless of the level of income.
- The penalty for registering late for UAE corporate tax is AED 10,000, and a late corporate tax return costs AED 500 per month for the first 12 months, then AED 1,000 per month.
- A VAT-registered dormant company still has to file VAT returns; the FTA penalty for a late VAT return is AED 1,000 the first time and AED 2,000 for a repeat within 24 months.
- Closing a dormant UAE company properly means cancelling visas, deregistering for tax and getting clearance from the licensing authority; leaving it unclosed keeps the filings, renewals and penalties running.
What happens if you leave a dormant company open in the UAE?
Nothing stops automatically. A company with no trading activity is still a registered legal entity, so each authority that registered it keeps expecting filings until you cancel with that authority. The table shows what keeps running and what the penalty is.
| Obligation | Still applies when dormant? | Penalty or consequence | Source |
|---|---|---|---|
| Corporate tax registration | Yes, until the FTA deregisters you | AED 10,000 if registration is late | Cabinet Decision No. 75 of 2023 |
| Corporate tax return | Yes, within 9 months of period end | AED 500 per month for 12 months, then AED 1,000 per month | Cabinet Decision No. 75 of 2023 |
| Corporate tax payment | Only if tax is due | 14% per annum, charged monthly | Cabinet Decision No. 75 of 2023 |
| Corporate tax deregistration | Needed when closing | Late application: AED 1,000 plus AED 1,000 a month, capped at AED 10,000 | Cabinet Decision No. 75 of 2023 |
| VAT return | Yes, if VAT-registered | AED 1,000 first time; AED 2,000 repeat within 24 months | Cabinet Decision No. 40 of 2017, as amended |
| Trade licence renewal | Yes, annually | Fines set by the licensing authority | Dubai Economy and the relevant free zone |
| Residence visas | Yes, until renewed or cancelled | Fine on overstaying; check amount with GDRFA | u.ae |
Penalty figures as of 16 October 2026. The amounts above come from the Ministry of Finance (MoF) texts of the decisions; check the current text before you rely on a number.
Does a dormant company still have to file a corporate tax return?
Yes. The Corporate Tax Law (Federal Decree-Law No. 47 of 2022, Article 53) requires a return no later than nine months after the end of the tax period, and the FTA stated in September 2025 that the obligation applies regardless of the level of income. For a company with a 31 December year end, that means 30 September of the following year.
Say a company with a 31 December year end stopped trading in March 2026 and never deregistered. That is a hypothetical, but the rule is real: its return for the period ending 31 December 2026 is due by 30 September 2027, and a missed deadline starts the AED 500 monthly penalty.
Records matter even with no activity. Article 56 of the Corporate Tax Law requires records and documents to be kept for seven years after the end of the relevant tax period, so closing the company does not let you discard its books.
If you'd rather not track these dates by hand, the free UAE compliance calendar lists them for your company.
Does a dormant company still have to file VAT returns?
Yes, if it is VAT-registered. Registration stays in force until the FTA accepts a deregistration, so each return period still needs a return, even a nil one.
The VAT penalty table in Cabinet Decision No. 40 of 2017 (as amended, with the table updated by Cabinet Decision No. 129 of 2025 from 14 April 2026) sets AED 1,000 for a first late return and AED 2,000 for a repeat within 24 months. Late payment of VAT due is charged at 14% per annum, applied monthly, and a late deregistration application costs AED 1,000 plus AED 1,000 each month, capped at AED 10,000.
What happens to the trade licence and visas of a dormant company?
The licence must be renewed on the licensing authority's schedule, and the visas must be renewed or cancelled. Fines, fees and procedures differ between Dubai mainland, each free zone and the other emirates, so confirm the figures with the authority that issued your licence.
Dubai's closing-a-business guidance shows what a long lapse does. For a licence expired for more than two years, the local partner must sign an undertaking accepting liability for the company's debts, a liquidation notice must run in Arabic newspapers with a 15-day window for debtors, and labour cards must be cancelled with MOHRE. Abandonment does not make the company disappear; it makes the eventual closure more procedural.
On visas, the u.ae portal says only that there is a fine on overstaying and sends you to the GDRFA fines inquiry; it does not publish a per-day amount, so check the live amount rather than trusting a figure from a blog.
How do you close a dormant company in the UAE?
Closing is a sequence, and the u.ae free zone closure guidance sets it out. The steps below apply to free zones; mainland procedures differ by emirate.
- Pass a shareholder resolution to close the company.
- Cancel all employee and investor visas.
- Settle outstanding financial obligations.
- Deregister with the FTA for corporate tax and VAT, where applicable, on EmaraTax.
- Submit the licence cancellation or liquidation application to the free zone authority with the clearances it asks for.
- Collect the final de-registration certificate once the authority approves.
AED 10,000: administrative penalty for failing to submit a corporate tax registration application within the FTA deadline. Source: Cabinet Decision No. 75 of 2023 (as amended by Cabinet Decision No. 10 of 2024), Ministry of Finance, checked 16 October 2026.
What most guides don't tell you
- Closing the licence does not close the tax file. The FTA registration is separate from the licence, and the penalty schedule has its own line for a late deregistration application. A company that cancels its licence first and deregisters later is the one that picks up the AED 1,000 monthly charge.
- There may be a way out of the AED 10,000 registration penalty. The FTA waives the late corporate tax registration penalty if the company registers and files its return within seven months of the end of its first tax period (and refunds it if already paid). The waiver depends on filing through EmaraTax within that window, so a dormant company that never registered should check its dates before assuming the penalty is fixed.
- A long lapse puts the debt question on you. In Dubai, the route for a licence expired more than two years asks the local partner to accept liability for the company's debts, which is a reason to deal with a dormant company before it ages into that category.
Which deadlines apply to your company?
Which dates apply depends on your year end, your tax and VAT registration status and your licensing authority. The free UAE compliance calendar is a free calendar of your company's UAE tax and compliance deadlines, personalised from a few questions, as a PDF and calendar file.
Frequently asked questions
Can I just abandon my UAE company and leave the country? No. The company's tax filing duties, licence and visa records stay open until each authority cancels them, and the u.ae portal notes that there is a fine on overstaying a residence visa. In Dubai, a licence that has been expired for more than two years can only be cancelled through a route that makes the local partner sign an undertaking accepting liability for the company's debts.
How do I make my UAE company dormant? I couldn't find a federal dormant status on the FTA, Ministry of Finance or u.ae pages checked for this guide, so confirm with your licensing authority whether it offers one. Without such a status, a company that stops trading is simply a company with no activity: you keep renewing the licence and filing nil returns, or you close it.
Do I need to deregister for VAT and corporate tax before closing my company? The u.ae free zone closure steps list tax deregistration with the FTA, where applicable, before the licence cancellation or liquidation application. A late corporate tax deregistration application costs AED 1,000 plus AED 1,000 each month, capped at AED 10,000.
What is the difference between deregistration and liquidation in the UAE? Tax deregistration ends your registration with the FTA, while liquidation is the formal winding up of the company itself. In Dubai, a commercial company's liquidation involves notarised general assembly minutes, a liquidator and a newspaper notice that gives creditors 45 days to file claims.
What happens to employee visas when I close my company? The u.ae free zone closure steps require you to cancel all employee and investor visas before the licence is cancelled. For Dubai mainland closures, labour cards must also be cancelled with MOHRE.
About Qawi · Qawi is a corporate services firm licensed in the Sharjah Media City (SHAMS) free zone, handling company formation, visas and PRO, bookkeeping, VAT and corporate tax for UAE businesses. Guides are researched from FTA, Ministry of Finance and free zone sources. Qawi on LinkedIn
Sources
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (consolidated), Ministry of Finance
- Cabinet Decision No. 75 of 2023 on Administrative Penalties for Corporate Tax violations, Ministry of Finance
- Cabinet Decision No. 40 of 2017 and its amendments, Ministry of Finance
- FTA: submission of corporate tax returns within nine months, 24 September 2025
- FTA: waiver of penalties for late corporate tax registration
- u.ae: closing a business in a free zone
- Dubai.ae: closing your business
- u.ae: visa fees and fines
Last checked: 16 October 2026
This is general information, not tax or legal advice for your specific situation.