Smooth UAE Business Exit in 2026: A Practical Guide to Liquidation and Deregistration

When businesses decide to exit, downsize, or restructure operations in the UAE, understanding the current regulatory framework is essential to avoid delays, unexpected costs, and compliance risks. Recent updates to the Commercial Companies Law and tax regulations have made exit processes more structured and flexible in 2026, provided they are handled correctly.

Evolving Liquidation and Deregistration Regulations in the UAE

UAE liquidation and deregistration rules have evolved significantly to support economic growth and attract long-term investment. Earlier frameworks focused on strict oversight, while reforms since 2015 have simplified ownership structures and exit procedures.

A major shift occurred with Federal Decree-Law No. 32 of 2021, which clarified dissolution pathways and expanded foreign ownership options. This was further strengthened by Federal Decree-Law No. 20 of 2025, effective January 1, 2026. These amendments introduced greater flexibility, including the ability to transfer company registration without liquidation and stronger governance requirements during wind-downs.

These rules apply across mainland, free zone, and offshore entities. While free zones retain their own procedures, they increasingly align with federal standards for onshore and cross-border activities.

Liquidation Process: Key Steps to Follow

The liquidation process now relies heavily on digital submissions, helping reduce timelines and administrative friction. It typically begins with a shareholder resolution to dissolve the company, followed by notarization and the appointment of a registered liquidator. A public notice must be published in two local newspapers, giving creditors 45 days to submit claims. During this period, businesses must:

• Settle all outstanding liabilities and distribute remaining assets
• Clear employee dues, including salaries and end-of-service benefits
• Cancel work permits and visas
• Obtain no-objection certificates from relevant authorities such as MOHRE, immigration, utilities, and landlords

Tax compliance is central to closure. Final VAT and corporate tax returns must be filed, and a tax clearance obtained from the Federal Tax Authority. The liquidator’s final report is submitted to the licensing authority, such as the Department of Economic Development or the relevant free zone authority, which then issues the company cancellation certificate.

Deregistration Without Full Liquidation

In certain cases, deregistration may be possible without a full asset wind-down, particularly for dormant or inactive entities. This process still requires regulatory and tax clearances but may be simpler where no ongoing liabilities exist. Cost varies depending on company size, audit requirements, and authority fees. Under current rules, corporate tax deregistration must be completed within three months of cessation to avoid penalties. Digital portals have significantly improved processing times.

Tax Clearance and the Five-Year Refund Window

Tax clearance remains one of the most critical elements of any business exit. All VAT, corporate tax, excise, and customs obligations must be settled with the Federal Tax Authority before deregistration. From January 1, 2026, refund claims and credit balances are subject to a strict five-year limitation period, starting from the end of the relevant tax period. Unclaimed amounts expire after this window.

Transitional provisions provide relief for older credits. Where the five-year period expires before 2026 or within one year after, businesses have until December 31, 2026, to submit claims. This is particularly relevant for VAT credits accumulated in earlier years. VAT deregistration must be applied for within 20 business days of ceasing taxable activities. Proper planning is essential to ensure credits are utilised or claimed before expiry.

Alternatives to Full Liquidation: Business Mobility Options

Recent amendments have expanded options for businesses that wish to restructure rather than fully exit. Re-domiciliation allows companies to transfer registration between emirates or between free zones and the mainland while retaining the same legal identity. Assets, liabilities, contracts, and obligations continue without interruption. This option suits businesses seeking better market access, regulatory alignment, or operational flexibility without dissolving the entity. Additional options include converting company structures, such as from an LLC to a joint stock company, or operating on the mainland through linked licenses or permits offered by certain free zones.

How HLB HAMT Can Support Your UAE Business Exit

Before initiating closure, businesses should review contractual obligations, outstanding disputes, asset ownership, and data retention requirements. Proper documentation and sequencing of steps are essential to avoid post-exit liabilities or regulatory follow-ups. A structured exit strategy ensures compliance, protects shareholder interests, and prevents future exposure.

HLB HAMT is a trusted advisor for UAE business liquidation, deregistration, and restructuring. With deep experience across mainland, free zone, and offshore jurisdictions, the firm manages the entire exit process, from regulatory filings and tax clearances to coordination with authorities and liquidators.

For businesses planning a smooth, compliant exit or evaluating alternatives to liquidation, HLB HAMT provides clear guidance, practical execution, and end-to-end support. Contact HLB HAMT to discuss your UAE business exit strategy with confidence.

 

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