Cancelling a UAE Trade Licence
Closing a company is a sequence, not a form, and the order cannot be rearranged. Almost every expensive mistake here is the same one: people try to cancel the licence while visas are still live on it, or they simply stop renewing and assume that closes things. Lapsing does not close anything — it accrues fines against you.
The order, which cannot change
Each step unlocks the next. Attempting a later step first is simply refused, which is why closures take weeks rather than days.
- Cancel every employee visa and work permit, including your own investor or employment visa, last
- Close the immigration file and cancel the establishment card — this cannot happen while any visa remains
- Settle labour obligations: final salaries, gratuity, WPS position and any MOHRE claims
- Clear government and zone dues: fines, outstanding invoices, portal holds
- Deregister for tax where registered — corporate tax and VAT deregistration have their own deadlines and penalties
- Close the bank account and obtain the closure letter
- Cancel the premises: terminate the lease, and cancel the tenancy registration
- Apply for licence cancellation and receive the cancellation certificate
Keep the cancellation certificate permanently. It is the document that proves the entity is closed, and it is what a future authority, bank or partner will ask for.
Mainland is harder than free zone
The difference is liquidation. A mainland LLC generally requires a formal liquidation process with an appointed liquidator and a published notice period for creditors to come forward, which is what makes mainland closure slower and costlier. A free zone closure is usually an administrative deregistration handled by the zone, without a public creditor notice period.
| Mainland LLC | Free zone company | |
|---|---|---|
| Process | Formal liquidation with appointed liquidator | Administrative deregistration by the zone |
| Creditor notice | Published notice period required | Not normally required |
| Typical duration | Commonly 2 to 3 months or more | Commonly a few weeks |
| Liquidator report | Required | Not normally required |
| Cost driver | Liquidator fees and publication | Zone cancellation fee and outstanding dues |
| Deposit refund | Not usually applicable | Applied against dues, then refunded |
The free zone deposit, and what it really covers
Many zones hold a refundable security deposit, often tied to visas issued. At closure it is applied against what you owe before anything is returned — outstanding invoices, late fees, visa cancellation costs. Two consequences people do not expect:
- If you let renewals slip for a year or two, the deposit may already be consumed, so there is nothing to refund and possibly a balance to pay
- The refund typically arrives only after the immigration file is closed and the cancellation certificate is issued — it is the last event, not an early one
Why lapsing is worse than cancelling
Letting the licence expire feels like the free option. It is the expensive one:
- Fines continue to accrue monthly against the licence after expiry
- Employee visas stay live, so sponsorship obligations remain yours
- Tax registration stays open, and filing obligations continue regardless of whether you trade
- Owners and managers can be blocked from new company registrations or face immigration consequences while the file is unresolved
- Reinstating a struck-off company to close it properly costs more than closing it would have
If you have already stopped trading and let a licence lapse, the position is recoverable — but it is settled by paying accrued amounts and then cancelling, not by ignoring it further.
Tax deregistration is its own deadline
This is the newest trap and the one most often missed, because it did not exist for mainland companies before corporate tax. Deregistration for corporate tax and for VAT must be applied for within a set window of ceasing business, and late deregistration carries its own penalty separate from anything the licensing authority charges. A final return is generally still due. Do not treat the licence cancellation as the end of your tax obligations — see UAE corporate tax.
Cancelling a Trade Licence — FAQs
What is the first step in cancelling a UAE trade licence?
Cancelling every employee visa and work permit, with your own investor or employment visa last. The immigration file cannot be closed while any visa remains live on it, and the licence cancellation cannot be completed until that file is closed. Trying to start with the licence is the most common reason a closure stalls.
Can I just let my trade licence expire instead of cancelling?
No, and it is the more expensive route. Fines accrue monthly after expiry, employee visas stay live so sponsorship obligations remain yours, tax registration stays open with filing obligations continuing, and owners or managers can be blocked from new registrations. Reinstating a struck-off company in order to close it properly costs more than closing it would have.
How long does it take to close a UAE company?
A free zone deregistration is commonly a few weeks. A mainland LLC generally takes two to three months or more, because it requires a formal liquidation with an appointed liquidator and a published creditor notice period. In both cases the timeline is driven by visa cancellation and the immigration file, which come first.
Will I get my free zone deposit back?
Usually, but only after dues are settled and the immigration file is closed, with the cancellation certificate issued. The deposit is applied first against outstanding invoices, late fees and visa cancellation costs. If renewals were left unpaid for a year or more, the deposit may already be consumed and there may even be a balance owing.
Do I need to deregister for corporate tax and VAT?
Yes, and within a set window of ceasing business. Late deregistration carries its own penalty, separate from anything the licensing authority charges, and a final return is generally still due. This is the newest trap in a closure because it did not exist for mainland companies before corporate tax, so older guides omit it entirely.
Is cancelling a free zone licence different from a mainland one?
Yes. Free zone closure is normally an administrative deregistration handled by the zone itself. A mainland LLC generally requires a formal liquidation with an appointed liquidator and a published notice period for creditors, which is what makes mainland closure slower and more expensive.
Related
General information, not legal advice. Liquidation and deregistration requirements are set by DET, each free zone, MOHRE, ICP and the Federal Tax Authority and change. Take advice for your own closure.
Last updated: October 2026 · Maintained by the My Business Setup editorial team
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