Compliance Requirements for Corporate Tax Upon Business Cessation

Background:
Mr. A, a UAE resident, has been operating a business in the UAE, with his tax period running from January 1 to December 31 each year. On December 31, 2025, Mr. A ceased trading and decided to apply for deregistration for corporate tax purposes. However, he only made the application to the FTA on January 3, 2026.

It’s noted that Mr. A’s last tax return filed was for the tax period from January 1, 2024, to December 31, 2024. Additionally, Mr. A has not filed his tax return for the tax period from January 1 to December 31, 2025.

Analysis:
In accordance with UAE tax regulations, Mr. A is required to fulfill certain obligations before his deregistration for corporate tax purposes can be approved by the FTA. Firstly, Mr. A must file his tax return for the tax period from January 1 to December 31, 2025. This includes the payment of any corporate tax due for that period.

The filing of the outstanding tax return and payment of corporate tax are essential steps to ensure compliance with tax obligations before deregistration. Once these requirements are met, the FTA can proceed with the deregistration process for Mr. A.

Conclusion:
In conclusion, Mr. A’s decision to cease trading and apply for deregistration for corporate tax purposes necessitates compliance with certain requirements set forth by the UAE tax authorities. Filing the outstanding tax return for the 2025 tax period and settling any corporate tax liabilities are prerequisites for the approval of deregistration by the FTA. This case underscores the importance of adhering to tax regulations and fulfilling obligations even when ceasing business operations to avoid potential penalties or delays in the deregistration process.