ITC Accounting and Tax Consultancy

Liquidation

Liquidation is an official insolvency process that involves the termination of a company (also known as “winding up” or “closing” a company). The process entails selling all of the company’s assets and using the proceeds generated from the sales to pay off its debts, and expenses, and distribute any remaining funds to the shareholders.

Company Liquidation in Dubai can be sought by shareholders or creditors and fall into two categories:

When a partner files a case without the other partners present, the process of compulsory liquidation begins by court order, and the firm’s creditors may also request its dissolution, which results in a similar sort of liquidation.

Shareholders’ decisions to discontinue corporate operations may result in voluntary liquidation. For the process to be started, a resolution must be enacted, and a liquidator must be chosen.

Is VAT Deregistration Required before the Company Liquidation Process?

  • Companies that are getting closed must have a company liquidation letter from the government authorities to apply for VAT Deregistration.
  • VAT deregistration is mandatory for taxable companies in Dubai when they decide to liquidate.
  • An LLC is required to apply for VAT deregistration with the Federal Tax authority (FTA).
  • The FTA will deregister the VAT registration once the application is submitted with all the required documents.
  • The companies that are winding up the business would incur penalties if they fail to apply for VAT deregistration.

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