Closing a free zone company in Dubai is not as simple as letting the license expire or stopping operations. Every business registered in a Dubai free zone is legally required to follow a proper company closure process. This ensures that the license, visas, corporate obligations, financial commitments, and government records are all wrapped up correctly. Failing to cancel your company in the proper way can lead to fines, legal complications, visa issues, and difficulty opening a new company in the future.
This guide explains the process in simple, practical language. Whether you run a small one-person free zone company or a larger setup with employees and multiple visas, the steps below will help you understand what the closure process involves, how long it takes, and what you need to prepare.
1. Understanding What Company Closure Means in a Dubai Free Zone
Free zones in Dubai operate as separate jurisdictions with their own rules, procedures, and documentation requirements. While the specific steps can vary from one free zone to another, the general idea remains the same. When you close a company, the authorities need to confirm that:
• The company has no debts
• All government obligations have been met
• All visas linked to the company have been cancelled
• Employees have been offboarded correctly
• The company has no ongoing liabilities
• All assets have been accounted for
• All partner obligations have been completed
Closing the company formally is important because a free zone license cannot simply remain inactive. If it expires without proper cancellation, fines may accumulate and you may face future restrictions.
2. Reasons Why Companies Close in Dubai Free Zones
Every business has its own story, but some common reasons for closing a free zone company include:
• The business did not perform as expected
• High renewal fees compared to business activity
• The owner is relocating or shifting strategy
• Switching from a free zone structure to a mainland company
• Changes in the market or a shift in demand
• Owners want to avoid future renewal costs
• Company is not required anymore and is only incurring expenses
• Reduction of global business operations
• Corporate restructuring
Whatever the reason, closing the company the right way is essential to avoid complications later on.
3. Pre-Closure Preparation: What You Should Do Before Starting the Process
Before you initiate the official closure request with your free zone, it is helpful to complete some internal preparation.
3.1 Hold a Shareholder Resolution
Shareholders must formally agree to close the company. This is usually done with a written resolution signed by all shareholders. The resolution states that the company will be closed and, if required, appoints a liquidator.
Most free zones require this document to be signed and sometimes notarized. If a shareholder is overseas, the resolution may need attestation from their home country.
3.2 Review Company Liabilities
Make a list of all the company’s obligations:
• Outstanding invoices
• Vendor payments
• Employee salaries
• Gratuity payments
• Office rent or flexi desk rent
• Bank loans or credit
• Subscriptions linked to the company
• Supplier contracts
• Equipment leases
Clearing liabilities early helps avoid delays during the final audit stage or liquidation report.
3.3 Notify Employees
If your company has employees, you need to:
• Inform them ahead of time
• Process final salaries
• Settle any gratuity payments
• Cancel employment visas
• Provide the required notice period
Free zones will not allow company closure until all employee visas are cancelled.
3.4 Check Visa Status
Every free zone company is linked to a certain number of visas or visa quotas. Before closure, you must:
• Cancel all active visas
• Clear dependents’ visa statuses
• Cancel establishment card or immigration card
This can only be done through official channels in the free zone or the immigration department.
4. The Step-by-Step Process of Closing a Free Zone Company
Although each free zone has slightly different rules, these are the standard steps most companies follow.
4.1 Apply for Initial Approval
You begin the process by requesting initial approval for closure. The free zone will review your company file to confirm that:
• There are no outstanding fines
• There are no overdue renewal payments
• Your account is updated
• Your contact details are correct
Once approved, they will provide a list of required documents and next steps.
4.2 Appoint a Liquidator (If the Free Zone Requires It)
Some free zones require the appointment of an external liquidator. This is usually a licensed audit or accounting firm. The liquidator will be responsible for:
• Checking the company’s financial health
• Preparing a liquidation report
• Reviewing outstanding liabilities
• Confirming that the company can be closed
Not all free zones require a liquidator, but many of the larger ones do.
4.3 Place a Public Notice (If Required)
Some free zones require companies to publish a notice in local newspapers. This notice announces the company’s intention to close and gives creditors time to come forward. The standard notice period can be between 15 to 45 days depending on the free zone.
4.4 Obtain Clearance Certificates
To proceed with final closure, you will need clearance from different departments. Clearances usually include:
• Free zone authority
• Facility management
• Bank clearance
• Telecom provider
• Utility provider
• Customs (if relevant)
• Leasing department
• IT services (if services were used)
This step ensures that all obligations are cleared before the free zone cancels your license.
4.5 Cancel Visas and Immigration Documents
This includes:
• Cancelling employee visas
• Cancelling partner visas
• Cancelling dependent visas
• Cancelling your establishment card
• Returning any physical documents or cards
You cannot complete the closure without clearing your immigration status.
4.6 Submit the Liquidation Report
If your free zone required a liquidator, you must submit the final liquidation report. The free zone authority will review it to confirm that:
• The company is financially clear
• All records are updated
• No liabilities are outstanding
This report must be officially issued and signed by the appointed liquidator.
4.7 Final Approval and License Cancellation
Once all documents are submitted and approved, the free zone will issue:
• Company deregistration certificate
• License cancellation letter
• Official closure confirmation
This becomes your final proof that the company has been legally shut down.
5. Closing a Bank Account
After the free zone completes the closure, you must close your company’s corporate bank account. The bank will require:
• Company closure certificate
• Board resolution
• Passport copies of all owners
• Clearance of remaining funds
• Settlement of any loans or credit cards
Banks may take anywhere from a few days to several weeks to complete the closure depending on internal processes.
6. VAT Deregistration and Tax Obligations
If your company is registered for VAT, you must apply for deregistration with the Federal Tax Authority. Before the closure is approved, you must:
• File final VAT return
• Pay any outstanding VAT liabilities
• Maintain records for at least five years
If deregistration is not done properly, fines may apply. This is one of the most commonly overlooked steps by business owners.
7. Economic Substance Regulations (ESR) and UBO Requirements
Before closing your company, you must also:
• File ESR notifications if required
• Ensure your UBO information is updated
• Submit final UBO declaration if the free zone asks for it
Even during closure, companies remain responsible for compliance.
8. Closure Timeline
The time required to close a free zone company can vary, but typical timelines are:
• Simple free zone company with no visas: 2 to 4 weeks
• Company with multiple visas: 4 to 8 weeks
• Liquidation with notice period: 45 to 90 days
• Complex corporate structures: 3 to 6 months
Free zones that require public notices or external liquidators usually take longer.
9. Expected Costs of Closing a Free Zone Company
The cost depends on the free zone. Some of the main fees include:
• Application for closure
• Liquidator fees
• Visa cancellation fees
• Office clearance fees
• Newspaper announcement fees
• Administrative charges
• Immigration card cancellation
• Bank account closure (if applicable)
The total cost can range from a few thousand dirhams to more than 15,000 AED depending on the free zone.
10. What Happens If You Do Not Properly Close Your Company
Many business owners ignore the closure process by simply letting their license expire. This creates serious complications such as:
• Accumulated fines
• Inability to open future companies
• Problems renewing visas
• Legal notices from free zones
• Negative record with UAE immigration
• Bank account freezes
• Penalties from the Federal Tax Authority
Proper closure avoids all of these issues.
11. Tips for a Smooth Company Closure
Here are practical tips to avoid delays:
• Start early. Begin the closure process at least 60 days before your license expiry.
• Clear all dues before applying for closure.
• Maintain proper accounts from day one.
• Cancel visas first, then handle the rest.
• Keep communication open with your free zone authority.
• Work with a consultant if you want faster processing.
Keeping everything organized ensures a straightforward experience.
12. Conclusion
Closing a free zone company in Dubai is a structured and often detailed process. Although the specific steps can vary from one free zone to another, the overall approach remains similar. You must clear all liabilities, cancel all visas, obtain the required clearances, and submit the correct documents to legally close your business. Once the process is complete, the free zone will issue an official closure certificate.
Taking the time to close your business correctly protects you from fines, legal complications, and restrictions in the future. Whether your company was a small one-person setup or a larger operation, completing the closure process the right way ensures a smooth and responsible exit from the UAE’s business ecosystem.
