The Real Cost of Company Liquidation in Dubai involves more than just shutting down operations and walking away. The company liquidation process requires legal compliance, administrative approvals, and settlement of all dues. One of the most crucial aspects business owners must prepare for is the real cost of liquidation which includes government fees, professional charges, fines (if any), and other associated costs.
In this article,we provide a comprehensive breakdown of all the costs associated with company liquidation in Dubai and offer practical ways to reduce the financial burden wherever possible.
Key Factors That Affect Liquidation Costs
The total expense for company liquidation in Dubai depends on several variables:
- Business location (Mainland or Free Zone)
- Company structure (LLC, Sole Proprietorship, etc.)
- Number of employee or partner visas
- VAT registration status
- Accumulated penalties or unpaid obligations
Let’s explore each cost component in detail.
Government Fees & License Termination Charges
Government charges for license cancellation differ based on the type of business:
Mainland LLC (DED):
- Typically ranges from AED 3,000 to AED 7,500
- Covers license cancellation, Chamber of Commerce clearance, and government approvals
Sole Proprietorship:
Generally lower, ranging from AED 1,500 to AED 3,000
Free Zone Companies:
- Varies significantly by Free Zone Authority
- Generally falls between AED 2,000 and AED 10,000
Licensed Liquidator Fees
For mainland LLCs, appointing a licensed liquidator is mandatory. The liquidator prepares the formal liquidation report required for finalizing license cancellation.
- Costs typically range between AED 2,500 and AED 8,000
- The fee depends on the company’s financial complexity, number of shareholders, and required documentation
VAT Deregistration & Related Penalties
If your company is VAT registered, you must apply for deregistration with the Federal Tax Authority (FTA):
- Online application is free via the FTA portal
- Hiring a VAT consultant or PRO service may cost AED 500 to AED 2,000
- Late VAT deregistration incurs a penalty of AED 1,000
- Delayed VAT return submissions attract additional fines starting from AED 1,000 per return
- Deregistration must be completed within 20 business days of business cessation
This should also be considered when there are liquidation services.
Visa and Labour Cancellation Costs
All visas and labour cards linked to the company must be cancelled before liquidation:
- Employee visa cancellation: AED 200 to AED 500 per visa
- Partner/investor visa cancellation: AED 250 to AED 800 per visa
- Labour card cancellation: AED 100 to AED 200
Cancellation certificates are mandatory for completing trade license termination.
Corporate Bank Account Closure
Closing all corporate bank accounts is part of the liquidation process. Generally:
- No closure fee for most banks
- Possible charges for final account statements or administrative processing
- Banks require trade license cancellation proof and zero outstanding balances
Lease Termination & Ejari Cancellation
If your office lease is registered under Ejari (mandatory for mainland Dubai):
- Ejari cancellation fees: AED 200 to AED 500
- Early lease termination may involve penalties as per your tenancy agreement
Penalties & Overdue Fees
Accumulated penalties can significantly impact liquidation costs:
- Trade license renewal delays: AED 200 to AED 500 per month
- Labour card expiry: AED 100 per month
- VAT and immigration-related fines vary based on violation type and duration
Additional & Hidden Costs
Other often-overlooked expenses include:
- Document attestation (board resolutions, POAs): AED 200 to AED 500
- Notary Public charges: AED 300 to AED 1,000
- PRO service fees: AED 1,000 to AED 5,000
- Audit or liquidation reports (mandatory for some LLCs): AED 1,000 to AED 10,000
- Clearance certificates from FTA, MOHRE, utilities, and banks
Total Estimated Liquidation Costs
Sole Proprietorship (Mainland):
- Approximately AED 3,000 to AED 7,000
Mainland LLC:
- Usually AED 7,000 to AED 15,000 or higher, depending on complexity
Free Zone Company:
- Generally between AED 5,000 and AED 12,000 depending on the Free Zone Authority
Tips to Minimize Liquidation Expenses
- Start VAT deregistration promptly to avoid penalties
- Cancel visas early to avoid overstaying fines
- Work with comprehensive service providers who handle PRO, VAT, and liquidation procedures together
- Stay compliant year-round to prevent accumulating penalties
- Choose experienced yet cost-effective liquidation partners to streamline the process
Frequently Asked Questions (FAQs)
The cost depends on the company type. For sole proprietorships, liquidation typically costs AED 3,000 to AED 7,000. For mainland LLCs, costs range between AED 7,000 to AED 15,000 or more. Free Zone companies usually face costs of AED 5,000 to AED 12,000 or higher depending on the Free Zone Authority’s regulations.
No. Liquidators are only mandatory for LLCs. Sole proprietorships and most Free Zone companies usually do not require a licensed liquidator unless specifically requested by the authority.
Delaying VAT deregistration can result in a late deregistration penalty of AED 1,000. If you submit VAT returns late, additional penalties starting from AED 1,000 per return may apply. The FTA requires deregistration within 20 business days from cessation to avoid penalties
Yes. All employee, partner, and investor visas, as well as labour cards, must be cancelled through MOHRE and GDRFA before you can proceed with trade license cancellation
Yes, hidden or often overlooked costs may include:
- Document attestation fees (AED 200 to AED 500)
- Notary charges (AED 300 to AED 1,000)
- PRO service fees (AED 1,000 to AED 5,000)
- Audit or liquidation reports for LLCs (AED 1,000 to AED 10,000)
- Clearance certificates from various government departments.
