Starting a business in Dubai is an exciting journey, but sometimes, circumstances change, and business owners may need to close their company. When a business ceases operations, the final and most important step is to cancel the trade license. It ensures that the company is officially closed in the records of the authorities and avoids any fines or legal issues in the future. Whether you run a small business or a large firm, understanding the trade license cancellation process in Dubai is essential to ending your business activities smoothly and properly.
Understanding the Trade License Cancellation Process
Before you decide to cancel a trade license in Dubai, it is important to know that this process is not just about ceasing business activities. It involves several formal steps with government departments such as the Department of Economic Development (DED), Dubai Municipality, Ministry of Human Resources and Emiratization (MOHRE), and others. The main objective of the cancellation process is to ensure that there are no outstanding liabilities, fines, or obligations.
When a trade license is cancelled, the company name is removed from the DED register, and the business is no longer legally active in the UAE. This helps the business owner avoid future renewal fees or penalties and provides legal closure.
Reasons for canceling a trade license
There are many reasons why business owners may choose to cancel their trade license. Some may be moving to a different business idea or location, while others may be facing financial problems or a change in ownership. Common reasons include:
- The company has permanently ceased operations.
- The business is relocating to another emirate or country.
- The owner wants to start a new business under a different name.
- The company is unable to maintain financial operations.
- The business partners decide to dissolve the company.
Whatever the reason, proper cancellation ensures that no legal issues arise later.
Step-by-step process for canceling a trade license
The cancellation process in Dubai depends on the type of company – whether it is a sole proprietorship, civil company or LLC (limited liability company). However, the basic steps are quite similar for all types.
1. Pay all dues and penalties
Before submitting your request, you must pay any outstanding payments related to your trade license, including DED fees, visa cancellation or labor card dues.
2. Cancel all visas
If your company has employee visas, they must first be cancelled by MOHRE and the General Directorate of Residency and Foreigners Affairs (GDRFA). The owner’s visa must also be cancelled before closing the company.
3. Obtain approval from authorities
You must obtain approval certificates from various government bodies such as:
- Dubai Electricity and Water Authority (DEWA)
- Ministry of Human Resources and Emiratization (MOHRE)
- Federal Tax Authority (if the company is VAT registered)
- To cancel a lease or rental agreement
4. Apply for license cancellation at DED
After collecting all the approvals, you can submit an application to DED to cancel the trade license. Depending on the type of company, additional documents such as a liquidation report or partner approval letters may be required.
5. Obtain a Final Cancellation Certificate
Once the DED reviews and approves your request, they will issue a Final Cancellation Certificate, which confirms that your business is officially closed.
Documents required for cancellation of business license
Here are the documents generally required:
- Original copy of business license
- Clearance letters from DEWA, MOHRE and FTA (if applicable)
- No Objection Certificate (NOC) from partners (for LLC or civil companies)
- Lease cancellation or Ejari cancellation certificate
- Copy of owner’s Emirates ID and passport
- Liquidation announcement in newspaper (for LLC only)
Requirements may vary depending on the type of company and its activities.
Cost of a Professional License in Dubai
It is important for those who are planning to restart their business after closing it, to understand the cost of a professional license in Dubai. A professional license is required for individuals or groups providing professional services such as consultancy, education, legal services, beauty salons and healthcare. The cost usually depends on several factors – the type of activity, office space, government fees and required approvals.
Typically, the cost of a professional license in Dubai ranges between AED 10,000 and AED 20,000 per year, which includes government fees and the cost of a local service agent. However, prices may vary depending on the nature of the business and whether it operates on the mainland or in a free zone.
How long does it take to cancel a trade license?
How long does it take to cancel a trade license depend on the type of company and the documents. For a sole proprietorship, the process can take about 2 to 5 working days after all documents are completed. For LLCs or companies with multiple partners, it can take 2 to 3 weeks after liquidation and public announcements are required.
Common Mistakes to Avoid When Canceling a Trade License
Many business owners make mistakes when canceling their trade licenses, which can lead to delays or penalties. Here are some points to remember:
- Do not ignore the process of canceling pending employee visas.
- Ensure that all payments, including rent and utility bills, have been paid.
- Always collect clearance certificates from all relevant departments.
- Ensure the correct documents before applying to the DED.
Avoiding these mistakes will help the process run smoothly.
Final Thoughts
Cancelling a trade license in Dubai may seem complicated at first, but with proper planning and the right information, the process becomes straightforward. It is always a good idea to seek professional help to handle the paperwork, visa cancellation, and government approvals.
Whether you are permanently closing your company or preparing for a new beginning, completing a trade license cancellation legally and properly ensures peace of mind and a clean record for future business activities.
