A UAE free zone company that is not actively trading but still in legal existence is called a dormant company. Keeping a dormant company alive (without cancelling it) is useful for maintaining a business name, holding assets, or preserving the option to reactivate without re-registering. Here is how to manage a dormant UAE company.
Is Keeping a UAE Dormant Company Worthwhile?
Keeping a dormant UAE free zone company makes sense if: you want to preserve the company name for future use, the company holds assets (bank account balance, trade receivables, or contracts) that are not yet settled, you anticipate returning to UAE business activity within 1–2 years, or the company is in a multi-year tax compliance period (e.g., awaiting final UAE CT assessment).
Annual Costs for a Dormant UAE Company
Even a dormant UAE company incurs annual renewal costs: Free zone annual licence renewal: AED 7,500–30,000 depending on the free zone. DMCC dormant company: AED 7,500/year (reduced rate for companies in hibernation mode). Bank account maintenance fees: AED 0–600/year depending on the bank. Audited accounts (if required by the free zone): AED 3,000–8,000/year for a simple dormant company. UAE Corporate Tax filing (if required): must file a CT return showing nil income.
Declaring a UAE Company Dormant for CT Purposes
For UAE Corporate Tax, a dormant company with no taxable income for the year must still file a CT return on EmaraTax. Declare: AED 0 taxable income, no employees, no qualifying or non-qualifying income. CT due: AED 0. Filing is still mandatory — failure to file results in a late filing penalty (AED 500+/month).
When to Cancel Instead of Going Dormant
If you do not see a realistic path back to UAE trading within 2–3 years, cancelling the company is cheaper than maintaining it dormant. Cancellation: one-time cost of AED 2,000–5,000 vs. AED 7,500–30,000+/year for dormancy.