How to Freeze your License in the UAE?

by Zaara 21, Sep 2021

How to Freeze your License in the UAE?

The recent coronavirus pandemic has resulted in thousands and millions of people either working from home or their companies being forced to cease their company. But, the pandemic is not here to stay. And in the UAE, thankfully the situation seems to be deteriorating, and life will be back to normal in a couple of months.

During these uncertain times, it is difficult for businesses to shut down entirely and go through the process of setting up a business again. So, what other alternative do you have other than liquidating your business?

We have got an option for you. Keep reading ahead to know more.

Freezing your Business License in the UAE

If you have a business in the UAE and are planning to close your business temporarily, then the best option would be freezing the business license. For mainland companies, the Dubai Department of Economic Development offers the opportunity to freeze a trade license for up to three years. Freezing a license can help business owners facing difficult challenges put their operations on hold without having to terminate the company.

Business licenses can be frozen for up to three years, by paying a freezing fee. In the case of sole proprietorship registered in DED, freezing is permitted for one year. A business cannot carry on with any of its operations, once the license is frozen. However, the owner of the frozen license or shareholder can establish a new business in the UAE, by applying for a new license under his name. The option of the freezing license is a saviour for many, as it saves them from accumulated fines when the license is not renewed, and liquidation can also be avoided. Make sure you renew the license on time, or you will have to pay non-renewed license fine. The rate of the penalty amount is different for different Emirates and Free Zones. The penalty will be applied every month or year. The license will be automatically cancelled if it is not renewed for five straight years.

Procedure to Freeze a License in the UAE

Here are a few things you should do apart from paying the fees. It includes -

  1. Issuing a letter on corporate letterhead requesting to freeze the license temporarily. The letter should contain details on the reasons and justifications behind the decision.
  2. Cancelling all employment visas
  3. Obtaining a confirmation letter from the Ministry of Human Resources and Emiratisation, mentioning that there are no sponsored people on your license. The letter must also confirm that labour restrictions are not imposed on the license.

In the case of Dubai Economic Department, the freezing fee of AED 2,000 per year along with AED 210 per each due month since license expiry date must be paid, after applying. A report from the inspection division in DED must also be submitted.

Once you plan to restart after the completion of the freeze period, the shareholders or manager must submit an application for renewal with a valid lease contract registered in Ejari at the Dubai Economic Department.

Nobody would like to close their company for reasons that could be sorted with time, so when you have the option to temporarily shut down your company and resume it once you are back on track, why not opt for it.

We at Commitbiz can help you in freezing your license in the UAE. Not just this, right from business incorporation to office space, we cover it all. Contact us today - we’d be happy to assist you.