VAT Deregistration in the UAE

What is VAT Deregistration?

It refers to the process by which a business ceases to be registered for Value Added Tax (VAT) liabilities. This typically occurs when the total value of a company’s taxable transactions falls short of the threshold set by the tax authorities or when the business ceases trading altogether.

Once deregistered, the business ceases paying VAT on its sales and is no longer eligible for reclaiming VAT on its purchases, which may impact its financial operations. However, it also relieves the company from the administrative, financial, and legal liabilities of compliance with the local VAT regulations.

In general, VAT deregistration enables eligible taxable entities or companies to terminate their VAT registration together with the suspension of their Tax Registration Number (TRN). In the Emirates, this process is conducted exclusively through the web portal of the Federal Tax Authority (FTA), as well as the initial registration.

Eligibility Conditions for VAT Deregistration in the UAE

Obviously, the first condition for VAT deregistration for entities and individuals is being officially registered with the FTA for VAT in the first place. Other requirements for requesting VAT deregistration are the following:

1. A company or individual must initiate the VAT deregistration process if they cease to engage in the provision of VAT-taxable goods and services and do not anticipate any taxable transactions within the next 12 months. This also applies if the business is being terminated altogether.

2 A company or individual must initiate the VAT deregistration process if they are still conducting taxable transactions, but the total value of the VAT-taxable goods and services provided over the previous 12-month period has fallen short of AED 187,000, which is the Voluntary Registration Threshold. Also, this value must not go beyond this threshold again within the following 30-day period.

3. A company or individual may initiate the VAT deregistration process if they are still engaged in taxable transactions, but the total value of the VAT-taxable goods and services provided over the previous 12-month period has fallen short of AED 375,000, which is the Mandatory Registration Threshold. Also, this requires a calendar year having elapsed since the effective date of your voluntary VAT registration.

It should be remembered that voluntary VAT registration does not allow you to deregister for VAT within 12 calendar months after the registration date.

How to Deregister for VAT?

The step-by-step process of applying for VAT deregistration goes like this:

Step 1. Go to the FTA web portal and log in to your Taxable Person Account under your Tax Registration Number (TRN).

Step 2. Select the “De-register” option in the “Actions” menu of the VAT section.

Step 3. Pick your reason for VAT deregistration from the drop-down list:

• Company no longer provides taxable supplies
• Company provides taxable supplies, but their value is below the Voluntary Threshold
• Company provides taxable supplies, and their value goes beyond the Voluntary Threshold but falls short of the Mandatory Threshold
• Specify another reason

Step 4. Upload the necessary documents supporting your request for VAT deregistration

Step 5. Fill in your application form, review all the details, and submit the application.

Step 6. Wait for the FTA to review and approve your application. The waiting period typically lasts 20 workdays. Once it’s done, the application will receive the “Pre-approved” status.

Step 7. Submit your final VAT report to the FTA.

Step 8. Clear all outstanding debts to finalize VAT deregistration or file a claim for reimbursement.

Step 9. Once the deregistration process is over, download your Deregistration Certificate as confirmation from your e-Services account.

Important Considerations

The final VAT return and settlement of any tax due must be submitted no later than 28 days following the effective date of deregistration (i.e. the end of the last taxation period). Failure to deregister on time may lead to an initial penalty of AED 1,000, with additional monthly penalties of up to AED 10,000.

In the realm of business transactions, goods or services integrated into a company's operations could potentially be regarded as deemed supplies, necessitating their inclusion in the final VAT return.

Taxpayers are obligated to persist in submitting their VAT returns until the deregistration process receives official approval, ending with the issuance of the final VAT report.

Corporate VAT Support by Emirabiz

At Emirabiz, we offer all-around business support services, including those related to VAT. We can aid you in starting and managing a business in the UAE, as well as all the aspects of day-to-day operations, associated regulations, and the local business environment.

Our team provides the following VAT-related services:

• -VAT registration
• Consultancy on VAT and corporate tax
• VAT deregistration
• Filing of VAT returns

Our specialists can consult you on a plethora of business and VAT-related issues in relation to certain business activities, provided goods and services, different types of corporate structures, operational scopes, and other aspects.

Contact our team today and get a free consultation!