Value Added Tax has been deployed in the UAE making it obligatory
for the companies to comply with it. Surely, the business people are well aware
of the process to register. However, many people may not have any idea VAT
deregistration if they are closing their business or any other reason. For
example. If a company want TRN termination, it needs to cancel or deregister
VAT. The Federal Tax Authority deals
with all these matters but you have a complete understanding of the process
to ensure smooth execution of all steps.
There are several reasons why a business would opt to cancel
registration for VAT; However, the reason as to why your business will undergo
VAT deregistration in the UAE has to fall under conditions that are defined in the VAT
regulations in the country. The tax authority has the right in approving or
rejecting applications for deregistration for UAE VAT.
The article is aimed at providing a comprehensive guide from the
initial preparation to the final stage. So, keep reading!
What is VAT
Deregistration?
VAT Deregistration in UAE is an online process. Businesses and
individuals who are registered under the Federal Tax Authority (FTA) can
de-register from VAT in two situations:
·
If their turnover did not exceed AED 187,500
in the 12 months after registering with the FTA, they must apply for the VAT
Deregistration.
- If the business stops making taxable supplies then they have to apply for VAT deregistration.
- If a tax registrant applied for Voluntary registration on January 1, 2018 and after 12 months (on December 31, 2018) if the business has not made taxable supplies equal to AED 187,500, the business shall analyze and evaluate if it’s taxable supplies will exceed within the voluntary threshold (AED 187,500) in the next 30 days (ending January 30, 2019) then they can apply for VAT Deregistration in the next 20 days.
Eligibility
for VAT Deregistration
As per the current UAE VAT regulations that are set by the
country’s tax authority, Federal Tax Authority in UAE, a business has to follow
the conditions listed below in order to be eligible for VAT cancellation.
Mandatory VAT
Deregistration
Business stops dealing with taxable supplies; or The expenses or
supplies that are taxable in the previous year, as well as the future thirty
days don’t exceed the threshold for voluntary registration for VAT in UAE. If a VAT registered person fulfills the criteria stated above,
then it shouldn’t delay the application for VAT deregistration in order to
avoid fines and penalties.
As soon as a business becomes eligible to undergo VAT cancellation
in UAE, it should apply twenty business days or less from the event that has
caused the eligibility. The failure of a VAT-registered business to send an
application with the FTA within the available limit of time can cause financial
loss from fines and penalties for the late application.
Voluntary VAT
Deregistration
As per FTA set rules, a registered entity for VAT in UAE can
deregister voluntarily if it meets any of the following:
It is dealing with taxable supplies (goods and services); however,
for the past twelve calendar months, all taxable supplies have failed to reach
the threshold for mandatory VAT registration in UAE, which is currently at Dh
375,000;
The business can deregister if twelve calendar months already
passed since it registered with the tax authority under voluntary registration
for VAT In such case, the registered entity can apply for the VAT
deregistration.
The time limit for the submission of an application for voluntary VAT
deregistration As such, there’s no specific deadline that has to be met to
apply for deregistration for VAT (voluntarily) with the Federal Tax Authority.
Process for
VAT cancellation
As soon as the business has come up with a justified reason for
sending an application for VAT deregistration in UAE, it can then supply the
information to the tax authority. The application that is sent to the FTA
should also come with clearances, such as:
- Any outstanding tax against the VAT-registered business
- Any fines or administrative penalties that are paid in full;
Returns being
filed
If the VAT registered business fails in applying on time, the
fines for the late application also have to be cleared along with the other
liabilities of the business.
VAT
Deregistration Penalty
The penalty for the failure in submitting an application for
mandatory VAT deregistration in UAE within the stipulated deadline or time the frame is Dh 10,000.
Subsequent to the submission of application for VAT deregistration
Subsequent to the furnishing of VAT deregistration application
along with the necessary reasons and details to the tax authority, the
applicant for VAT deregistration will get a notification from the FTA
confirming the submission.
After the FTA’s notification for application submission, it will
then scrutinize the reasons for the application which is why it is extremely
important to supply proof and evidence the business has to make it eligible for
cancellation. Also, pending penalties, returns status, and tax payments will be
reviewed.
Unable to deal with the process? Hire VAT Agents in UAE
As it is at the discretion of the Federal Tax Authority to approve
or reject applications for VAT deregistration, you would want your application
to have a great chance to complete the process. This is exactly where VAT
consultancy firms in the UAE can help you. We will not only advise you on
what to do, but regulated tax agents will also implement the entire VAT
cancellation procedure for you!
Comments
Post a Comment