A Comprehensive VAT Deregistration Guide For UAE Businesses


A Comprehensive VAT Deregistration Guide For UAE Businesses

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!


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