VAT De-Registeration in UAE
VAT De-Registeration in UAE
VAT de-registration, often referred to as cancellation or termination of VAT registration, occurs when a business needs to cancel its VAT registration with the UAE Federal Tax Authority (FTA). VAT de-registration in the UAE can only be approved by the FTA if the termination reasons are valid and the necessary conditions are met according to the law.
Businesses in the UAE can apply for VAT de-registration if their turnover did not exceed AED 187,000 in the first 12 months after registration or if the business ceases to produce taxable supplies. Understanding the de-registration process is crucial to ensure compliance and avoid any potential penalties.
De-Registeration for VAT
VAT deregistration in the UAE is an online process conducted through the FTA portal. However, businesses that cease operations must obtain a company liquidation letter from government authorities before applying for VAT deregistration. Aebiaccountax provides seamless VAT deregistration services in Dubai and across the UAE, assisting businesses in canceling their VAT registrations efficiently.
Recently, the FTA announced that companies can opt for deregistration based on certain conditions outlined in the Federal Decree-Law No. 8 of 2017. VAT deregistration in the UAE allows businesses to withdraw from paying taxes, either voluntarily or mandatorily.
Once the VAT deregistration application is submitted to the FTA, the authority will review it and cancel the VAT number if the business has complied with the law. If the reasons for deregistration are not valid or the conditions are not met, the FTA may reject the application.
The FTA emphasizes that the UAE tax system relies on voluntary compliance by taxable persons concerning registration, filing tax returns, and payment of due taxes, including deregistration. Therefore, companies can apply for deregistration either voluntarily or mandatorily, as detailed below:
VAT Registration Processes
Basically, a business can opt for any of the two types of VAT registration in UAE:
A company can go forward with mandatory deregistration procedure: –
- If the company no longer makes revenue of AED 375,000.
- If the company doesn’t supply any taxable goods.
As per Article 17, a Registrant cannot apply for VAT Deregistration within 12 months of the date of
Tax Registration.
A company can go forward with voluntary deregistration procedure: –
- If it has completed 12 months of the date of Tax Registration.
- If it does no longer supply the goods that are taxable.
- If its annual turnover is below AED 187,500 even after supplying taxable goods.
- If its total value of the anticipated taxable supplies or expenses subject to tax in the coming 30-days period will not exceed the voluntary registration threshold.
- If the company is closed forever.
Calculating the Tax Registration Threshold
As per the Federal Decree-Law No. (8) of 2017 on Value Added Tax, to determine whether a person has exceeded the Mandatory Registration Threshold and the Voluntary Registration Threshold, the following details will be considered:
- The value of Taxable Goods and Services
- The value of Concerned Goods and Concerned Services received by the Person
- The value of the whole or relevant part of Taxable Supplies that belong to said Person if he has, wholly or partly, acquired a business from another person who made the supplies.
- The value of Taxable Supplies made by related parties in accordance with the cases stated in the Executive Regulation of this Decree-Law.
VAT De-Registration for Group
FTA will approve the cancellation of VAT registration for a group: –
- If the registered business no longer meets the requirement to be considered as a group.
- If the companies in the group are no more financially associated with the group.
- If it foreknows the tax status as a group can result in any sort of tax evasion.
Once the deregistration number is approved, the authorities will cancel the VAT number issued on registration. If any company wishes to reregister, they can fill the registration form once again, and a new VAT number will be issued to them.
Situations for disapproval of the application
The registrants will not be de-registered if,
- It fails to submit the application within 20 business days.
- It has not paid all due taxes and administrative penalties.
- It has not filed all required tax returns for the period in which they were registered.
Failure to submit the de-registration application within the period specified in the tax legislation will lead to the imposition of administrative penalties of Dh 10,000 as stipulated in the Cabinet Resolution No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE.
How to Submit Deregistration Form?
- Fulfil all the criteria to deregister for VAT in UAE.
- Log in to the VAT Account on FTA Portal.
- Fill the VAT deregistration form along with the details and the reason for the VAT deregistration.
- Receive SMS confirmation on the registered number for submission.
- Submit the form electronically.
After the successful submission, you will find the application status as “Pre-Approved.” It will be “Approved” only when you clear all the liabilities.
If you have any plan to continue your business or you are waiting for any new investor, it is not advisable to move forward with the VAT cancellation process. If such a situation arises, better keep the TRN, and file the tax return as ZERO if the company expect a good return within the next twelve months period.
Why Aebiaccountax?
Aebiaccountax is a dedicated team of highly skilled accountants specializing in VAT deregistration services. Our expert VAT consultants provide cost-effective solutions tailored to your business needs, ensuring compliance with local regulations throughout the deregistration process. We assist you in navigating the VAT deregistration procedure, managing all necessary documentation and requirements to ensure a smooth cancellation of your VAT registration with the government.
In addition to VAT deregistration, Aebiaccountax offers a comprehensive range of business-related services, including CFO services, internal and external audit services, free zone audits, and more, all designed to support your business requirements.
Feel free to contact us for a one-hour consultation, where our experts will address your VAT deregistration queries and provide tailored solutions to meet your business needs.