VAT Deregistration in UAE
Generally, the termination of VAT registration is called VAT Deregistration. However, in the UAE, De-registration of VAT is when a business cancels its VAT registration with the Federal Tax Authority (FTA). There could be various reasons, why a previously taxed business or an individual can opt for cancelling their registration for VAT in UAE. Such reasons are needed to fall under the conditions defined by the Law related to VAT. Unless the reasons are valid and the conditions are fulfilled, the FTA might disapprove the application to deregistration.
For taxable individuals and businesses, VAT deregistration process is as important as it is to register for a VAT. Businessmen must know the rules and process for VAT cancellation in UAE, as administrative penalties will be imposed upon failure to file an application within the timeframe specified in the tax law.
Eligibility for VAT Deregistration
As per the law defined under the regulations of FTA, the following eligibility is must apply for VAT Deregistration in UAE.
Mandatory Deregistering VAT:
Under the rules such an individual or a business which,
- Stops dealing in taxable goods and services OR,
- The taxable supplies or expenses in the previous 12 months and the future 30 days do not exceed the voluntary registration threshold (i.e. AED.187,500.)
If a business or an individual who was registered as a taxpayer with FTA, fulfills to these criteria, it must not delay applying for de-registration of VAT to avoid any penalties.
The time limit:
Once an FTA registered entity becomes eligible for VAT deregistration under this criterion, they have a time limit of only 20 business days from the event causing such eligibility. Failing to apply within the available time will cause financial loss due to fines as a penalty for late application.
Voluntary Deregistering VAT:
Under the rules of FTA any individual or business, registered for VAT, if:
- Is still dealing with the taxable services and goods, but for the past 12 calendar months the supplies or expenses were under the mandatory VAT registration threshold (i.e. AED. 375,000.) AND,
- 12 calendar months have passed since the entity was registered with FTA under voluntary registration.
In this situation, the taxed entity may apply for Voluntary de-registration of VAT. There is no limitation for any number of days to apply for FTA deregistration.
How to Cancel Vat Registration In UAE?
De-registering for VAT is a simple process. It involves the following steps:
Step 1: Visit the FTA VAT portal and sign in.
Step 2: Click on the de-register button against the VAT registration on the dashboard
Step 3: The taxable person details are already filled in the VAT de-registration application
Step 4: Select your reason for VAT de-registration from the drop-down options
- Businesses no longer making taxable supplies
- Businesses making taxable supplies, but below the Voluntary Threshold
- Businesses making taxable supplies, above the Voluntary Threshold, but below the Mandatory Threshold
- Other – please specify the reason
Step 5: The effective date from which the person is eligible to de-register depends on the de-registration.
Step 6: Click on Choose Files and upload all supporting documents
Step 7: Check and affirm the authorized signature and declaration part of the application form before submitting it.
Step 8: Next, FTA will review the application, and if confirmed the status will be changed to “Pre-approved.
Step 9: Finally, the business has to submit its VAT return filing and clear all its outstanding liabilities to complete the VAT De-registration procedure.
After Submission of Application
When the online form is completed after providing all the details and reasons, it is to be submitted electronically. The applicant deregistering for VAT will get SMS confirmation on their registered number for submission.
The FTA will analyze the application for the reasons provided along with the status of returns, and any pending penalties, or tax payments. If everything is according to the rules and regulations of FTA without any errors, the application will be approved and VAT Registration will be canceled.
The FTA will de-register VAT, effective from the ending date of the last tax period when the taxed entity became eligible for cancellation of VAT.
VAT Deregistration Process for Groups
The process for the Deregistration of VAT in UAE for the groups is the same as that of individuals. The difference is in the criteria specified for Groups that were registered for VAT.
In addition to other requirements being fulfilled, the groups need to have the following reasons become valid for them to get their VAT registration canceled:
- FTA will approve the cancellation of VAT registration for a group if the registered entity no longer meets the requirement to be considered as a group.
- FTA can also approve the VAT deregistration for the group if the companies in the group are no more financially associated with the group.
- FTA can also take the initiative to cancel the VAT registration of a group if it foresees the tax status as a group can result in any sort of tax evasion.
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