VAT De-Registration Process

The recently released executive regulations on value added tax (VAT) make clear how a business might deregister itself from paying taxes.

 Why De-Register?

Voluntary reasons for deregistration include dropping below the threshold of Dh375,000 in annual revenue, if it closes down or no longer trades in taxable goods or supplies.

Mandatory deregistration can also occur. If a company doesn’t voluntarily deregister, the Federal Tax Authority (FTA) may cancel a company’s VAT number because it has stopped making taxable supplies, with no plans to do so in the future.

 The Process

According to the executive regulations, released last week, the registrant must apply to the FTA for deregistration if it meets any of the cases set out in August’s Federal Decree-Law, some of which are listed above, within 20 business days of any of them taking place.

If the deregistration application is approved, the FTA will cancel the tax registration of the company with effect from the last day of the tax period during which the company met the conditions for deregistration.

All outstanding taxes, returns, and administrative penalties must be paid before deregistration can occur, according to the executive regulations.

Tax groups may also be deregistered if they no longer meet the requirements to be considered a group, if the companies are no longer associated on financial terms, or if the FTA believes that continued tax group status would lead to tax evasion.