Since the introduction of VAT every business in the UAE has been oriented towards the importance of VAT registration with the Federal Tax Authority (FTA). However, companies also need to have an in-depth understanding of when and under what situations they must deregister their businesses from VAT. If not they could face administrative penalties for late filing of deregistration applications.

VAT deregistration, also known as cancellation or termination of VAT registration, is a process where the registered company is required to cancel their VAT registration with the FTA. The deregistration process is mandatory when the taxable company ceases its operations, or the threshold level of VAT registration is no longer met.

Eligibility for VAT Deregistration

According to FTA set rules, VAT registered businesses in UAE would be required to obligatorily deregister from VAT if they are not making any taxable supplies or having average supplies of under AED 187, 500 within a year (12 months).

In short, a company needs to go ahead with deregistration if the following conditions are met:

• If 12 months have passed from the date of Tax Registration and its annual turnover is yet below AED 187,500 on taxable goods supply.
• If it has ceased sales of its taxable supplies.
• If its total value of the anticipated taxable supplies or expenses subject to tax in the coming 30-days period will not exceed the registration threshold.
• If the company has closed completely.

Deregistration process

The procedure to cancel can be done online through the FTA portal. The application for deregistration is to be submitted within the next 20 days after the completion of the tax year. Once the business applies for VAT deregistration along with supporting documents, FTA will cancel the registration after verifying all documents.

However, under below circumstances, FTA will refuse to de-register the firm:

• If the company fails to submit the application within 20 business days.
• If supporting documents of proof are not sufficing the evidence.
• If taxes and administrative penalties are unpaid.
• All the stipulated tax returns for the period for the registered period were not filed.

Failure to submit the VAT Deregistration application within the timeframe would attract a penalty of AED 10,000 as per Cabinet Resolution No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE.

Submitting Deregistration Application

Login to the FTA portal. On the home page click on the ‘De-Registration’ option. Fill in the VAT Deregistration form with the correct information and send it to the authorities to review and approve the VAT Deregistration.

• Log in to your VAT Account on FTA Portal .
• Fill in the VAT deregistration form along with the specific reasons for the VAT deregistration.
• Select the preferred date for deregistration.
• Fulfill all criteria by uploading the supporting documents of proof.
• Submit the form electronically.
• Receive SMS confirmation on the registered number.

After the successful submission, your application status will turn to “Pre-Approved”. Once the business clears all outstanding liabilities it will change to “Approved”. This then completes the VAT Deregistration process.

Contact us to cancel your VAT Registration

Our tax agents can help you fulfil all VAT-related requirements on time and prevent your firm from incurring penalties. From VAT registration, accounting, returns filing, and cancellation we can help you through the entire process. We will ensure that your business avoids all kinds of headaches with timely submissions. This will also give you peace of mind that your business is fully tax compliant and you can focus on your main business activities.

For more information feel free to contact us on any aspect related to tax in the UAE.