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Vat Deregistration in the UAE What You Should Know

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VAT Deregistration of the UAE VAT System is undoubtedly one of the overlooked aspects. The requirements to deregister your Tax Registration Number as per the VAT Legislation are quite definite and need diligent interpretation and proper supervision.

In fact, deregistration is as important as VAT registration and taxpayers should have a proper clarity of the situation or will face a penalty for late application for VAT deregistration. In brief, when a taxpayer becomes eligible for VAT deregistration, he or she must apply for deregistration within 20 business days. If you fail to apply for deregistration, you will have to pay a penalty of AED 10,000.

What is VAT Deregistration in the UAE?

VAT deregistration is a procedure in which registered businesses must cancel their FTA VAT registration. When a taxable business ends operations or the need for VAT registration is no longer required, it is mandatory to undergo the deregistration process. Taxable firms must apply for VAT deregistration, and FTA will cancel the registration after the application and the necessary documents are submitted. Taxable companies must be aware of all VAT deregistration procedures, as failing to do so will result in administrative fines. To register for VAT deregistration on time and avoid fines, get experienced assistance from the best VAT consultation services in Dubai, UAE.

Eligibility for VAT Deregistration

Registered businesses that no longer engage in taxable supplies can appeal to the FTA for tax deregistration. VAT registered businesses are also entitled to voluntary deregistration if the profit of taxable products and services falls below the recommended threshold of AED 375,000 but above the voluntary threshold of AED 187,500. However, if the company's taxable supplies fall under the voluntary threshold, the business must mandatorily deregister from VAT.

Following the FTA regulations, the companies are subjected to two types of VAT deregistration. In the first type, companies can seek voluntary VAT deregistration. In the second type, VAT deregistration is compulsory where the FTA itself cancels the VAT registration of the companies eligible for deregistration.

Be it voluntary or compulsory, the companies must appreciate the requirements and eligibility norms for the deregistration procedure. Businesses must outsource their tax services to the best VAT consultation firms in the UAE to gain a thorough understanding of each of these regulations.

Compulsory VAT Deregistration

When the taxable supply is less than the voluntary registration threshold limit, registered businesses are eligible for compulsory VAT deregistration. In such instances, the business must seek VAT de-registration mandatorily.

Voluntary VAT deregistration

If taxable supplies for the previous 12 months do not surpass the compulsory VAT registration limit of AED 375, 000 but do surpass the voluntary registration limit of AED 187,500, companies can opt for voluntary VAT deregistration.

How to deregister for VAT in the UAE?

Companies who wish for VAT deregistration must apply to the FTA. The necessary information and the cause for deregistration must also be provided. The FTA will confirm the reason for the voluntary deregistration, and if it’s valid, the authority will authorize it. In addition, the FTA will also check the following:

Status of returns
Outstanding tax payments
Any pending penalties

If the reason is valid, you can seek a pre-approval for VAT deregistration. However, the final approval will only be done after the pending payments are cleared.

Deregistration for VAT Groups

The criteria for VAT deregistration of VAT groups are similar to those for individual taxable companies. However, the VAT groups must meet certain additional criteria before applying for deregistration:

If the group no longer fits the requirements to be deemed as a VAT group, VAT deregistration will be allowed.
If the constituent member companies are no longer financially linked with the group, the group will be allowed deregistration.
If the FTA believes the group's tax status would lead to tax avoidance, deregistration will be permitted.

VAT Consultants in the UAE

There are various reasons why taxable companies in the UAE apply to the FTA to have their VAT registrations cancelled. This includes stopping manufacturing taxable supplies or ceasing its operations entirely. In such cases, the companies must apply for VAT deregistration.

The VAT registered companies must know when and how to cancel their VAT registration. Here is when VAT consultancy services like Alchemist Accounting comes into the picture. We are well-qualified and have years of experience. Our exemplary services can be seen in the client testimonials available on our website.

Alchemist Accounting provides services such as VAT Registration, filing of VAT returns as per the FTA guidelines and VAT deregistration. We help our clients with VAT-related requirements on time thus helping them avoid fines and allowing them to do business with peace of mind.