VAT deregistration in the UAE enables a taxable individual or business to cancel their VAT registration and suspend their Tax Registration Number (TRN). FTA VAT Deregistration is done online.
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Only businesses and individuals registered with the Federal Tax Authority (FTA) are eligible to deregister from VAT. The penalty for late VAT deregistration will be AED 10,000.
who must de-register for UAE VAT
A VAT-registered business or individual can only apply for VAT deregistration in the following circumstances:
If the business stops making taxable supplies and does not expect to make any taxable supplies over the next 12-month period then they must apply for VAT Deregistration.
If the business is still making taxable supplies but the value in the preceding 12 calendar months is less than the Voluntary Registration Threshold (AED 187,500) then they must apply for VAT Deregistration.
If the business is still making taxable supplies but the value in the previous 12 months was less than the Mandatory Registration Threshold (AED 375,000) and 12 months have passed since the date of registration if you were registered voluntarily then you may apply for VAT Deregistration.
Time Frame for VAT De-registration
A registrant must apply for VAT deregistration within 20 business days of the above-mentioned events occurring. By using their FTA portals, registrants can easily apply for VAT deregistration.
IMPORTANT: Please keep in mind that if you submit this de-registration form more than 20 business days after the Taxable Person is required to de-register, you will be subject to a late de-registration penalty of AED 10,000.
Companies that are closing must obtain a company liquidation letter from the government authorities before applying for VAT deregistration.
Reasons that lead to Deregistration from VAT in UAE:
Deregistration of your business from VAT in the UAE can occur for a variety of reasons, including the following:
Closing down the company and cancelling of trade license;
Suspension of business operations for the foreseeable future or for an extended length of time.
The level of business has decreased, resulting in the company's revenue falling below the VAT registration threshold set by law.
Who can Deregister from VAT?
There are criteria under which a VAT registrant MAY apply for deregistration and conditions under which they MUST apply for deregistration, according to the VAT Regulations. The following is a summary of the circumstances:
· If a business stops to make taxable supplies and does not anticipate to make any in the next 12 months, they must file for VAT Deregistration..
· If a business continues to make taxable supplies but the value in the previous 12 calendar months is less than the Voluntary Registration Threshold (AED 187,500), it must file for VAT Deregistration..
· If the business or a person are still making taxable supplies but the value in the previous 12 months was less than the Mandatory Registration Threshold (AED 375,000) and 12 months have passed since the date of registration if you were registered on a voluntary basis then they MAY apply for VAT Deregistration.
From above the importance of distinguishing scenarios where you can or need to apply for deregistration is evident and any non-compliance of the same can result in a penalty of AED 10,000/-.
Procedures for Deregistration from VAT:
Below is a brief summary of the procedures involved:
1. The "De-register" option on the VAT registrant's FTA portal dashboard can be used to submit a deregistration application (upon logging in). The following fields must be filled in on the deregistration form::
Reasons for VAT de-registration – This is a dropdown menu from which any of the below applicable reasons should be selected
Business no longer making taxable supplies
Business making taxable supplies, but below the Voluntary Threshold
Business making taxable supplies, above the Voluntary Threshold, but below the Mandatory Threshold
Other – please specify the reason
Please specify the details – This field can be used to fill in a detailed description as to why the deregistration application is being submitted
Please specify a preferred deregistration date for VAT – On needs to select an effective date for deregistration from VAT which can be the last date on which taxable supply was made or date of license cancellation etc.
Upload all the relevant supporting documents by clicking on ‘Choose Files’ – Relevant documents need to be uploaded such as
Letter stating the reason for deregistration from VAT
Turnover declaration letter showing of the monthly taxable supplied from the date of registration for VAT until the date of deregistration
Trade license cancellation letter (where the company is being closed)
2. The FTA will examine the application and the accompanying paperwork, and may request more documents or information if it thinks it essential. The VAT registrant's registered E-mail address will receive all communications from the Authority.
3. The status of the application will be changed to "Reviewed" once the FTA has completed its review procedure, and the VAT registrant will be able to submit a final VAT return and clear any outstanding FTA liabilities.
4. The registrant must click on the "De-register" option once the final VAT return has been submitted and any outstanding liabilities (if any) have been resolved. The status will be changed from "Reviewed" to "Pre-approved" after choosing the "De-register" option, and the VAT registration will receive an official email stating that the TRN has been canceled. It should be noted, however, that this does not imply that the FTA will issue a De-registration certificate immediately. Wait for FTA to finish its internal process before downloading a De-registration certificate from the VAT registrant's portal.
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