Who Can Deregister for VAT in the UAE?

VAT deregistration in the UAE is the formal process of removing your VAT registration from the FTA when your company no longer qualifies for VAT registration or has ceased taxable activities. Deregistration relieves a company of VAT obligations like maintaining VAT records, filing VAT reports, and collecting VAT.

Who can deregister for VAT in the UAE?

Under certain criteria, the FTA allows VAT deregistration. The following are the main types of businesses qualifying for VAT deregistration:

• Companies under the necessary deregistration limit: You qualify for necessary VAT deregistration if your taxable imports and supplies in the last 12 months amount less than AED 187,500. Usually, this happens when company turnover drops significantly and the VAT registration basic requirement is no longer satisfied.
• Companies eligible for voluntary deregistration: Companies with taxable supply and imports under AED 375,000 (the necessary registration threshold) but more than AED 187,500 may apply for voluntary deregistration. Firms wishing to deregister for strategic reasons or before dropping below the statutory level will find this approach appropriate.
• Companies that have ceased their business or trade activity: Your firm needs to deregister if it has totally ceased trade or taxable activities. This is relevant for businesses that have ceased, sold their operations, or ceased taxable supply.
• Businesses undergoing legal form or ownership change, such as mergers, acquisitions, or restructuring, may have to deregister and re-register for VAT reasons. This ensures the VAT registration status matches the present legal and operational context.
• Other Terms set by the FTA: Under certain circumstances, noncompliance, corporate activity changes, or a request made upon review, the FTA might mandate deregistration.

When Should You Request VAT Deregistration?

Enterprises have 20 working days from the date to pursue FTA deregistration, in case:

• The firm no longer qualifies for mandatory registration.
• The firm stops all taxable sales.
• A legal shift calls for the company’s deregistration.

Step in the UAE VAT deregistration procedure

Step 1: Eligibility confirmation

• Look back over the last twelve months at your taxable imports and suppliers.
• Find out if your business has stopped taxable activities or undergone structural changes.

Step 2:  Prepare for Required Documents

• FTA website VAT deregistration application form.
• Certificate of tax registration.
• Records or financial statements showing a turnover below the necessary level.
• Should it be relevant, provide evidence of activity termination.
• Any other supporting papers the FTA requests.

Step 3: Apply online and sign into your FTA e-Services

• Complete and send the VAT deregistration application.
• Send the necessary documents and details.

Stage 4: FTA Review and Communication

• The FTA reviews your application and could call for further information or an audit.
• Answer any questions fast to avoid holdups.

Step 5: Pay debts and file your last VAT return

• Once authorized, send your last VAT return for the period until deregistration.
• Settle any outstanding VAT or, if required, pursue reimbursement.

Step Six: Get Deregistration Verification

• The FTA will verify the deregistration.
• Revise your company’s records and inform stakeholders as appropriate.

Key Issues and Best Practices

• Maintain precise recordkeeping: UAE tax law still requires you to keep VAT data for at least five years after deregistration.
• Inform vendors and customers: Tell your vendors and clients about your VAT deregistration to avoid problems with tax audits and billing.
• Careful Asset and Stock Control: Should you own assets or stock for which VAT was previously sought, you could have to think about VAT on these items during deregistration.
• Talk to a tax expert: The VAT regulations might be somewhat complex. Consulting a tax expert guarantees compliance and lets you maximize your VAT position.

Importance of Deregistering for VAT on Time

• Requests for late deregistration lead to FTA fines and penalties.
• You are still in charge of VAT files and payments even if you no longer qualify for registration.
• Noncompliance increases the likelihood of an FTA audit and investigation.

Seek the Expert Services of Top Tax Consultants in UAE 

VAT deregistration is essential for UAE companies to maintain compliance and avoid unnecessary tax liabilities. Understanding the eligibility criteria and following the correct procedures is essential whether due to reduced revenue, cessation of operations, or structural changes within the business. Contact us today and we shall be glad to assist you.