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It is common for businesses to de-register for VAT with the UAE Federal Tax Authority, also known as cancelation or termination of VAT registration. Only the FTA can approve a VAT deregistration in the UAE if the reasons for termination are valid and the necessary conditions are met. Upon registering with the FTA for the first time, businesses that do not exceed AED 187,00 in their first 12 months of operation or cease making taxable supplies can deregister from the VAT case.
VAT Deregistration
Through the FTA portal, the VAT Deregistration procedure in UAE can be conducted online. Businesses that cease to operate, however, must obtain a letter of liquidation from the government to be deregistered from VAT.
Businesses in the UAE can deregister from paying VAT either voluntarily or mandatorily through VAT de-registration.
As soon as the FTA receives the application for VAT deregistration in the UAE, it will verify the application, and if the requirement has been met, it will cancel the VAT number for the entity. The FTA may reject the deregistration application if the reasons or conditions are invalid.
Who must de-register for UAE VAT?
If your taxable turnover is less than AED 187,500 or you have stopped conducting business, you must mandatorily deregister for VAT. In another case if the business makes taxable supplies over the past 12 months period that exceed the voluntary VAT registration threshold limit of AED 187,500 but is below the mandatory VAT registration threshold limit of AED 375,000, you may choose to deregister your business on a voluntary basis.
What is the eligibility for VAT Deregistration?
According to FTA regulations, you can determine your eligibility for VAT Deregistration in UAE by following the steps below:
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The FTA must be notified by submitting a VAT deregistration application when:
- The business no longer makes taxable supplies.
- The business has made taxable supplies in the past 12 consecutive months, but it is below the voluntary VAT registration threshold of AED 187,500.
- Other reasons impact the ongoing business operations, and the registrant is no longer eligible for FTA registration for VAT purposes.
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It is possible for businesses that have made taxable supplies over the past 12 months to apply for VAT deregistration voluntarily if they are above the voluntary VAT registration threshold limit of AED 187,500 but below the mandatory registration threshold limit of AED 375,000.
How to Cancel Vat Registration In UAE ?
Article 21 of the VAT Law requires you to deregister with the FTA within 20 business days of the date the event occurs, which requires you to do so.
What happens After the Submission of the Application for vat deregistration?
Once a successful submission has been made, your application status will change to "Pre-Approved." However, once all outstanding liabilities have been cleared and final return has been submitted, the status will change to "Approved." The VAT Deregistration process will then be complete.
What is the Time Frame for VAT De-registration?
In accordance with Article 21 of the VAT Law, you must apply for deregistration from VAT within 20 business days of the date of the event that requires you to deregister with the FTA.
How to apply for FTA VAT De-registration UAE?
Regarding FTA VAT de-registration in the UAE, following the correct procedure and submitting all the required documentation to the Federal Tax Authority (FTA) is essential. However, the process can be complex and varies depending on the circumstances of your business, so it's advisable to seek the assistance of a professional auditing firm like AMCA Auditing. They can provide the necessary guidance and support to ensure you complete the process accurately and efficiently.
Voluntary Deregistration
VAT Deregistration can only be requested by Registrants within 12 months of the deregistration date stipulated in Article 17
A company can go forward with a voluntary deregistration procedure: -
- Tax registration must have been completed within 12 months of the date of registration.
- If the taxable goods are no longer supplied.
- After supplying taxable goods, the company's annual turnover is still below AED 187,500.
- It is not anticipated that the total value of the taxable supplies or expenses within the upcoming 30-day period exceeds the voluntary registration threshold.
- In the event that the company is permanently closed.
Mandatory Deregistration
The following procedures can be followed for mandatory deregistration: -
- AED 375,000 in revenue if the company ceases to exist.
- A company may not provide taxable goods if it does not provide taxable goods.
VAT Deregistration for Groups
In order to cancel a VAT registration for a group, the FTA must approve the following: -
- The registered business is not considered a group if it ceases to meet the requirements to participate.
- A company in the group no longer has a financial relationship with it.
- Tax evasion is possible in any situation where the group knows its tax status.
The VAT number issued on registration will be cancelled once the deregistration number is approved. The registration form can be filled out again by any company wishing to reregister, and a new VAT number will be issued.
Applications disapproved in certain situations
There will be no de-registration of registrants if,
- The application is not submitted within 20 business days.
- Taxes and penalties due have not been paid.
- Taxes for the period when they were registered have not yet been filed.
In the event that the deregistration application is not submitted within the required time frame, an administrative penalty of Dh 10,000 will be imposed pursuant to Cabinet Resolution 40 of 2017 on Administrative Penalties for Violations of UAE Tax Laws.
It is not advisable to move forward with the VAT cancellation process if you intend to continue your business or if you are trying to find an investor. As such, if the company expects to make a reasonable return within the next twelve months, keep the TRN and file the tax return as ZERO.
Do you need assistance with deregistration through AMCA?
Accordance with the Emirati VAT laws, AMCA offers expert services of VAT Deregistration in UAE. AMCA analyzes all possible reasons for deregistration and simplifies the process. To streamline the deregistration process, AMCA evaluates your business activities and looks into deregistration options.
We would be happy to discuss with you any questions or concerns regarding UAE VAT De-registration or your business in general. AMCA looks forward to hearing from you!
Frequently Asked Questions
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Are VAT refunds available to foreign businesses?
Yes, foreign businesses are eligible for VAT refunds under certain circumstances.
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Are there going to be any penalties imposed?
Yes, Penalties will be imposed for non-compliance.
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Is VAT applicable to tourists?
Yes. However, they can claim VAT refunds at the airport at the end of their trip (subject to certain conditions).