VAT De-Registration

In General term, the termination of TRN issued as a result of VAT registration is called VAT de-registration. However, in the UAE, for de-registration of VAT a business need to cancel its VAT registration with the Federal Tax Authority (FTA). There could be several reasons that a previously taxed business is opting for cancelling their registration for VAT in UAE but the reason should fall under the conditions defined in prevailing VAT laws. FTA reserves the right to approve or disapprove the application for de-registration.

VAT de-registration in UAE is as important as VAT registration in UAE. Registrant must be aware of prevailing UAE VAT laws, rules and processes to ensure timely application of VAT de-registration in UAE with in stipulated time frame as may be specified in the UAE VAT Law to avoid penalties.

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    ELIGIBILITY FOR VAT DEREGISTRATION:

    As per the prevailing UAE VAT law as defined under the regulations of FTA, one meeting following conditions must apply for VAT Deregistration in UAE.

    Mandatory Deregistering VAT:

    Under the rules of FTA any registered entity registered for VAT which,

    • Stops dealing in taxable goods and services OR,
    • The taxable supplies or expenses in the previous 12 months and the future 30 days do not exceed the voluntary registration threshold (i.e. AED.187,500.)

    If FTA registered entity who has been registered as tax payer with FTA, fulfils above stated criteria, it should not delay in applying for deregistration of VAT to avoid any penalties.

    Time limit for making an Application:

    Once registrant becomes eligible for VAT deregistration under the above stated criteria, they should apply within 20 business days from the event causing such eligibility. Failing to apply within the available time will cause financial loss due to fines as a penalty for late application.

    Once an FTA registered entity meet the criteria for VAT deregistration as stated above, they have a time limit of only 20 business days from the event causing such eligibility to apply for deregistration. Failing to apply within the available time will cause financial loss due to fines as a penalty for late application.

    Voluntary Deregistering VAT:

    Under the rules of FTA any registered entity, registered for VAT, if:

    • Is still dealing with the taxable services and goods, but for the past 12 calendar months the supplies or expenses were falling below the mandatory VAT registration threshold (i.e. AED. 375,000.) AND,
    • 12 calendar months have been passed since the entity was registered with FTA under voluntary registration.

    In such situation, the registered taxed entity may apply for Voluntary deregistration of VAT.

     

    Time limit for making an Application:

    As such there is no specific time line for any specific number of days to apply with FTA for deregistration.

    Once an FTA registered entity justifies the criteria to deregister from VAT in UAE as provided in the VAT Law, they can do so by logging into their VAT Account on FTA Portal. After login in, through VAT DEREGISTRATION FORM UAE you can provide with the details along with the reason for the VAT deregistration. Some information will already be populated into form from the earlier registration data provided at the time of initial application for UAE VAT registration.

    FTA UAE reserves the right to approve or reject the application for deregistration from VAT based on the data and information provided by the registrant along with the following clearance:

    • Outstanding Taxes against the entity.
    • Returns being filed.
    • Any Administrative Penalties have been paid in full.

     

    If the registrant fails to apply for deregistration from VAT in UAE, Late submission can also be made for approval from FTA to deregister VAT. However clearance of all the liabilities along with the late submission penalty would be mandatory.

    Despite the fact that application for VAT deregistration filled with all the valid reasons, the approval status from FTA may reflect as “Pre-Approved” and will only be Approved post clearance of all these liabilities.

     

    VAT Deregistration Penalty

    The penalty to fail in applying for a mandatory de-registration of VAT within the stipulated timeframe i.e. within 20 business days, from the occurrence of the events causing the tax payer entity to get eligible for VAT deregistration, is AED.10,000.

    SUBSEQUENT TO SUBMISSION OF VAT DEREGISTRATION APPLICATION

    Subsequent to submission of online form along with the required details and reasons electronically, the applicant deregistering for VAT will get an SMS confirmation on their registered number confirming the submission.

    After submission of application the FTA will scrutinize the application for the reasons provided along with the returns status, pending penalties or tax payments (if any).

    Once the application is scrutinized and meet the clearance criteria, the FTA will deregister the registrant entity from VAT, effective from the ending date of the last tax period when the taxed entity became eligible for cancellation of VAT.

    VAT DEREGISTRATION FOR GROUPS

    The process for Deregistration of VAT in UAE for the groups is the same as that for individual entity. The difference is in the criteria specified for Groups that were registered for VAT.

    In addition to other requirements being fulfilled, FTA may approve the cancellation of their VAT registration if the groups have the following conditions become valid for them:

    • The registered entity no longer meets the requirement to be considered as a group.
    • The companies in the group are no more financially associated with the group.

    FTA can also take the initiative to cancel the VAT registration of a group if it foresees the tax status as a group can result in any sort of tax evasion.

    Once the application is scrutinized and meet the clearance criteria, the FTA will deregister the registrant entity from VAT, effective from the ending date of the last tax period when the taxed entity became eligible for cancellation of VAT.

    How can we help you?

    Protax Business Consultants are engaged in rendering following services under Tax Services:

    1. VAT Implementation Services
    2. VAT Return Filing
    3. VAT Compliance Review
    4. VAT Consultancy Services
    5. Tax Agent Service
    6. VAT Training Seminar to the business owners, businesses & consultants, and;
    7. VATderegistration Services in all the Seven States of UAE (Emirates Dubai, Abu Dhabi, Sharjah, Ajman, Fujairah, Ras Al Khaima, Um-Al-Quwain)

    In addition to other requirements being fulfilled, FTA may approve the cancellation of their VAT registration if the groups have the following conditions become valid for them:

    • The registered entity no longer meets the requirement to be considered as a group.
    • The companies in the group are no more financially associated with the group.

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