VAT De-registration Services in UAE
VAT De-registration : An Introduction
VAT Deregistration refers to the process of canceling a business’s VAT registration. Post VAT Deregistration, a business no longer need to collect and pay VAT on its supplies. In the dynamic business environment of the UAE, understanding and adhering to VAT regulations is paramount for effectiveness of every enterprise’s tax compliance. VAT deregistration, an important aspect of these regulations, often goes unnoticed but is equally critical as VAT registration. This process is applicable on businesses that no longer meet the VAT registration threshold or have ceased to make taxable supplies.
It’s not just about deregistering; it’s about understanding when and why this is necessary for maintaining regulatory compliance and avoiding hefty penalties for non-compliance. Whether you’re scaling down operations or shifting business focus, staying informed about VAT De-registration is key to ensuring seamless tax compliance in accordance with UAE tax laws.
Who needs to De-register from UAE VAT ?
As per the VAT Decree Law (Federal Decree-Law No. 18 of 2022 – Issued 26 Sep 2022) read with VAT Executive Regulations (Cabinet Decision No. 99 of 2022 – Issued 21 Oct 2022), below are relevant provision explaining when a business may or shall apply for VAT de-registration.
From combined reading of the VAT Decree Law and VAT Executive Regulations we can conclude that VAT de-registration can either be mandatory or can also be done voluntarily. Let’s understand both the cases in detail.
CASE 1 : Mandatory VAT Deregistration
Mandatory VAT Deregistration is a situation whereby a VAT registered business is legally obligated to apply for deregistration from VAT. This can happen if any of the below two conditions are satisfied :
- If he stops making Taxable Supplies : That is when the business is officially closed or when the business model is changed to a model whereby only exempt or out of scope supplies will be made by that business moving forward. OR
- If the value of the Taxable Supplies is less than AED 187.5K : That is when the taxable supplies for the last 12 months are under AED 187.5K, and it is projected that within the next 30 days, the value of taxable supplies or expenses too will not be more than AED 187.5K.
CASE 2 : Voluntary VAT Deregistration
Voluntary VAT Deregistration is a situation whereby a VAT registered business although not loegally obligated but decides to de-register from UAE VAT. A VAT Registered business can only voluntarily apply to deregister from VAT if the value of his Taxable Supplies in the past 12 months is less than AED 375,000.
A business that has voluntarily applied for VAT Registration, cannot apply for VAT De-registration within 12 Months from the date of its registration.