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Guide on Deregistration of VAT or Cancelling VAT Registration in UAE

In general, TRN termination in UAE is the result of VAT deregistration or cancellation. In order to deregister for VAT, the business has to cancel the registration with the FTA or Federal Tax Authority. There are several reasons why a business would opt to cancel registration for VAT; However, the reason as to why your business will undergo VAT deregistration in UAE has to fall under conditions that are defined in VAT regulations in the country. The tax authority hast the right in approving or rejecting applications for deregistration for UAE VAT.

UAE VAT deregistration is as crucial as the process undergone by businesses in order for them to be VAT registered. A registrant has to be aware of all prevailing VAT legislation, as mentioned earlier, in order to ensure a timely application for VAT cancellation in UAE. There is a stipulated time frame wherein a business can choose to deregister without acquiring any  VAT penalties.

VAT Deregistration Eligibility

As per the current UAE VAT regulations that are set by the country’s tax authority, Federal Tax Authority in UAE, a business has to follow the conditions listed below in order to be eligible for VAT cancellation.

Mandatory VAT Deregistration

  • Business stops dealing with taxable supplies; or
  • The expenses or supplies that are taxable in the previous year, as well as the future thirty days don’t exceed the threshold for voluntary registration for VAT in UAE

If a VAT registered person fulfills the criteria stated above, then it shouldn’t delay the application for deregistering VAT in order to avoid fines and penalties.

Time limit for the submission of VAT Deregistration application (mandatory)

As soon as a business becomes eligible to undergo cancellation of VAT registration, it should apply twenty business days or less from the event that has caused the eligibility. The failure of a VAT-registered business to send an application with the FTA within the available limit of time can cause financial loss from fines and penalties for the late application.

Voluntary VAT Deregistration

As per FTA set rules, a registered entity for VAT in UAE can deregister voluntarily if it meets any of the following:

  • It is dealing with taxable supplies (goods and services); however, for the past twelve calendar months, all taxable supplies have failed to reach the threshold for mandatory VAT registration in UAE, which is currently at Dh 375,000;
  • The business can deregister if twelve calendar months already passed since it registered with the tax authority under voluntary registration for VAT

 In such case, the registered entity can apply for the VAT deregistration.

Time limit for the submission of an application for voluntary VAT deregistration

As such, there’s no specific deadline that has to be met to apply for deregistration for VAT (voluntarily) with the Federal Tax Authority.

Process for VAT Cancellation

As soon as the business has come up with justified reason for sending an application for VAT deregistration in UAE, it can then supply the information to the tax authority. The application that is sent to the FTA should also come with clearances, such as:

  • Any outstanding tax against the VAT-registered business;
  • Any fines or administrative penalties that are paid in full;
  • Returns being filed

If the VAT registered business fails in applying on time, the fines for late application also have to be cleared along with the other liabilities of the business.

VAT Deregistration Penalty

The penalty for the failure in submitting an application for mandatory VAT deregistration in UAE within the stipulated deadline or time frame is Dh 10,000.

Subsequent to the Submission of Application for VAT Deregistration

Subsequent to the furnishing of VAT deregistration application along with the necessary reasons and details to the tax authority, the applicant for VAT deregistration will get a notification from the FTA confirming the submission.

After the FTA’s notification for application submission, it will then scrutinize the reasons for the application which is why it is extremely important to supply proof and evidence the business has to make it eligible for cancellation. Also, pending penalties, returns status, and tax payments will be reviewed.

How We Can Help - Regulated Tax Agents in UAE

With our regulated tax agents in UAE, we can provide you with all the necessary information and guidance to complete the process.

We also render the following services that are related to VAT:

As it is in the discretion of the Federal Tax Authority to approve or reject applications for VAT deregistration, you would want your application to have a great chance to complete the process. This is exactly where we can help you. We will not only advise you on what to do, but our regulated tax agents will also implement the entire VAT cancellation procedure for you. Call us today!

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions.