In the UAE, a taxable entity registered for excise tax in UAE may cancel the registration if any of the conditions apply:
- If the taxable entity hasn’t carried out activities that require excise tax registration as per Article 6 of Excise Tax Laws for one year from the registration date or ceasing of relevant activities.
- If the local authorities deem deregistration for excise tax in UAE is necessary.
- If the excise registrant makes a request provided that the registrant has cancelled tax warehouse licenses that are held prior to the filing of excise tax deregistration request.
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Process of Excise Tax Deregistration in UAE
If a business is no longer responsible with excise tax, the following steps are to be taken for the deregistration:
Step 1: Complete the application form for excise tax deregistration
In the deregistration form, a reason for undergoing the process must be stated. If applicable, supporting documents must be attached with the application form. The supporting documents must show that a registration can apply for the deregistration as it's no longer engaging in taxable activities such as importing, stockpiling, and production of excise goods.
Take note: email credentials of Authorized signatories are to be updated. As soon as the request is submitted for excise tax deregistration, the local tax authority, UAE Federal Tax Authority (FTA), shall give its approval or rejection for the request and the registrant will be notified accordingly. The FTA has the discretion in asking for additional supporting documents from the registrant.
If the submission date for the excise tax deregistration form is beyond thirty days starting from the date a business is required in undergoing the deregistration process will be fined with AED 10,000 for late deregistration.
Step 2: File the final tax return
A final excise tax return in UAE is the one that is filed for the last taxation period in which a registrant is registered with the local tax authority. A final tax return begins from the first day of the calendar month and ceases on the date of excise tax deregistration or cancellation pre-approved by the Federal Tax Authority.
The final excise tax return has to be submitted before the deadline which is the fifteenth days after the end of calendar month in which the last excise tax return is required.
Failure in applying with the FTA to deregister for excise tax or file the final excise tax return as a settlement of any payable tax before the deadline is subject to a fine and potential delay for the completion of the excise tax deregistration process.
Step 3: Settle any outstanding liability with the FTA
You may be required to settle tax payment or get a tax refund, depending on your company's account balance status with the FTA.
If you have an outstanding liability with the FTA, then your application won't be approved until you settle your outstanding liability. You'll receive a SMS or email informing you regarding the status of your deregistration application and a request to complete payment for outstanding liabilities.
In the event that you have credit pending with FTA, you'll have to request for a tax refund. As soon as it's approved and there's no longer any refundable tax, then the excise tax deregistration request is going to be processed.
Find more: How Can I Resolve a Tax Dispute in UAE?
How long does it take to deregister for Excise Tax in UAE?
The duration of the process of excise tax deregistration will depend on a lot of factors. It is likely that the tax authority will inquire about your taxes. Communicating with the FTA can take several days or weeks, especially if the business does not have a regulated tax agent in UAE to help. Hire a regulated tax agent in Dubai as tax professionals can provide the authorities with answers almost instantly.
If you are planning on cancelling your excise tax registration in UAE, it is very likely that you're scramming and wading through hundreds of tax returns to file your last tax return. It is most definitely a daunting task, most especially when you need to complete the process before the deadline. Otherwise, the company will get a hefty fine. Fortunately, there is no need for you to get frustrated and waste precious hours in devoting to the deregistration process.
At Farahat & Co, our excise tax team is comprised of seasoned tax specialists with the main goal of giving you peace of mind. We will handle the deregistration for excise tax for you and represent your business on your behalf with the authorities to reduce stress on your end. We also help businesses eliminate errors and help ensure that their tax returns are prepared accurately and correctly.
If you want to know more about excise tax legislation in UAE, call us today!