De Register for VAT in UAE
Generally, the termination of VAT registration is called VAT Deregistration. However, in the UAE, deregistration of VAT is when a business cancels its VAT registration with the Federal Tax Authority (FTA). There could be various reasons, why a previously taxed business or an individual can opt for cancelling their registration for VAT in UAE. Such reasons are needed to fall under the conditions defined by the Law related to VAT. Unless the reasons are valid and the conditions are fulfilled, the FTA might disapprove the application to deregistration.
For taxable individuals and businesses, VAT deregistration in UAE is as important as it is to register for a VAT. Businessmen must know the rules and process for VAT cancellation in UAE, as administrative penalties will be imposed upon failure to file an application within the timeframe specified in the tax law.
Eligibility for VAT Deregistration
As per the law defined under the regulations of FTA, following eligibility is must apply for VAT Deregistration in UAE.
Mandatory Deregistering VAT:
Under the rules such an individual or a business 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 a business or an individual who was registered as tax payer with FTA, fulfils to these criteria, it must not delay applying for de registration of VAT to avoid any penalties.
The time limit:
Once an FTA registered entity becomes eligible for VAT deregistration under this criterion, they have a time limit of only 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.
Voluntary Deregistering VAT:
Under the rules of FTA any individual or business, 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 under 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 this situation, the taxed entity may apply for Voluntary deregistration of VAT. There is no limitation for any number of days to apply for FTA deregistration.
How to Cancel Vat Registration In UAE?
Once an entity fulfills the criteria to deregister for VAT in UAE, the can do so through 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.
The decision of FTA to approve the application for deregistration of VAT depends on the provided reason as well as the clearance of all:
- Outstanding Taxes against the entity.
- Returns being filed.
- Any Administrative Penalties have been paid in full.
Late submission can be made but the approval from FTA to deregister VAT will be on hold unless all the liabilities along with the late submission penalty have been paid.
Even with the valid reason, the approval from FTA will show the status of the application as “Pre-Approved” and will only be considered complete when all these liabilities are cleared.
VAT Deregistration Penalty
The penalty for failing to apply for a mandatory de-registration of VAT within the specified timeframe i.e. within 20 business days, from the occurrence of the event causing the tax payer entity to get eligible for tax deregistration, is AED. 10,000.
After Submission of Application
When online form is completed after providing all the details and reasons, it is to be submitted electronically. The applicant deregistering for VAT will get SMS confirmation on their registered number for submission.
The FTA will analyze the application for the reasons provided along with the status of returns, any pending penalties or tax payments. If everything is according to the rules and regulations of FTA without any errors, the application will be approved and VAT Registration will be cancelled.
The FTA will deregister 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 of individuals. The difference is in the criteria specified for Groups that were registered for VAT.
In addition to other requirements being fulfilled, the groups need to have the following reasons become valid for them to get their VAT registration cancelled:
- FTA will approve the cancellation of VAT registration for a group if the registered entity no longer meets the requirement to be considered as a group.
- FTA can also approve the VAT deregistration for the group if 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.
Farahat & Co, providing the expert services of VAT Registration and Deregistration in compliance with the VAT laws, we can provide you with state-of-the-art services. Get our quality VAT consultation services to worry not for any administrative penalties related to VAT.