VAT Deregistration Services in UAE is the formal process by which a business cancels its VAT registration with the UAE Federal Tax Authority (FTA). When your business deregisters, it officially stops charging VAT on its sales, and can no longer reclaim VAT on its purchases. This step is crucial for businesses that no longer meet the mandatory VAT registration thresholds or have ceased taxable activities. Understanding when and how to deregister ensures compliance and helps avoid penalties, which can be significant if the process isn’t handled timely and correctly.
In the UAE, VAT deregistration can be mandatory or voluntary depending on the circumstances. For example, if your annual taxable supplies drop below AED 187,500, you may be required to deregister. Alternatively, you may choose to deregister voluntarily if your sales fall below AED 375,000 but do not drop below the mandatory threshold. The deregistration process is done online via the EmaraTax portal, where you submit your application along with supporting documents such as financial statements or proof of business closure.
This guide provides clarity on why VAT deregistration might be the right move for your business, the step-by-step procedure to follow, common reasons for deregistration, and crucial deadlines to keep in mind. Staying informed on this process is vital to ensure your business remains compliant and avoids fines. For expert assistance, tax consultants in Dubai like My Taxman can simplify your deregistration journey and handle the technicalities for you.
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VAT Deregistration refers to the formal process by which a business cancels or terminates its Value Added Tax (VAT) registration with the UAE Federal Tax Authority. Once deregistered, a business is no longer required to charge VAT on sales, submit VAT returns, or comply with other VAT obligations. VAT deregistration is mandatory in certain cases and voluntary in others, depending on business activity, turnover, and operational changes.
Reasons for Deregistration of VAT in UAE
Businesses may seek VAT deregistration for multiple reasons, primarily including:
- Turnover Falls Below Mandatory Registration Threshold: If the annual taxable turnover drops below AED 375,000 within 12 consecutive months, deregistration is required.
- Voluntary Deregistration: Businesses with turnover below the voluntary registration limit of AED 187,500 may opt to deregister even if not mandatory.
- Permanent Closure or Business Dissolution: Businesses ceasing operations or dissolving legally must deregister.
- Change in Business Activity: If a business switches to making only VAT-exempt supplies or alters its structure significantly (mergers/acquisitions).
- No Taxable Supplies: When taxable sales stop completely, VAT registration is no longer needed.
Understanding the correct reason for deregistration is vital as each affects the application and compliance process.
Types of VAT Deregistration in UAE
VAT deregistration can be categorized into two types:
- Mandatory VAT Deregistration
Businesses must deregister if they no longer meet mandatory requirements, such as cessation of business, turnover below AED 375,000, or shifting to exempt supplies. This is a legal compliance requirement.
- Voluntary VAT Deregistration
Businesses registered voluntarily may opt to deregister if taxable turnover falls below AED 187,500. They must comply with restrictions like not applying for deregistration within the first 12 months of registration.
Both types must follow formal application steps on the FTA (EmaraTax) portal.
How to Cancel VAT Registration in UAE: Step-by-Step Guide
Businesses can complete VAT deregistration online via the EmaraTax portal by following these steps:
- Log in to EmaraTax Account: Use your credentials to access the FTA portal.
- Select VAT Deregistration: Locate the VAT services and choose the deregistration option.
- Complete the Application Form: Provide business details, reasons for deregistration, and intended effective date.
- Upload Supporting Documents: This may include trade license cancellation, financial statements proving turnover or business closure, and proof of tax payments.
- Settle Outstanding VAT Liabilities: Pay any pending taxes or penalties before final approval.
- Submit Final VAT Return: File the final return up to the date of deregistration.
- FTA Review and Approval: FTA reviews your application and may request additional information or conduct audits.
- Receive Deregistration Confirmation: Upon acceptance, the VAT registration is officially cancelled.
Applications must be submitted within 20 business days of becoming eligible to avoid penalties.
Penalties for Late or Non-Compliance in VAT Deregistration
Failure to apply for deregistration on time or to settle VAT liabilities can lead to significant fines, typically AED 1,000 per month until compliance. Submitting inaccurate or incomplete information can also trigger audits and additional penalties. Hence, professional tax consultants in Dubai can help avoid such risks by ensuring thorough and timely filings.
Role of Tax Consultants in Dubai for VAT Deregistration
Navigating VAT deregistration complexities requires expert tax advice and assistance. Tax consultants in Dubai offer services such as:
- Assessing eligibility and advising on mandatory vs voluntary deregistration
- Preparing and submitting accurate deregistration applications
- Ensuring all supporting documents and financial records comply with FTA requirements
- Managing outstanding tax payments and final VAT returns
- Representing businesses in communications and audits with FTA
- Providing ongoing tax consultancy and advisory services
My Taxman specializes in comprehensive tax consulting services in Dubai and UAE to help clients with VAT deregistration and all tax compliance issues. Contact us at +971-543223140 for tailored support.
Conclusion
VAT Deregistration in UAE is a crucial compliance step for businesses that no longer meet VAT registration criteria or choose to cancel their VAT registration strategically. Accurate understanding of the reasons for deregistration, following the FTA’s formal process, and timely application submission are essential to avoid penalties. With the support of experienced tax consultants in Dubai like My Taxman, businesses can ensure a smooth and compliant deregistration process. Reach out to My Taxman today at +971-543223140 to discuss VAT deregistration services and expert tax advisory services tailored to your needs.
FAQs on VAT Deregistration
Q1: When is VAT deregistration mandatory in the UAE?
A1: It is mandatory when your business turnover falls below AED 375,000 in 12 months, you cease operations, or switch to exempt supplies.
Q2: How long does the VAT deregistration process take?
A2: Typically, it takes between 2 to 4 weeks after submitting all documents and applications on the EmaraTax portal.
Q3: Can I deregister VAT before completing 12 months of registration?
A3: No, voluntary deregistration before 12 months is generally not allowed under UAE VAT law.
Q4: What happens if I don’t deregister on time?
A4: You may incur penalties of AED 1,000 per month and face audits for non-compliance.
Q5: Do I need a tax consultant for VAT deregistration?
A5: While not mandatory, tax consultants can simplify the process, ensure compliance, and reduce audit risks.
