Deregistration from VAT in UAE refers to the process by which a VAT registered entity can have their Tax Registration Number (TRN) cancelled with the Federal Tax Authority (FTA). The VAT Regulations in UAE contains specific provisions related to conditions subject to which a VAT registered person is obligated to De-register from VAT and other procedures for Mandatory/Voluntary Deregistration from VAT in UAE.
Understanding these provisions can ensure a smooth process for settlement of your VAT obligations in UAE and also avoid the administrative penalty of AED 10,000/- associated with non-compliance of proper deregistration procedures. So the provisions of the Law are of paramount importance to ensure unnecessary penalty costs are avoided by Companies. Deregistration can help a business a lot as it will ensure that the business does not face any problem during the liquidation process or any time after that.
How can VAT De-Registration Services in the UAE help your Company to Grow
Helps in Better Company Management
The De-Registration of a company can enhance the management functions of a company which will help the growth of the Company by removing all hindrances for the liquidation or amendments.
Saves the Company from Losses
The Deregistration of the company can help the company to prevent additional losses to both the company as well as the investors of the company.
Secures the Future of the Company
Registration and De-registration of VAT can be very crucial for a company. Deregistration of a company at the proper time can result in a secure future of the business.
Support the Economy of the Country
As compliance is thoroughly examined, the chances of fraud to be conducted by the business are greatly reduced.
How can JAXA Chartered Accountants help you?
- Client Approaches JAXA – The Company Data is received.
- JAXA Understands Current Status – The current registration status of the business is analyzed by the experts at JAXA.
- Planning – After the analysis of the Registration status, the need or the de-registration is assessed.
- Taking Care of the Proceedings – Each and every process which requires the attention of the experts is performed.
- Reviews – From time to time, JAXA will conduct reviews.
- A Dedicated Team of Experts and Professionals
- Compliant with International Financial Reporting Standards (IFRS)
- Experience in the Finance field for more than 13 Years.
- Customizable Solutions for the Business
- Vast experience from various sectors in various companies
How Can JAXA Help Your Business
The procedure is straightforward however depending on the facts and circumstances, the above process can be time-consuming as various requirements raised by the Tax Authority has to be met diligently. Any delay from the VAT Registrant or failure to submit the required documents to the Authority within deadlines prescribed by them can lead to rejection of the application and will consequently result in Penalties being imposed.
We at JAXA Chartered Accountants can assist you to comply with the complex issues faced during a VAT Deregistration process in a professional and diligent manner. Seeking assistance from professionals such as ourselves will not merely save your valuable time (which can otherwise be put to productive use) but will also help in avoiding unnecessary financial penalties.
Frequently Asked Questions (FAQs)
Reasons that lead to Deregistration from VAT in UAE:
Deregistration of your business from VAT in UAE can be due to reasons such as the following:
- Closing down the company and cancelling of trade license;
- Suspension of business operations for foreseeable future or long period of time; or
- The level of business has gone down resulting in a turnover of the company no longer meeting the VAT registration threshold required by the Law.
Who can Deregister from VAT?
As per the VAT Regulations, there are conditions subject to which a VAT registrant MAY apply for deregistration and conditions where they MUST apply for deregistration. The circumstances are summarized below:
· If the business or a person stops making taxable supplies and does not expect to make any taxable supplies over the next 12-month period then they MUST apply for VAT Deregistration.
· If the business or a person is still making taxable supplies but the value in the preceding 12 calendar months is less than the Voluntary Registration Threshold (AED 187,500), then they MUST apply for VAT Deregistration.
· If the business or a person are still making taxable supplies but the value in the previous 12 months was less than the Mandatory Registration Threshold (AED 375,000) and 12 months have passed since the date of registration if you were registered on a voluntary basis then they MAY apply for VAT Deregistration.
From above the importance of distinguishing scenarios where you can or need to apply for deregistration is evident and any non-compliance of the same can result in a penalty of AED 10,000/-.
The time limit for the Deregistration application
A VAT-registered person must apply for deregistration within 20 business days of the occurrence of the above events which makes it mandatory for the registrant to apply for deregistration. Any failure to submit the application within the aforementioned timeframe can lead to a penalty of AED 10,000/- being imposed.
Procedures for Deregistration from VAT:
Below is a brief summary of the procedures involved:
1. An application for deregistration can be submitted using the “De-register” option available on the dashboard of VAT registrant’s FTA portal (upon logging in). The deregistration form has the following fields which needs to be filled in:
Reasons for VAT de-registration – This is a dropdown menu from which any of the below applicable reasons should be selected
- Business no longer making taxable supplies
- Business making taxable supplies, but below the Voluntary Threshold
- Business making taxable supplies, above the Voluntary Threshold, but below the Mandatory Threshold
- Other – please specify the reason
- Please specify the details – This field can be used to fill in a detailed description as to why the deregistration application is being submitted
- Please specify a preferred deregistration date for VAT – On needs to select an effective date for deregistration from VAT which can be the last date on which taxable supply was made or date of license cancellation etc.
- Upload all the relevant supporting documents by clicking on ‘Choose Files’ – Relevant documents need to be uploaded such as
- Letter stating the reason for deregistration from VAT
- Turnover declaration letter showing of the monthly taxable supplied from the date of registration for VAT until the date of deregistration
- Trade license cancellation letter (where the company is being closed)
2. The FTA will review the application along with the documents submitted and can seek further documents/details as the Authority deems necessary. All communications from the Authority will be directed to the registered E-mail id of the VAT registrant.
3. Once the FTA completes its review process, the status of the application will be changed to “Reviewed” and the VAT registrant will be given the facility to submit a final VAT return and settle any outstanding liabilities due to the FTA.
4. Once the final VAT return is submitted and outstanding liabilities (if any) are settled, the registrant is required to click on the “De-register” option again. On clicking the “De-register” option, the status will be changed from “Reviewed” to “Pre-approved” and the VAT registration will get an official email stating the TRN has been canceled. However, it should be noted that this does not mean a De-registration certificate will be issued by the FTA then itself. One needs to wait for FTA to complete its internal process and subsequent a De-registration certificate will be made available for download on the VAT registrant’s portal.
For any more details and information about VAT Deregistration Services, you can Contact Us. We will provide you with in-depth information and other useful background information.