VAT Deregistration in the UAE: A Guide
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The UAE has been operating under a 5% Value Added Tax (VAT) regime since 2018, covering most goods and services, particularly those related to the corporate sector. While businesses must comply with VAT obligations such as record keeping, filing VAT returns, and adhering to deadlines, there are scenarios where VAT deregistration is necessary.
What is VAT Deregistration?
VAT deregistration is the process by which a business ceases to be registered for VAT. This typically occurs when a company’s taxable transactions fall below the threshold set by the UAE’s Federal Tax Authority (FTA), or when the business stops trading altogether. Once deregistered, the business is no longer required to charge VAT on sales or claim VAT on purchases. However, they are also exempt from the administrative, financial, and legal burdens of VAT compliance.
Conditions for VAT Deregistration in the UAE
Eligibility for VAT deregistration depends on several factors:
No Longer Providing Taxable Supplies: If a business ceases trading or providing taxable supplies and does not expect to have taxable transactions in the next 12 months, it must deregister.
Falling Below the Voluntary Threshold: If the value of taxable goods and services provided by the business over the past 12 months falls below AED 187,000 (the Voluntary Registration Threshold), the business must deregister.
Falling Below the Mandatory Threshold: If the taxable turnover drops below AED 375,000 (the Mandatory Registration Threshold), the business must apply for deregistration after 12 months of voluntary registration.
Note: Voluntary registration requires a company to remain VAT-registered for at least 12 months before it can deregister.
Steps to Deregister for VAT
Log into the FTA Portal: Go to the FTA web portal and log into your Taxable Person Account using your Tax Registration Number (TRN).
Select Deregister Option: In the VAT section, choose the “De-register” option from the “Actions” menu.
Choose the Reason: Select the reason for deregistration from the drop-down list (e.g., no longer providing taxable supplies, value of taxable supplies below the threshold).
Upload Documents: Provide supporting documents for your deregistration request.
Submit Application: Complete and submit your application form.
FTA Review: Wait for FTA approval. The review process typically takes around 20 working days.
Submit Final VAT Report: Once pre-approved, file your final VAT return with the FTA.
Clear Outstanding Liabilities: Settle any outstanding VAT debts or request reimbursement, if applicable.
Receive Deregistration Certificate: Once the process is complete, download your Deregistration Certificate from your e-Services account.
Key Considerations
The final VAT return and payment of outstanding VAT must be completed within 28 days of the deregistration’s effective date. Failure to do so can result in penalties.
Businesses must continue filing VAT returns until the deregistration is officially approved.
Non-compliance with the deregistration process or delays can lead to penalties, including an initial fine of AED 1,000 and additional monthly penalties of AED 10,000.
Additional VAT-Related Costs
Penalties for Late Deregistration: AED 1,000 initially and up to AED 10,000 monthly.
Deemed Supplies: Goods or services involved in a business may be considered as deemed supplies and should be included in the final VAT return.
VAT Support Services by Tycoon Documents
Tycoon Documents offers a wide range of VAT-related services, including:
- VAT registration and deregistration
- Filing VAT returns
- Consultancy on VAT compliance and corporate tax
By handling the complexities of VAT deregistration and offering guidance on compliance, Tycoon Documents ensures that businesses can efficiently manage their tax obligations and avoid penalties. Contact Tycoon Documents for a consultation on how they can assist with VAT or other business needs.