VAT Deregistration

VAT deregistration in UAE permits taxable entities to cancel their VAT registration and suspend their Tax Registration Number (TRN).

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VAT non-compliance could cause huge penalties and this reason is enough to make business persons look for VAT professionals who can handle all their VAT-related tasks while rooting out all the doubts and fending off unnecessary penalties. Maintenance of commercial books of accounts and records of all your business transactions becomes imperative once you register for VAT. The FTA conducts random audits from time to time, which you need to foreknow right from the beginning. To steer clear of any unpleasant situations you might want to give charge of your accounting and bookkeeping functions to bookkeeping specialists who are worth their salt in providing accurate and transparent bookkeeping services. The aspiring business persons in UAE are more likely to fail to comply with the ever-changing rules and regulations as they are new to the system. Therefore, it is always advisable for new business persons that they work with professionals only to ensure that their accounts are on the right track of being compliant.

VAT Deregistration in UAE

VAT deregistration in UAE permits taxable entities to cancel their VAT registration and suspend their Tax Registration Number (TRN). Only the businesses and individuals who are registered under the Federal Tax Authority (FTA) are eligible to deregister from VAT on a compulsory or voluntary basis. VAT deregistration becomes obligatory to the FTA-registered businesses or individuals who:

Cease to make/trade taxable supplies and have no intention of making future taxable sales.
Make taxable supplies but the turnover in the 12 calendar months after registering with the FTA is less than the Mandatory or Voluntary Registration Threshold.

VAT Deregistration: Prerequisites & Procedure

If your business has stopped functioning you need to obtain a company liquidation letter from the government authorities to be able to request the deregistration of VAT. VAT Deregistration is done electronically through the FTA portal. Once your VAT-deregistration application is received and reviewed by FTA the status of your VAT De-Registration will start displaying ‘Pre-Approved’ after confirmation provided you have complied with the law. Then the next step is to submit the final VAT Return Filing. Businesses must clear all the outstanding liabilities in order to complete the VAT Deregistration process after the last VAT Return filing is done.

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VAT Deregistration: Types

The FTA declared that the UAE Tax System is based entirely on voluntary compliance by taxable entities, whether it is regarding registration, tax return filing and payment of due tax or de-registration. Therefore, an entity can apply for the deregistration mandatorily or voluntarily:

Mandatory VAT Deregistration

A company is obligated to register its business from the VAT system in UAE if it:
1. Is incapable of generating revenue of AED 375,000.
2. Has stopped supplying any taxable goods.

Voluntary VAT Deregistration

According to Article 17, a registrant is not eligible to go for VAT deregistration within 12 months of the date of tax registration. An entity can opt for voluntary deregistration if it:
1. Has been 12 months since the date of tax registration.
2. No longer supplies the goods that are taxable.
3. Has an annual turnover that doesn’t touch even AED 187,500 despite supplying taxable goods.
4. Claims total value of the anticipated taxable supplies or expenses subject to tax in the coming 30 days will not go beyond the voluntary registration threshold.
5. Has shut its operations forever.

VAT Deregistration: For Groups

FTA consents the request of VAT deregistration for a group if:
1. The registered entity stops fulfilling the requirement to be considered as a group.
2. The companies within the group are not financially linked with the group any more.
3. Anticipates the tax status as a group can lead to any kind of tax evasion.
After the deregistration number is accepted, the authorities will cancel the VAT number issued on registration. The deregistered company can re-register by filling the registration form again. They will be provided a new VAT number on approval.

VAT Deregistration: Application Rejections & Penalties

FTA may disapprove the application for VAT-deregistration in following scenarios:
1. The registrant doesn’t submit the application within 20 business days.
2. All due taxes and administrative penalties are not yet paid.
3. All required tax returns are not filed for the period in which the entity was registered.

Failure to submit the de-registration application within the period specified in the tax legislation attracts administrative penalties of Dh 10,000 as specified in the Cabinet Resolution No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE.

VAT Deregistration: Form Submission

Make sure you are meeting all the criteria to deregister for VAT in UA and fill the form available on the FTA portal online following the below-mentioned steps.
1. First sign in into your VAT Account on FTA Portal.
2. Once you are logged in, locate and click on the “De-register” button on your dashboard to access the VAT Deregistration form.
3. Populate the fields appropriately with the details asked on the VAT deregistration form and mention the reason for VAT deregistration.
4. And at last, click on submit button after receiving SMS confirmation on your registered phone number.

On successful submission, your application will go through the various statuses: Pending, Submitted, Pre-approved, De-registered. You might be required to provide additional information in case FTA asks for. If this is the case the application status remains “Pending” and after supplying the requested details the status changes into “Submitted”. To have the application approved by FTA you need to clear all the outstanding liabilities or penalties (if any). Once all the dues are paid the status switches from “Pre-approved” to “De-registered”.

Final Tax Return Submission

Your final tax return encompasses the recent tax period for which you were a registrant. This period ends on the date when your pre-approved deregistration is effective. The status indicates that you have to submit your final tax return and pay all liabilities associated with it after a maximum of 28 days of your effective deregistration date. Failure to meet this deadline can result in imposition of a penalty and delay in deregistration. The details of the final tax return must be thoroughly reviewed and verified by the taxable party. It must feature all transactions along with supplies for services and goods that are assets of the business being maintained by the taxable party when they deregister. These services and goods can be exempted if business is carried on by a selected trustee in bankruptcy pursuant (Federal Law No.7 on Tax Procedures, 2017).

VAT Deregistration: Expert Advice

The VAT-deregistration process can be daunting at times. The FTA may reject the application for VAT deregistration if the reasons you have mentioned are invalid and the conditions are not met. Plus, the authorities may impose hefty fines on you. For a seamless VAT-registration you sure need expert assistance. If you are seeking professional help in VAT-deregistration in Dubai, give us a call. We provide all kinds of assistance pertaining to VAT registration and deregistration in compliance with the Emirati VAT laws while ensuring that you don’t get fined by FTA.
We advise you to not move forward with the VAT cancellation process if you have any plan to continue your business or you are waiting for any new investor. If this is the situation, better keep the TRN, and file the tax return as ZERO if the company hopes for a good return within the next 12 months period.
Once your business is deregistered from the VAT system of the UAE, you can’t charge VAT, but have to retain your VAT records for at least six years, because FTA may ask for them. FTA will automatically re-register your business if it believes you shouldn’t have cancelled. And you’ll have to pay any VAT you should have paid.

Our Approach

Public companies are obligated by law to ensure that their financial statements are audited by a registered CPA. The independent audit aims to ensure that the management has provided financial statements that are free from material error. Small companies can go for an audit when required by any financial institution, supervisory unit, or to meet certain conditions. However, Limited Liability companies (LLCs), Partnerships or Affiliations limited by shares, Joint-stock companies and every other business mandated by law should conduct an audit at any time of the financial year in the UAE.

Adam Global studies all the possible reasons that might result in application disapproval. In order to make the VAT deregistration process an easy breeze for you, our qualified VAT experts review your business activities and deregistration possibilities right from scratch. After you approach us for VAT deregistration assistance before taking any step, we first figure out the significance and requirement of the same for your business. You can reach Adam Global for various VAT-related services such as:

VAT Registration
VAT Compliance & Control
VAT Filing & Payment
VAT Training
VAT Deregistration
Evaluation of VAT Impact on Company Cash Flow, etc.

Partner with us, only if you want your VAT-related activities to be handled by experts in the UAE – from VAT registration to VAT compliance to VAT deregistration.

FAQ

In what situations VAT-deregistration becomes compulsory?

In the latest issuance, the FTA proclaimed that companies can withdraw from paying taxes either voluntarily or mandatorily by opting for deregistration from the VAT based on certain conditions in accord with the Federal Decree-Law No. 8 of 2017. You have to deregister your business from VAT if your FTA-registered business:
No longer trades taxable supplies and has no intention to make future taxable sales.
Makes taxable supplies but the turnover fails to meet the Mandatory or Voluntary Registration Threshold.
Has been sold.
Joins a VAT group (or a VAT group is disbanded).

How to pay the pending dues if I am in a payable position?

You can pay your due amount on the FTA portal itself by going to the “My Payment” tab on your dashboard. To check how much you owe to FTA, navigate to the “VAT & Penalty Payment” through this tab and enter this amount in the “enter amount you want to pay” field and click on the “Make Payment” button.

What if I don’t owe anything to FTA but they do?

If you are in a receivable position instead of payable, you can simply request for a VAT refund through the online portal after completing the deregistration process.

Is there any time limit for mandatory VAT deregistration?

Yes, you get 20 days to apply for mandatory VAT deregistration. The countdown begins from the date when the business loses its eligibility for being taxed. If you don’t submit an application within the 20 days’ time frame, your business will be penalized to pay AED 10,000 for late submission.

Am I eligible to register for VAT after deregistration in the UAE?

Yes, if you think you are a taxable person/company you can re-register your business for VAT in UAE after your VAT number has been cancelled by the FTA on your request.

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