VAT De-registration is a process where in the registered firm applies for cancellation of its registration. VAT De-registration is required when any taxable business no more exists or no more requires registration. De-registration of VAT means de-activation of the registration and the VAT number of the firm. Whenever a business stops trading or no longer deal with taxable goods and services, it can cancel its VAT number. We have explained here the need and formalities for VAT de-registration.
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 time frame specified in the tax law.
When should a company de-register from paying VAT?
A VAT-registered person in the UAE can apply to de-register if they meet any of the following conditions:
- The registered person no longer makes taxable supplies.
- The value of their taxable supplies is less than the voluntary registration threshold of 187,500 AED over a period of 12 consecutive months.
- The value of their taxable supplies is less than the mandatory threshold of 375,000 AED over a period of 12 months.
A person who registers for VAT voluntarily must stay registered for at least 12 months before applying to de-register.
Every member state of the GCC can determine the minimum period for which taxpayers must remain registered. Taxpayers cannot deregister before the minimum date set by their state. Member states can also set additional conditions for taxpayers to be considered for deregistration.
After a taxable person applies for deregistration, the FTA will notify them whether they have been deregistered and specify the date from which the deregistration will be effective.
How does the deregistration process work in the UAE?
A registrant should apply for de-registration within 20 business days of the occurrence of either of the above 2 events. The registrant should ensure that due tax and administrative penalties have been paid and tax returns have been filed. The registration will not be cancelled unless these are done.
If the de-registration application is approved, the tax registration of the registrant will be cancelled with effect from the last day of the tax period during which the event for de-registration has occurred, or from a date decided by the FTA. A notification on successful de-registration will be sent to the registrant within 10 business days after the de-registration application is approved.