Implications of VAT Deregistration in the UAE

There  can be various circumstances under which a registered VAT entity becomes eligible for cancellation of its VAT registration. Similar to VAT registration procedures, the regulation for UAE VAT has provided the details of procedures to be followed in the cases of VAT Deregistration. Here we discuss the major aspects relating to VAT Deregistration in UAE, which are to be considered and monitored by VAT registrants when they meet the applicable conditions to avoid any penalties due to non-compliance with VAT rules. 

What is meant by VAT Deregistration in UAE?

Each VAT registered person or company is allotted with a unique TRN (Tax Registration Number) when they register with FTA (Federal Tax Authority) of UAE. Any cancellation or deactivation of this VAT identity and the procedures involved along with this are counted as part of VAT Deregistration. The VAT Deregistration can be processed voluntarily by any VAT registrant or it can happen as a mandatory enactment by FTA when they find that the registrant in the context does not meet the conditions for VAT registration.

Are there any eligibility criteria for VAT Deregistration under UAE VAT?

Those VAT registrants who no longer make taxable supplies become automatically eligible for VAT Deregistration. This situation can happen for example, because of any restructuring decisions made by the VAT registrant that involve a stoppage of any production line or branch that makes taxable supplies. There can be another situation in which the amount of taxable supplies is decreased and for the last 12 months, it is below the mandatory registration threshold of AED 375,000 but is more than the voluntary registration limit of AED 187,500.  This allows the VAT registrant to go for VAT Deregistration on a voluntary basis, if the situation is expected to continue in the same way. When the amount of taxable supplies goes below the voluntary threshold limit (AED 187,500) for a consecutive period of 12 months, and is expected to be like that and not cross this voluntary limit for next 30 days, that evokes the mandatory requirement for deactivation of VAT registration. FTA can also initiate the cancellation of VAT registration of any registrant, if the authority finds that the tax status can lead to any tax evasion or any other factors that necessitate such a disciplinary action.

What are the steps involved for the VAT Deregistration process in UAE?

A VAT registrant should start the process of VAT Deregistration within 20 business days when it becomes eligible for VAT Deregistration or when it meets the condition for mandatory VAT Deregistration. The first step is to ensure that all the tax dues or administrative penalties due, if any, are paid and VAT return pending, if any, are filed. It is to be noted that the application of VAT Deregistration will not be processed if any of these are still due or pending. The next step is to submit the application for VAT Deregistration with FTA along with all the required supporting documents including the reason for such deregistration. FTA will then review the application and on validation of the reason/supporting documents, the approval for deregistration will be granted. Within 10 days of such approval, notification for cancellation can be received from FTA in the registered email address.

How CDA helps in VAT Deregistration process?

It is always recommended to consult with a subject matter expert when it comes to VAT matters. CDA has been providing VAT consulting services for various companies in different sectors across UAE. We have locally based qualified professionals who are well versed with the regulatory requirements and best practices of the region. 

Also read, How is VAT Applicable on Banking Transactions in UAE?

CDA provides tailor made service packages based on our detailed understanding and assessment of our clients business processes. Our VAT related services include, but not limited to support for VAT registration, VAT implementation, VAT code mapping, VAT system integration, Formatting of VAT invoices, documentation of VAT policies/procedures, VAT return filing, VAT file maintenance, VAT health checkups, VAT trainings for employees, VAT deregistration, correspondences with FTA and other VAT compliance procedures

This brings us to the conclusion of our discussion on the implications of VAT Deregistration in the UAE. Do you need further clarifications on UAE VAT? Contact CDA for one-hour free VAT consultation.