A Comprehensive Guide to VAT Deregistration in the UAE

There are several reasons that influence canceling of VAT registration UAE, and unless the reasons are sufficient and meet the necessary conditions, the Federal Tax Authority can reject the request for VAT deregistration. Thus, Tax Consultants in UAE are committed to assisting businesses to ensure compliance with the procedures of VAT deregistration, to which noncompliance can accrue fines and penalties. This article thoroughly explains the procedure of deregistering for VAT in the UAE, in compliance with VAT laws and regulations.     

VAT Deregistration Based on a Request Submitted to FTA

 This includes cases where taxable person stops making taxable supplies and cases in which the value of taxable supplies made by him during (12) consecutive months is less than the limit required for voluntary registration.

Procedures for VAT Deregistration

To ensure compliance with VAT deregistration procedures, a request must be submitted to the Federal Tax Authority in accordance to relevant cases, stipulated above, within a period of (20) business days from the date of any of them, as the Authority is obligated to approve the request to cancel tax registration if the following two conditions are met, which are:

• The registrant must have stopped making the supplies, in addition, he should not be expecting to make such supplies during the next 12-month period.

•  If the value of the supplies by the taxable person or the taxable expenses incurred by the registrant during the previous twelve months is less than the required voluntary registration threshold, and it becomes clear to the Authority that it is not expected to exceed the value supplies or expenditures within the next 30 days Optional registration limit required.

Upon the Authority’s approval of the request submitted regarding cancellation of registration, it will cancel the registration as of the last day of the tax period in which the tax registrant fulfilled the conditions for cancellation, or any other date that the Authority may specify.

 In cases where the conditions for canceling registration in VAT are met, the Authority may cancel the registration as of the last day of the tax period in which it becomes clear to the Authority that the cancellation conditions have been met, or from any other date determined by the Authority.

 As for the case in which the cancellation of tax registration is due to a decrease in the registrant’s supplies to less than the required mandatory registration limit, the Authority will cancel the registration pursuant to a request submitted by the taxable person from the date specified by the registrant in his application or from the date of submitting the application in the case in which the applicant has renewed by a certain date by canceling the tax registration.

In the case of voluntary registration, the registrant does not have the right to submit a request to cancel tax registration until (12) months have passed from the date of his tax registration.

Provisions Related to the Payment of the Total Tax and Administrative Fines

Canceling tax registration does not waiver the authority’s right with regard to paying the due tax and administrative fines, as cancellation does not take place until all the amounts due have been paid, whether related to tax or administrative fines, and the registrant must also submit all the stipulated tax returns.  

Cancellation of Registration for the Tax Group

 The Authority will cancel the tax registration for the tax group if the following conditions are met:

• The situation in which persons registered as a tax group no longer meet the conditions for registration as a tax group in accordance with the Decree Law.

• If there is no longer a connection based on their conduct of business, organizationally, financially and economically.

• If there are serious reasons that would enable tax evasion or significantly reduce the Authority’s tax revenues if registration as a tax group remains.

Request to Cancel Tax Registration

 A request to cancel registration for VAT must be submitted to the Authority within the deadlines specified in accordance with the federal decree law. In the case that the registrant is late in submitting the cancellation request within the specified time, the Authority may impose a fine not exceeding (10,000) UAE dirhams.

 The Authority does not cancel tax registration except after paying all taxes and administrative fines due in addition to submitting all tax returns, which includes late returns in addition to the final tax return. Whereas, once the cancellation request is submitted, the Authority will review it, verify it, approve or reject it, and immediately notify the registrar of its decision, and it may request the registrar to provide supporting data.

Seek Expert Guidance from Top Tax Consultants in UAE

To effectively ensure compliance with VAT deregistration procedures and avert fines and penalties, businesses are advised to seek the expert services of trusted Tax Consultants in UAE. Thus, contact us today and we shall be glad to assist you.