VAT

Deregistration Of Vat In UAE: Complete Guide To Eligibility, Process & Documents Value Added Tax (VAT) is now an integral part of conducting business in the UAE from the time it was introduced in the year 2018. Although many companies focus on VAT registration, knowing the VAT deregistration process in the UAE is also crucial. If your business has been unable to make tax-deductible supplies, is closing operations, or does not meet the tax registration rules, you may have to terminate your VAT registration at the Federal Tax Authority (FTA). Failure to deregister your VAT registration when required may lead to administrative penalties and ongoing VAT compliance obligations. This guide will explain all you need to be aware of regarding VAT deregistration in the UAE, including eligibility requirements, required documents, the procedure for applying, deadlines, and the most common errors to be aware of. Caviar accounting assists businesses across the UAE with VAT deregistration, VAT registration, tax filing, bookkeeping, and FTA compliance. What Is VAT Deregistration In UAE? VAT deregistration is the formal method of ending a business’s VAT registration through the Federal Tax Authority (FTA). When your deregistration request is accepted, your Tax Registration Number (TRN) will be inactive, and you’re not legally required to: Charge VAT on taxable supplies Send periodic VAT returns on a regular basis. Collect VAT from customers Recover input VAT on any future business expense. But they must pay any outstanding VAT obligations and complete their VAT tax return prior to deregistration being completed. Before applying for VAT deregistration, it is helpful to understand who benefits from VAT, as VAT plays an important role in supporting public services while allowing eligible businesses to recover input tax. Why Businesses Apply For VAT Deregistration The eligibility criteria to deregister VAT within the UAE are clearly governed by law under the Federal Decree-Law and must be decided on the basis of current trading. Applications must be made within 20 days of becoming eligible in accordance with FTA guidelines. The following guidelines define those who are eligible to submit applications: The company has stopped producing taxable supplies entirely. The business is currently being closed down and legally wound up. The shift in the business or the corporate type results in the registration of VAT outdated. In the course of 12 months, the quantity of taxable supplies is lower than the voluntary tax registration threshold, which is AED 187,500. When Is VAT Deregistration Required? Businesses can request VAT registration under two types: Mandatory VAT Deregistration The business has to apply for deregistration of VAT in the following situations: It permanently stops making taxable supplies. The company closes or gets liquidated. It is no longer planning to engage in taxable business activities. This does not fulfill the criteria for mandatory registration for VAT. The application should generally be filed within 20 days following the day the obligation to deregister arises. In the event of a delay, it could be a cause for administrative fines. Voluntary VAT Deregistration Businesses may request deregistration of VAT if: The taxable supply of the company is under the registration threshold that must be met. The company no longer wants to remain VAT registered. It is in compliance with the FTA requirements for eligibility. The FTA scrutinizes every application prior to its approval. VAT Deregistration Threshold In UAE Type      Threshold Mandatory VAT Registration AED 375000 Voluntary VAT Registration AED 187500 Deregistration Eligibility The business ceases to meet the requirements for VAT registration in accordance with the applicable regulations. Documents Required For VAT Deregistration In order to apply for deregistration of VAT within the UAE Businesses must supply additional documents for the Federal Tax Authority (FTA) to confirm their eligibility. The documents required may differ according to the reasons for deregistering, like the closure of a business, liquidation, or a decline in taxable revenue. Making sure that the documentation is complete and correct will help you avoid delays when processing the application. Before preparing the required documents, businesses should ensure that their financial records are accurate and up to date. Conducting an internal audit in the retail industry can help verify VAT records, invoices, and supporting documents, reducing the risk of delays or rejection by the Federal Tax Authority (FTA). Commonly required documents comprise: A valid trade license or cancellation of trade license certificate (if the company has shut down) Tax Registration Number (TRN) details Reason for VAT deregistration and supporting documents Statements of financial responsibility or reports showing tax-deductible revenue Sales and purchase records for the relevant period  Final Tax return (if appropriate) Documents that prove liquidation or business closure, for example, the liquidation certificate or close-down documents Emirates ID and passport copy of the person who is authorized to sign  Power of Attorney (POA) or authorization letter when an authorized tax representative submits the application Step By Step VAT Deregistration Process The process of deregistering VAT in the UAE is done via FTA’s EmaraTax portal. Companies must make sure they satisfy the criteria for eligibility and complete all taxes prior to having their application considered for approval. Follow these steps:- Step 1: Confirm Your Eligibility Before you apply, consider whether your business is eligible to be deregistered from VAT. It is possible to be eligible when you have permanently stopped providing taxable services, shut down your company, or no longer meet the minimum requirements in order to be VAT registered according to UAE taxes. Step 2: Gather The Required Documents Make sure you have all the supporting documents ready prior to beginning the process. This could include the license for your business as well as documents for your finances, proof of closure (if appropriate), VAT return data, and any other documentation needed to be submitted by FTA. A complete set of documents can prevent any delays in the review process. Step 3: Log In To The EmaraTax Portal Log in to your account through the EmaraTax website using your login username and password. In your VAT dashboard, pick your VAT registration. Then, select the option