In the UAE, VAT deregistration is equally as crucial as VAT registration. In the UAE, many circumstances govern whether or not an individual or organization is required to pay VAT (Value Added Tax). You must register with the FTA after these prerequisites are met. When a registered party, also known as a registrant, no longer meets the conditions to be subject to VAT, they must deregister. VAT deregistration must be completed within a certain time frame, otherwise you may face penalties from the authorities.
VAT deregistration is a more involved procedure than merely calling the FTA and informing them that you are no longer eligible for VAT. Because of this complication, firms may find it difficult to terminate their VAT registration. This is why it is advised to seek the assistance of a competent accounting and tax consultation business.
Nadeem and Umendra Chartered Accountants is an experienced and dependable accounting and tax advisory firm with extensive knowledge of VAT issues. It can walk you through the full procedure and ensure that your VAT deregistration is completed correctly.
In the UAE, you may be eligible for VAT deregistration.
In the UAE, there are two types of VAT deregistration: required and optional. Let's look at both categories and their associated circumstances.
VAT Deregistration Is Required
When a firm ceases to make taxable supplies, or when its taxable supplies/expenses in the previous year and the next 30 days do not exceed the maximum for voluntary VAT registration (AED 187,500), VAT deregistration in the UAE becomes necessary.
When VAT deregistration becomes necessary, firms should apply for deregistration as soon as possible to avoid being fined or punished.
The obligatory VAT deregistration period is 20 days. These 20 days begin on the date the business's eligibility to be taxed is terminated. Your company will be punished if an application is not filed within 20 days. The penalty for applying late is AED 10,000.
Deregistration of VAT voluntarily
If a company provides taxable services and commodities but the value of its taxable supply has stayed below the stipulated limit (AED 375,000) in the previous 12 months, it can apply for voluntary deregistration of VAT in the UAE. Furthermore, if a firm registered for VAT voluntarily, it may request for deregistration after a 12-month period has passed after its voluntary deregistration.
There is no time restriction for voluntary VAT deregistration. Businesses that fulfill both of the preceding qualifications may apply for voluntary deregistration at any time.
How to Cancel VAT Registration in the UAE – Step-by-Step Instructions
If you are eligible for statutory or voluntary VAT deregistration, you may apply on the FTA's website. To apply for FTA deregistration, you must first complete the following steps:
Log in to your account on the FTA's web portal.
After login, find and click on the "De-Register" icon on your dashboard.
This will direct you to the VAT deregistration form.
Several fields on the de-registration form must be completed. The area "Taxable Person Details" will already be filled out.
You will specify the cause for your deregistration as well as the date it became effective for you. You will choose your deregistration reason from a dropdown menu that includes the following options:
The company no longer manufactures taxable goods.
The company makes taxable supplies, but their value is less than the voluntary limit (AED 187,500).
The company makes taxable supplies whose value surpasses the voluntary limit but not the required limit (AED 375,500).
If you select this option, you will be asked to explain why you are doing so.
You will also be required to supply information in support of your application for deregistration. For example, ABC firm became a registrant in December 2017 after filing for required VAT registration. On December 25, 2017, the FTA approved their application. The management of ABC Firm has decided to close the company in August 2018. ABC Company will not produce any taxable supply in the next 12 months as a result of this decision.
The precise date you must/may deregister will be determined by your cause for deregistration:
If your company no longer makes taxable supplies, your deregistration requirement/eligibility will begin on the day you stopped making taxable supplies. If your business produces taxable supplies, but their value is below the voluntary limit, then your deregistration requirement/eligibility will commence from the date on which your supplies’ value stops exceeding the voluntary registration limit.
If your business produces taxable supplies and their value exceeds the voluntary limit but not the mandatory limit, then your deregistration date will be based on your own preference.
For reasons other than the ones given, you must provide a date that according to you, is suitable for deregistration.
Along with your application, you must submit supporting documentation. To upload these papers, click the "Select files" option and pick the files you want to submit.
Examine the authorized signatory carefully before submitting your proposal. Check that the email address supplied by the signatory is valid and up to date.
Check all of the checkboxes after reading the declaration section.
When everything is in order, click the "submit" button to finish your application.
If you submit your deregistration form after 20 business days from the day you were supposed to deregister, you will be fined AED 10,000.
After you have submitted your application, it will take some time for the FTA to process and approve it. Your dashboard allows you to track the progress of your application. The FTA will also send you SMS and email updates when your application is processed.
Details on the Deregistration Status
Following submission, your application will progress through the following stages:
De-registered means that your application was accepted and that there are no outstanding liabilities that must be paid off.
When you submit your application, it will appear on your dashboard as "pending." When the FTA approves the application for processing, the status on your dashboard will change from "pending" to "pre-approval."
During the course of processing your application, the FTA may request that you submit a final tax return. This last tax return may be found in your "VAT returns" area and must be cleared before your application can be granted.
It should be noted that if any outstanding liabilities or penalties remain unpaid, your application will be denied.
Submission of the Final Tax Return
Your final tax return will include information from the most recent tax period for which you were a registrant. The effective date of your pre-approved deregistration marks the end of your final tax period.
You must file your last tax return and pay all related liabilities within 28 days of your effective deregistration date. If you do not fulfill this deadline, you will be penalized and your deregistration procedure will be delayed.
The taxable party must inspect and verify the details of the final tax return. When a taxable party deregisters, the final tax return must contain all transactions, including supply for services and items that are assets of the company being conducted by the taxable party. If a designated trustee in bankruptcy continues the business in accordance with (Federal Law No.7 on Tax Procedures, 2017), then such services and products are exempt.
To finalize your deregistration, you must clear any outstanding liabilities.
If you need to make a payment, navigate to the "My Payment" option on your dashboard. Navigate to the "VAT & Penalty Payment" page on this tab to discover how much you must pay. Enter this amount in the "Enter Amount to Pay" area and press the "Make Payment" button.
After the payment has been processed, go to your dashboard and select the "De-Register" option to finish the deregistration procedure.
If the FTA owes you a credit amount, you may simply finish the deregistration process and obtain a VAT refund using the online portal.