VAT Deregistration in UAE
VAT deregistration is just as important as VAT registration in the UAE. The UAE has certain conditions that determine whether an individual or business has to pay VAT (Value Added Tax) or not. Upon the fulfilment of these conditions, you must register with the FTA. When a registered party, known as a registrant, no longer fulfils the requirements for being subjected to VAT, they must deregister themselves. VAT deregistration needs to be carried out in a given amount of time, otherwise, you may be penalized by the authorities.
The process of VAT deregistration is more complicated than simply contacting the FTA and telling them you are no longer eligible for VAT. This complexity can make it hard for businesses to cancel their VAT registration. This is why it is recommended to enlist help from a reputable accounting and tax consultancy firm.
Push Digits is an experienced and reliable accounting and tax consultancy agency that has plenty of experience with VAT related matters. It can guide you through the entire process and make sure that your VAT deregistration is carried out properly. You can visit their website to learn more about the services they offer.
Eligibility for VAT Deregistration in UAE
There are two forms of VAT deregistration UAE wide: mandatory and voluntary. Let’s take a look at both types and their conditions.
Mandatory VAT Deregistration
When a business stops dealing in taxable supplies, or when their taxable supplies/expenses in the last year and the next 30 days don’t exceed the limit for voluntary VAT registration (AED 187,500), then deregistration of VAT in UAE becomes mandatory for them.
When VAT deregistration becomes mandatory, businesses should submit their deregistration application as soon as possible to avoid the chances of being fined or penalized.
The time limit for mandatory VAT deregistration is 20 days. These 20 days are counted from the date on which the business’s eligibility for being taxed is lost. If an application is not submitted in 20 days, your business will be penalized. The penalty for late application is AED 10,000.
Voluntary VAT Deregistration
If a business is dealing with taxable services and goods but the value of its taxable supplies has remained below the defined limit (AED 375,000) in the last 12 months, then a business can apply for voluntary deregistration of VAT in UAE. Also, if a business registered for VAT voluntarily, it may apply for deregistration after 12 months have elapsed since its voluntary deregistration.
Voluntary VAT deregistration does not have a defined time limit. Businesses that meet both of the above-mentioned conditions can apply for voluntary deregistration when they see fit.
How to Cancel VAT Registration in UAE – Step by Step Guide
If you are applicable for mandatory or voluntary VAT deregistration, you can submit your application through the FTA’s website. In order to apply for FTA deregistration, you must follow these steps:
- Go to the FTA’s online portal and login into your account.
- After logging in, locate the “De-Register” button on your dashboard and click on it.
- This shall take you to the VAT deregistration form.
- The de-registration form will have various fields that must be filled out. The “Taxable Person Details” section will already be filled out.
- You will enter the reason for your deregistration and the date from which it became applicable to you. You will select your deregistration reason from a dropdown list with the following options:
- The Business no longer produces taxable supplies.
- The Business produces taxable supplies, but their value is below the voluntary limit (AED 187,500).
- The Business produces taxable supplies and their value exceeds the voluntary limit but not the mandatory limit (AED 375,500).
- Choosing this option will require you to specify your reason.
- You will also have to provide details behind your application for deregistration. For example, ABC company became a registrant after applying for mandatory VAT registration in December 2017. Their application was approved by the FTA on 25th December 2017. ABC company is now being closed by the management in August 2018. Due to this decision, ABC company will not be producing any taxable supplies in the coming 12 months.
- The exact date from which you must/may deregister will depend on your reason for deregistration:
- If your business no longer produces taxable supplies, then your deregistration requirement/eligibility will commence from the day on which you ceased producing 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.
- You must provide supporting documents along with your application. In order to upload these documents, click the “choose files” button and select the documents that you are submitting.
- Before making your submission, carefully review the authorized signatory. Ensure that the signatory’s provided email address is correct and updated.
- Make sure to read the declaration section and tick all the checkboxes.
- Once everything is in order, click on the “submit” button to complete your application process.
If you submit your deregistration form after 20 business days from the date on which you were to deregister, a fine of AED 10,000 will be incurred.
After you have completed your application, it will take the FTA some time to process and approve your application. You can check the progress of your application from your dashboard. You will also receive SMS and email notifications from the FTA as your application goes through processing.
Deregistration Status Details
After submission, your application will go through the following statuses:
- Pending: the deregistration request has been submitted by you and is awaiting processing approval from the FTA. The pending status will be applied once again after you submit any additional information that the FTA asks for.
- Submitted: the FTA requires additional information from you.
- Pre-approved: your application has been approved by the FTA and there are pending liabilities that you must pay off.
- De-registered: your application has been approved and there are no outstanding liabilities that need to be paid off.
When you submit your application, it will be marked as “pending” on your dashboard. Once FTA accepts the application for processing, it will go from “pending” to “pre-approval” on your dashboard.
As your application is processed, the FTA may ask you to submit a final tax return. You will be able to find this final tax return in your “VAT returns” section and it must be cleared before your application can be approved.
It should be noted that your application will not be approved if any outstanding liabilities or penalties remain unpaid.
Final Tax Return Submission
Your final tax return will cover the latest tax period for which you were a registrant. Your final tax period comes to an end on the effective date of your pre-approved deregistration.
You must submit your final tax return and pay all liabilities associated with it after, a maximum of, 28 days of your effective deregistration date. If you are unable to meet this deadline, you will be subjected to a penalty and your deregistration process will be delayed.
The details of the final tax return must be checked and verified by the taxable party. The final tax return must include all transactions, including supplies for services and goods that are assets of the business being continued by the taxable party when they deregister. If business is continued by a selected trustee in bankruptcy pursuant (Federal Law No.7 on Tax Procedures, 2017), then such services and goods can be exempted.
You must settle any liabilities that are outstanding in order to complete your deregistration.
If you have to pay a due amount, you can do so by going to the “My Payment” tab on your dashboard. In this tab, navigate to the “VAT & Penalty Payment” tab to see the amount that you must pay. Enter this amount in the “enter amount you want to pay” field and click on the “Make Payment” button.
After the payment has been accepted, you can go to the “De-Register” button on your dashboard and click it to complete the deregistration process.
If you have a credit amount owed to you by the FTA, you can simply complete the deregistration process and request for a VAT refund through the online portal.