How to Cancel VAT Registration in UAE?

If you’re a business owner in the UAE, you might reach a stage where staying VAT-registered is no longer necessary. Maybe your company’s revenue has fallen below the mandatory threshold, or perhaps you’ve stopped making taxable supplies altogether. In such cases, understanding how to cancel VAT registration in UAE becomes crucial.

VAT cancelation, also referred to as how to deregister from VAT UAE, is not just about closing a tax account; it’s about ensuring your business remains fully compliant with the Federal Tax Authority (FTA) rules. The process involves submitting the correct application, settling any outstanding liabilities, and ensuring your tax returns are up to date. While it might sound complex at first, it’s actually a straightforward and manageable process when broken down step by step.

In this guide, we’ll cover everything you need to know about VAT deregistration in the UAE, from eligibility conditions to the application process, timelines, and important points to watch out for, so you can smoothly handle your VAT exit without any penalties.

When Should You Cancel Your VAT Registration in the UAE?

Knowing when to cancel your VAT registration in the UAE is crucial for staying compliant and avoiding unnecessary penalties. VAT cancelation isn’t just paperwork; it reflects that your business no longer meets the conditions for VAT or chooses to step back voluntarily.

You must apply for VAT deregistration in the UAE under these circumstances (as per Article 21 of the VAT Law):

• Business activities have stopped: If your company has completely stopped supplying taxable goods or services, it’s time to deregister.
• Turnover falls below the threshold: If your business turnover in the past 12 months was less than AED 187,500 and you do not expect it to exceed this threshold in the next 30 days, cancelation becomes necessary.

In these cases, deregistering is mandatory.

Voluntary VAT Deregistration

Sometimes, businesses can choose to deregister even if it’s not strictly required. According to Article 22, a business may voluntarily apply for VAT deregistration if:

• Taxable supplies in the previous 12 months were less than AED 375,000.

However, Article 23 adds an important rule: a business that initially registered voluntarily cannot deregister within the first 12 months of registration.

What is the Eligibility to Cancel VAT in the UAE?

VAT cancelation in the UAE is a formal process that allows a business to cancel its VAT registration when it no longer meets the criteria for being a taxable person. Understanding VAT deregistration rules is essential to ensure compliance and avoid penalties.

A business or individual can apply for VAT deregistration in the UAE under the following conditions:

1. Business Stops Taxable Supplies: If your business ceases to provide goods or services subject to VAT, you are eligible to deregister. This includes firms that close operations entirely or pivot to activities not subject to VAT.
2. Annual Revenue Falls Below Threshold: Businesses whose taxable supplies (and imports) fall below the mandatory VAT registration threshold, currently AED 187,500, may apply for voluntary cancelation.
3. Temporary Suspension of Business Activities: If your business temporarily halts all taxable activities for more than six months, you may request VAT cancelation.
4. Non-Trading Entities: Companies that were registered for VAT but never commenced trading can apply for deregistration immediately.
5. Changes in Business Structure: If your company merges, dissolves, or is liquidated, it becomes eligible to cancel its VAT registration.

It’s essential to comply with the VAT deregistration rules established by the Federal Tax Authority (FTA) to avoid fines or legal consequences. Businesses must submit accurate records of all taxable supplies and ensure that all outstanding VAT is paid before approval for deregistration is granted.

Documents Required for VAT Cancelation in UAE

If you’re planning to cancel your VAT registration in the UAE, it’s essential to understand the VAT deregistration rules and ensure all necessary documents are ready.

The Federal Tax Authority (FTA) requires specific paperwork to process your request efficiently. Here’s a comprehensive guide to the documents required for VAT deregistration in UAE:

• Most recent financial statements & turnover template
• Copy of revoked trade or business license
• Board resolution authorising VAT deregistration
• Letter of liquidation (if closing)
• Evidence suggests that business operations have ceased
• Updated HR records & Ministry of Labour letter on employees
• Sample invoices & letters confirming chargeable expenses
• Previous and updated sales agreements or licenses
• TRNs, correspondence mentioning TRNs, and Head Office Business Certificate
• Diagram of business operations (suppliers, customers, countries)
• Outline of suppliers, importers, and partners
• Modified business setup agreement (if applicable)
• Sealed letter confirming non-operation in the UAE (if required)

By preparing these documents in advance, you ensure a smooth process when applying for VAT deregistration. Following the VAT deregistration requirements in UAE carefully helps avoid delays and ensures compliance with local tax laws.

How to Cancel VAT Registration in UAE?

Following VAT deregistration rules, here’s how you can deregister VAT in UAE step by step:

Step 1: Log in to Your EmaraTax Account

The first step is to access your EmaraTax account, which is the UAE’s official tax portal.

• Use your registered username and password or log in using UAE PASS.
• If two-factor authentication is enabled, you’ll receive a One-Time Password (OTP) via your email or mobile. Enter it to proceed.
• New users: Click Sign Up to create an account and link to your business.

Tip: Ensure your account details are up to date, including your email address and mobile number, as all VAT deregistration communications will be sent to this address.

Step 2: Select Your Company Profile

Once logged in, you’ll see a dashboard with a list of Taxable Persons linked to your account.

• Select the company for which you want to cancel VAT registration and click ‘View’.
• If your company isn’t listed, you’ll need to create a Taxable Person in EmaraTax by entering your company details, trade license, and VAT registration number.

This step ensures you are deregistering the correct entity and prevents errors in the application.

Step 3: Initiate VAT Deregistration Application

Now it’s time to officially start the process of deregistering from VAT in the UAE:

• On the company’s VAT dashboard, click Actions on the VAT tile.
• Select Deregister to open the VAT deregistration form.

Tip: This form is the central application where all your details, documents, and reasons for deregistration will be captured.

Step 4: Update or Review Your Business Information

Before submitting the deregistration application:

• Click “Edit/Review” if you need to update details such as bank account, contact information, or company address.
• Ensure that all essential documents, such as financial statements, are prepared.
• Click ‘Proceed to De-Registration’ and then ‘Start’ to initiate the formal process.

Note: If your business is registered under the Tourist Refund System (TRS), your VAT deregistration won’t be finalised until TRS deregistration is completed.

Step 5: Provide Required Information and Upload Documents

You will now need to fill in all necessary information and submit supporting documents.

• Fill every mandatory field accurately to avoid rejections.
• Upload documents in accepted formats, such as PDF or Excel.
• Select the reason for deregistration: e.g., business closure, suspension of taxable activities, or turnover below the VAT threshold.
• Depending on your selected reason, the system will display additional fields to capture specific details.

Tip: Keep scanned copies of all documents ready before starting this step, as it saves a significant amount of time.

Step 6: Specify Eligible Deregistration Date

Next, you’ll enter the date from which your business becomes eligible for VAT deregistration.

• Automatic date: EmaraTax often calculates this based on your business records.
• Custom date: If you have a specific reason, you can request a different effective date.

Important: This date determines your VAT liability period, so make sure it is accurate.

Step 7: Enter Taxable Supplies and Expenses

To support your deregistration, you must provide evidence of taxable supplies and expenses:

• Use the Excel sheet provided in the system to record figures.
• All amounts must be in AED (UAE Dirhams).
• After completing the sheet, click Next Step to go to the Authorised Signatory section.

Tip: Double-check your numbers, as errors in taxable supplies or expenses can cause delays in approval.

Step 8: Verify Authorised Signatory

This step ensures that the person applying is authorised:

• Check the details of the Authorised Signatory listed in the system.
• You can handle back and forth using the Previous and Next buttons to review details.
• Confirm the signature, name, and designation.

Tip: Only an authorised signatory can finalise the deregistration application.

Step 9: Review and Submit the Application

Finally, go through the entire application before submitting:

• Review every detail, including personal information, business details, taxable supplies, and uploaded documents.
• Once confirmed, click Submit.
• After submission, EmaraTax will process your deregistration, and you will receive confirmation once it has been approved.

Tip: Keep a copy of the submitted application and acknowledgement for your records.

By following these steps carefully, you can complete the VAT deregistration process in the UAE smoothly while complying with the relevant VAT deregistration rules.

Common Mistakes During VAT Deregistration in UAE

Deregistering VAT in the UAE can seem straightforward, but businesses often stumble due to misunderstandings or oversights. Here are some of the most common mistakes:

1. Applying Before Meeting Eligibility Criteria

Many businesses attempt to deregister before meeting the requirements outlined by the Federal Tax Authority (FTA), such as having taxable supplies below the mandatory threshold or ceasing business operations altogether. Failing to meet these criteria may result in the rejection of your application.

2. Incomplete or Incorrect Documentation

Submitting documents with missing information, such as revoked trade licenses, financial statements, or employee details, can cause delays in the process. It’s essential to ensure all required documents are accurate, updated, and aligned with FTA guidelines.

3. Neglecting Outstanding VAT Payments

Some businesses overlook pending VAT liabilities or unfiled returns before applying for deregistration. Any unpaid VAT must be settled to avoid fines or rejection of the deregistration request.

4. Incorrect Reporting of Supplies

Errors in reporting taxable, zero-rated, or exempt supplies can lead to discrepancies. Accurate records of turnover and VAT transactions are crucial when deregistering.

5. Failure to Update Business Records

Failing to reflect changes in HR records, contracts, or financial agreements may create inconsistencies that raise red flags during FTA review.

6. Ignoring VAT Deregistration Deadlines

Businesses must apply for deregistration within a specified period after becoming eligible. Missing this window can result in penalties or continued VAT obligations.

7. Not Using the Emara Tax Portal Properly

Attempting deregistration outside the official online portal or not following the correct steps in the Emara Tax Account can lead to delays or rejected applications.

8. Assuming Deregistration Cancels All Liabilities

Some businesses mistakenly believe VAT deregistration eliminates all past liabilities. Any prior obligations or audits remain enforceable.

Smoothly Handle Your VAT Exit with Shuraa Tax!

Understanding how to cancel VAT registration in UAE may seem overwhelming at first, but with the proper guidance, it becomes a straightforward process. By following the VAT cancelation rules, meeting the eligibility criteria, and preparing all the necessary documents for VAT deregistration in the UAE, you can ensure a smooth exit without incurring penalties.

Remember, whether you’re figuring out how to deregister for VAT in the UAE, learning how to deregister from VAT in the UAE, or handling the process of deregistering VAT in the UAE, staying compliant is key. Carefully following the VAT deregistration requirements in the UAE, from logging into your EmaraTax account to submitting accurate financial records, will save you time, stress, and unnecessary fines.

For expert assistance and to make sure your deregistration process is handled seamlessly, turn to Shuraa Tax. Their team can guide you through every step and ensure your VAT exit is fully compliant with the Federal Tax Authority.

📞 Call: +(971) 44081900
💬 WhatsApp: +(971) 508912062
📧 Email: info@shuraatax.com

Frequently Asked Questions

1. What is the timeline for VAT deregistration approval in the UAE?

After submitting your deregistration application on EmaraTax, the Federal Tax Authority (FTA) typically takes 20 business days to review and respond. However, this can vary based on:

• The accuracy of your application and documents.
• Whether you have outstanding liabilities or returns.
• The need for any additional clarification or audits.

It’s recommended to track your application status regularly and respond promptly to FTA requests.

2. When is a business required to cancel VAT registration in the UAE?

A business is mandated to cancel its VAT registration if it no longer meets the conditions set by the Federal Tax Authority (FTA). This includes situations where:

• The business stops making taxable supplies, or
• Its taxable turnover falls below AED 187,500 over the past 12 months and is not expected to exceed that amount in the next 30 days.

3. Can a business apply for voluntary VAT deregistration in the UAE?

Yes, a business may apply for voluntary deregistration if its taxable supplies over the past 12 months are less than AED 375,000. However, if the business registered voluntarily in the first place, it cannot deregister within the initial 12 months of registration, as per Article 23 of the UAE VAT Law.

4. Can a business re-register for VAT in the future?

Yes. If a deregistered business later meets the VAT registration threshold (currently AED 375,000 for mandatory registration), it may apply to re-register with the FTA through EmaraTax. It is important to note that previous non-compliance may impact the approval process.

5. Is a final VAT return required before deregistration is approved?

Yes. Before a deregistration request can be processed, the business must:

• File all pending VAT returns
• Submit a final VAT return up to the deregistration date
• Pay any outstanding VAT liabilities

The FTA will only approve the cancellation once the business is fully compliant and all obligations have been fulfilled.