Looking to cancel your VAT registration in the UAE? Understanding the de-registration of VAT in UAE is crucial for businesses that no longer meet the mandatory registration criteria. Whether your company has ceased operations, fallen below the taxable threshold, or undergone structural changes, applying for VAT deregistration in UAE is a legal requirement.
At Shuraa Tax, we simplify the VAT deregistration in UAE process, ensuring compliance with Federal Tax Authority (FTA) regulations while avoiding unnecessary penalties.
What is VAT Deregistration in UAE?
VAT deregistration in UAE refers to the official cancellation of a company’s VAT registration with the Federal Tax Authority (FTA). This process is necessary when a business no longer meets the eligibility criteria for VAT registration . Companies must comply with VAT Law requirements when applying for deregistration to avoid fines and legal consequences.
Types of VAT Deregistration in UAE
Understanding the different types of VAT deregistration in the UAE is essential for businesses looking to comply with tax regulations while ensuring a smooth exit from the VAT system.
Mandatory VAT Deregistration
Entities must meet specific requirements for de-registration of VAT in UAE as per FTA regulations. A registered company must apply for VAT deregistration in Dubai if it stops selling taxable products and services.
Moreover, a taxable person must deregister if their annual turnover or taxable purchases over the previous 12 months fall below the AED 187,500 threshold. Failure to apply for VAT de-registration UAE within the stipulated 20 business days results in AED 10,000 or more penalties.
Voluntary VAT Deregistration in UAE
Businesses may opt for voluntary VAT deregistration services in Dubai under two circumstances:
- If their 12-month annual turnover is less than AED 375,000 but above AED 187,500.
- If they wish to cancel VAT registration in UAE despite continuing operations.
With no specific time restrictions, businesses can apply for voluntary VAT de-registration UAE at their convenience, ensuring all compliance requirements are met.
VAT Deregistration for Groups
The FTA authorises VAT deregistration UAE for tax groups under the following conditions:
- The registered business no longer meets tax group requirements.
- There is no longer an economic, financial, or regulatory association.
- The tax group structure could lead to tax evasion or significantly decrease tax payments.
Once the deregistration of VAT in UAE is approved, the VAT number issued upon registration is revoked. Businesses wishing to re-register can apply and obtain a new VAT number.
How to Cancel VAT Registration in UAE?
The VAT deregistration process in UAE involves the following steps:
Step 1: Log in to the EmaraTax Portal
- Access the EmaraTax portal with your credentials.
- If you are a new user, sign up or use the ‘Forgot Password’ option to recover your account.
Step 2: Initiate VAT Deregistration Application
- Navigate to the VAT section and select ‘Deregister.’
- If needed, update bank details before proceeding.
Step 3: Provide Justification and Supporting Documents
- Select the reason for deregistration.
- Enter the effective date and supporting details.
- Submit financial turnover details, taxable income, and expenses.
Step 4: Submit and Review the Application
- Verify all information before applying.
- The FTA will assess your application, review your tax return status, and check for outstanding liabilities.
Step 5: Receive Confirmation and Deregistration Approval
- Upon approval, the VAT number will be cancelled.
- If additional documents are required, FTA will notify the applicant.
Documents Required for VAT Deregistration in UAE
Businesses must submit the following documents for VAT deregistration in Dubai:
- Copy of revoked trade license
- Letter of liquidation or board resolution confirming closure
- Latest audited or unaudited financial statement (P&L, balance sheet, trial balance)
- Ministry of Labor letter regarding employee count
- Updated sales agreements or licensing documents
- Supplier and importer details
- Formal declaration of business closure (if required)
- Any outstanding tax payment proof
Common Mistakes to Avoid During VAT Deregistration in UAE
Many businesses face penalties due to errors in VAT deregistration. Some common mistakes include:
- Unpaid Tax Liabilities: Businesses must clear all outstanding VAT payments before deregistration.
- Failure to Cancel Trade Licenses and Permits: Businesses must cancel all relevant government-issued licenses.
- Ignoring Labor Law Compliance: Ensure employee wages, benefits, and visa cancellations are settled before deregistration.
- Incomplete Closure of Bank Accounts: Close corporate bank accounts and settle outstanding debts.
Impact of VAT Deregistration in UAE
The effects of VAT deregistration in the UAE are as follows:
No VAT Charges
Once deregistered, businesses cannot charge VAT on sales, which can lower prices for non-VAT-registered customers. However, VAT on business purchases can no longer be claimed.
Reduced Administrative Burden
Deregistering from VAT eliminates the need to file VAT returns, reducing compliance costs and time spent on tax management.
Changes in Financial Planning
Businesses should reassess their financial strategy as VAT deregistration affects cash flow and pricing competitiveness.
Why Choose Our VAT Deregistration Services in Dubai?
Navigating VAT deregistration in UAE can be complex and requires compliance with FTA regulations. Our expert team ensures a smooth and hassle-free process by:
- Evaluating eligibility for VAT deregistration
- Preparing and submitting all the necessary documents
- Handling VAT return filings and penalty settlements
- Liaising with the FTA for efficient processing
If your business qualifies for VAT deregistration in Dubai, contact Shuraa Tax today for professional assistance in seamlessly managing your tax obligations.
Services offered by Shuraa Tax
Below are the services which Shuraa Tax offers:
