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VAT deregistration This is the official termination of a business VAT registration with the FTA. After the deregistration, the business will no longer be allowed to:
⇒ Issue VAT invoices
⇒ File VAT returns
⇒ Claim input VAT on purchases
⇒ Keep under VAT Law VAT-specific recordkeeping.
A business is also to be deregistered when it stops carrying out taxable transactions or has ceased to satisfy the minimum financial requirements on VAT registration.
→Numerous enterprises are punished because of mistakes in the deregistration of VAT. The following are some of the mistakes:
1.Unpaid Tax Liabilities: Before deregistration, businesses would have to clear the outstanding VAT payments.
2.Failure to cancel trade licences and permits: Businesses should cancel all the licenses issued by the government.
3.Neglect in Labor Law Compliance: Before deregistration, settle labour expenses among employees as well as the benefits and visa cancellations.
4.Incomplete Crossing of Bank Accounts: Undress the corporate bank accounts and liquidate the outstanding debts.
VAT deregistration in the UAE may be tricky and subject to the regulations of the FTA.
⇒ Assessing the eligibility to VAT deregistration.
⇒ Investigating and completing all the required documents.
⇒ The management of VAT returns and penalty payments.
⇒ Connecting with the FTA to have an efficient processing.
It is important to know the various forms of VAT deregistration in the UAE where business firms wish to abide by the tax obligations and to make an easy transition out of the VAT scheme.
1.Compulsory VAT Deregistration:
1. Organizations should comply with certain conditions of de-registration of VAT in UAE according to FTA. A company that is registered in Dubai has to seek a VAT deregistration in case the company ceases selling any taxable goods and services.
2.In addition, a taxable person is required to deregister where its annual turnover or purchases subject to taxation during the last 12 months are less than the AED 187,500 limit. The outcome of failing to submit an application to VAT de-registration UAE within 20 business days implies fines of AED 10,000 or higher.
2.UAE Voluntary VAT Deregistration:
→Deregistration of VAT can be made voluntary to businesses in Dubai in two cases:
1. In case their yearly turnover of 12 months is less than AED 375,000 and more than AED 187,500.
2.In case they would like to cancel VAT registration in UAE even when they are still in operation.
Having no time limit, voluntary VAT de-registration UAE can be submitted by business organizations at its own convenience, with all compliance conditions taken into account.
→A VAT deregistration process of the UAE follows the following step-by-step process:
1.Access EmaraTax Portal:
⇒ Go to the EmaraTax dashboard with your credentials or UAE PASS.
2.Select Company:
⇒ Select the taxable entity (company) associated with your profile.
3.Start Deregistration:
⇒ When the VAT tile is clicked, under the actions button, you can choose an option of deregister and the application begins.
4.Review and Update:
⇒ Make edits or check bank details (where necessary).
⇒ Ensure that you have all the documents needed to deregister.
5.Fill Application:
⇒ E-file deregistration form and indicate the deregistration reason.
⇒ Attach supporting documents e.g. trade license cancellation, financial statements, evidence of cessation, etc.
⇒ Type in the eligibility date and effective date to deregister (with valid reasons in case of change).
6.Send Product and Expense Information:
⇒ Disclose taxable product and expense information in Dirhams (UAE).
7.Check Authorized Signatory:
⇒ Check signatory information prior to continuing.
8.Review and Declaration:
⇒ Discuss all the given information.
⇒ Submit your application.
→In order to deregister in Dubai, businesses are required to provide:
⇒ Duplicate of repudiated trade license.
⇒ Closure confirmed by letter of liquidation or board resolution.
⇒ Recent audited (or unaudited) financial statement (P&L, balance sheet, trial balance).
⇒ Letter by the ministry of labour on the number of the employees.
⇒New sales contracts or license.
⇒ Information regarding the suppliers and importers.
⇒ Formal statement of business closure (where necessary).
⇒ Incident of any unpaid tax payment evidence.
→Deregulation of VAT in UAE follows the following steps:
1.Step 1: Log in to EmaraTax Portal:
→ Log-in to EmaraTax portal using your credentials.
→ In the event that you are a new user, create an account or click the Forgot Password button to retrieve your account.
2.Step 2: File VAT Deregistration Operating:
→ Go to the VAT part and choose an option of deregister.
→ In case of necessity, refresh bank information and move ahead.
3.Step 3: Justify and Documenting Materials:
→ Choose the cause of deregistration.
→ Enter effective date and supporting information.
→ Provide financial turnover information, taxable income and expenses.
4.Step 4: Application Submission and Review:
→Examine all facts prior to application
→ The FTA will evaluate your application, check your tax status of your tax returns, and check whether you have any liabilities or not.
5.Step 5: Approval of Confirmation and Deregistration:
→ Once approved the VAT number will be cancelled.
→ In the case of the need of some more documents, FTA will inform the applicant.
→The impacts of VAT deregistration in UAE are as follows:
1.No VAT Charges:
⇒After deregistration, the businesses will not be able to impose VAT on sales and this can reduce prices to those who do not pay tax. Nonetheless, business purchases are no longer allowed to claim VAT.
2.Less Administrative Nuisance:
⇒ The deregistration of VAT removes the obligation to submit VAT returns, which is cheaper to comply and time is also saved in managing taxes.
3.Reforms in Financial Planning:
⇒ VAT deregistration impacts the cash flow and pricing competitiveness; therefore, enterprises should re-evaluate their financial policy.
→Key benefits include:
1.Essentials to avoid penalties: Due and correct deregistration will assist in avoiding fines of AED 1,000 monthly up to AED 10, 000 in case of delay or failure to obey.
2.Time and resource saving: Specialists deal with complicated documents and technical VAT rules, which allow companies to devote their time and attention to business.
3.Minimization of risks of errors: Professionals prevent frequent errors in record preparations and eligibility requirements that may cause audit or rejection.
4.Proper closure: They make sure that final VAT returns are made properly, debts are paid and refunds are made in case there is any credit.
5.Financial management: The company can enhance its financial management by eliminating unnecessary VAT compliance burden, which improves the cash flow and saves on administrative expenses.
Here are some common questions about VAT Deregistration
The last tax return is the last tax return that you submit prior to deregistering VAT with the FTA. The last day of taxation is the date of your Deregistration of VAT. Within 28 days of Deregistration, you have to file your final tax returns and pay any payable taxes. Not doing it in time will mean punishment and your de-registration procedure may be postponed.
You (VAT Registrant) or tax agents in UAE or a legal representative can apply to FTA with VAT Deregistration application.
A 1,000 AED penalty and a monthly penalty, up to a maximum of 10,000 AED, respectively, is imposed on failure to file a deregistration application by the due date as indicated in the Tax Law.
To log in with the Emaratax platform you can use your FTA account or UAE ID pass and deregister with VAT according to the steps provided here.
→The de-registration will be required when:
The business ceases to make taxable supplies.
This is a decrease in taxable turnover to less than AED 187,500 during the previous 12 months.
Voluntary deregistration can be made in case the turnover is taxable and is less than AED 375,000 (mandatory) but greater than AED 187,500.
The application should be done within 20 business days of eligibility to prevent penalties.
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