VAT Deregistration Service in the UAE

The implementation of the Value Added Tax in the UAE at the beginning of the year January 2018 was a great step signaling the UAE diversifying revenue sources other than the traditional oil wealth. Every company operating in the UAE that deals with the supply of tangible and or other goods and services that attract the payment of the Value Added Tax, is supposed to register for this type of taxation if their turnover surpasses a specific level. There are some situations when businesses may have to deregister from the VAT scheme. It is important to note that this is done on condition that the process is either compulsory or done voluntarily based on certain conditions.

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Deregistration For VAT

VAT deregistration can be recognized as the process of removal of a business from the Value Added Tax registration maintained by the Federal Tax Authority. The moment a business is deregistered, it is credited with the formal legal right to no longer charge VAT for supplies, file VAT returns, or fulfill other criteria that are associated with this tax type. Specifically, deregistration is more useful for companies that fail to go through the legal provisions of VAT registration or companies that have found the cost of compliance to be too steep. Therefore, the management has to take serious steps towards the procurement of better advice from some of the best tax consultants.

Voluntary Deregistration:

Some of the conditions required for a firm to voluntary demerge from VAT may include :

Falling Below the Mandatory Threshold: The voluntary deregistration threshold is AED 187,500 while the mandatory deregistration threshold is AED 375,000 for the previous twelve months, should a business taxable supplies and imports are more than the former and less than the latter, the business may apply for the deregistration.

Implications of VAT Deregistration

Deregistering from VAT in the UAE has several implications that businesses need to be aware of:

No Longer Charging VAT:-In this way, after deregistration, the business will not charge VAT on their supplies which will also make its goods and services cheaper than those of VAT registered customers who will have to pass the tax onto the final customer.
Reduced Compliance Burden:- VAT registered enterprises are freed from periodic filings of VAT returns and VAT record keeping hence less paperwork and compliance expenses are incurred by the business.

What are the VAT deregistration causes?

Any business for VAT purposes is required to de-register if it is making no supplies which are taxable or in case the total turnover becomes less than Voluntary Deregistration Turnover which is AED 187,500. They are also able to apply for voluntary deregistration if the turnover which ranges between AED 187,500 and AED 375, 000.

When a business can apply for VAT deregistration?

According to Article 21 of VAT Law, the application for VAT deregistration should be filed within 20 business days from the date of occurrence of the event which invites such deregistration.

Where and how does the application for VAT deregistration be submitted?

The VAT deregistration application should be filed electronically by the registered person or his tax agent or any other legal representative to the FTA.

Are there penalties for missing the registration deadline?

Yes, missing the deadline to submit your deregistration application can result in an initial fine of AED 1,000. If the delay continues, an additional AED 1,000 may be charged for each subsequent delay, with the total fines capped at AED 10,000.

What is the duration of the VAT deregistration Process?

VAT deregistration process timeline is commonly 20 business days which could be extended in special circumstances.

Is there any possibility to save the draft of the deregistration application?

As a draft,the deregistration application can be saved to use later but it is mandatory to complete within 60 days, otherwise, it will be abandoned.

What is the status of the EmaraTax account after deregistration?

After deregistering for VAT, your EmaraTax account remains active. However, your VAT registration status will be updated to reflect that you are deregistered, labeled as E8 – Deregistered.