Introduction

Value Added Tax (VAT) was introduced in the United Arab Emirates (UAE) in 2018 as part of the government’s efforts to diversify revenue sources and enhance economic stability. While many businesses have successfully registered for VAT, there are situations where deregistration becomes necessary. In this essay, we will explore the process of deregistering for UAE VAT.

Reasons for Deregistration

Businesses may need to deregister for VAT due to various reasons, including:

  1. Ceasing Business Operations: If a business decides to close down or cease its operations in the UAE, it should deregister for VAT.
  2. Falling Below the Threshold: If a business’s taxable supplies fall below the mandatory registration threshold (currently AED 375,000), it can voluntarily deregister.
  3. Change in Business Structure: If a business changes its legal structure (e.g., from a sole proprietorship to a company), it may need to deregister.
  4. Transfer of Business Ownership: When a business changes ownership, the new owner may choose to deregister and re-register under their name.

Steps for Deregistration

Follow these steps to deregister for UAE VAT:

  1. Assess Eligibility: Determine if your business meets any of the deregistration criteria mentioned above.
  2. Prepare Documentation:
    • Gather relevant documents, including your VAT registration certificate, financial records, and any other supporting documents.
    • Prepare a letter requesting deregistration, stating the reason (e.g., cessation of business).
  3. Log in to the FTA Portal:
    • Visit the Federal Tax Authority (FTA) portal.
    • Log in using your credentials.
  4. Access the VAT Deregistration Form:
    • Navigate to the VAT section and find the deregistration form.
    • Fill in the required details, including your TRN (Tax Registration Number).
  5. Provide Necessary Information:
    • Specify the reason for deregistration (e.g., cessation of business).
    • Upload the supporting documents.
  6. Submit the Form:
    • Review the information provided.
    • Submit the form electronically.
  7. Await Confirmation:
    • The FTA will review your application.
    • If approved, you will receive a confirmation email.
  8. Update Business Records:
    • Update your business records to reflect the deregistration status.
    • Inform suppliers and customers about the change.

Important Considerations

  • Timeframe: Deregistration usually takes effect from the end of the tax period in which the application was submitted.
  • Final VAT Return: Submit a final VAT return for the period up to the deregistration date.
  • Penalties: Failure to deregister when required may result in penalties.

Conclusion

Deregistering for UAE VAT is a straightforward process, but businesses must ensure compliance with all requirements. By following the steps outlined above, businesses can smoothly transition out of the VAT system when necessary.

Remember to consult the FTA’s official guidelines or seek professional advice for specific cases. Deregistration should be done correctly to avoid any legal or financial implications.