Before going to VAT deregistration in UAE, Lets find out what are the VAT rules and regulation in United Arab Emirates (All States). The FTA implemented the VAT system in the UAE. Businesses operating in the UAE are obliged to pay 10% VAT on certain specified goods and services they supply in the country. The VAT rate may vary from time to time depending upon the development of the economic situation in the UAE and its budget revenues, which affect its expenditures. The businesses supplying taxable goods or services must register themselves with the Federal Tax Authority (FTA) to be eligible to collect VAT on taxable sales.
VAT registration in UAE is mandatory if you are an importing company or if you are going to sell goods within the country, either wholesale or retail; it must have a VAT number with it. However, as time goes on, you may find out that your business is no longer profitable and thus decide to shut it down by canceling the VAT registration. This article aims to give you basic knowledge about VAT registration in UAE and how to apply for VAT deregistration in UAE when the need arises.
What is VAT Deregistration in UAE?
To start with, let’s take a look at what VAT stands for. VAT stands for Value Added Tax.
As mentioned above, the deregistration of VAT is a process by which an existing VAT-registered business cancels its existing registration with FTA. The registration number will be nullified after deregistration. However, it may still be possible for your business to register for VAT again (by submitting a new application and paying the required fees). The time between when your business is deregistered and when it can re-register depends on whether or not your period of registration has already expired. If you have already completed your normal period of registr
Non-taxable firms need to know the process of deregistration so that they can maintain their VAT-exempt status. The expert advice of a reputable UAE tax consultancy could be employed to apply for VAT deregistration and prevent administrative penalties.
Who must apply for VAT Deregistration in UAE?
There are only certain circumstances in which a business or individual registered for VAT can apply for deregistration:
If a company or individual does not anticipate making any taxable supplies over the next 12 months, they must apply for VAT deregistration.
VAT Deregistration is required for businesses or individuals who continue to make taxable supplies but whose value in the preceding 12 months has fallen below the Voluntary Registration Threshold (AED 187,500).
If your business is a VAT-registered company and you’re planning on shutting down or making significant changes to your company’s operations, then you will need to deregister from VAT. This includes closing down, merging with another business, or transferring all of your assets to another entity. Additionally, if you have sold or disposed of more than 50 percent of your total assets and are filing for bankruptcy or restructuring as an LLC Company; then also you need to deregister from VAT.
Eligibility for VAT Deregistration in UAE:
Any VAT-registered companies whose value of taxable supplies decreased below a value of AED 375,000 but not less than AED 187,500 are eligible to deregister their VAT status. But, a business will compulsorily have to deregister from VAT when the company is below the obligatory level for taxable supplies.
VAT deregistration can take two forms based on the guidelines of the FTA. First, Companies can apply for voluntary VAT deregistration. Second, they have an option to cancel the VAT deregistration themselves (which is known as voluntary), or the FTA can cancel their registration. In either case, it’s important to understand what factors make them eligible for this process and the process in general. To outsource its tax services, businesses are encouraged to find the best VAT consultancy firms in the UAE to understand all the legal aspects of the UAE norms.
Time Frame for VAT De-registration:
You can easily apply for VAT deregistration by visiting your FTA portals.
Please take note that if you submit this deregistration form more than 20 business days from the time you were supposed to deregister, you will be charged the late deregistration penalty fee of AED 10,000.
Organizations that are closing need a business liquidation letter from the government to apply for VAT deregistration.
How to Deregister for VAT in the UAE?
A business can apply for VAT deregistration in UAE by logging into its VAT portal. Step-by-step instructions are as follows:
Step 1: Sign in to the FTA VAT portal.
- Navigate to the VAT Registration area of the dashboard and click the ‘De-Register’ button.
- Taxpayer Information will be pre-populated in the deregistration application.
- Choose from the drop-down list on which basis you’re deregistering for VAT.
- Business is no longer able to supply a taxable product.
- When it comes to making taxable supplies, a business falls below the Voluntary Threshold.
- Supplies the business provides above the Voluntary Threshold but below the Mandatory Threshold are subject to sales tax.
- Something Other.
- Effective date from which a tax-exempt organization needs to register varies based on the reasons for its deregistration.
- After clicking on ‘Choose Files’, all the relevant supporting documents should be uploaded.
- Make sure to review and check the authorized signatory and declaration section of the application form before you submit it.
If the reason is valid, the FTA will approve the voluntary deregistration. The FTA will also verify the following:
- The status of returns
- Tax payments owing
- Penalties that are pending
VAT deregistration can be pre-approved if the reason is valid, but the final approval will be withheld until the outstanding payments are made.
You will have to deal with all the expenses you owe before you can be taken off of our records.
If you need to pay the due payment, you can do so by going to the My Payment tab on your dashboard. From this tab, navigate to the VAT & Penalty Payment tab to see the exact amount. Enter the Amount box, put the number you want to donate and click the Pay with Visa/Mastercard button.
You can complete the deregistration process after the payment has been accepted by clicking the “De-Register” button on your dashboard.
Through the online portal, you can request a VAT refund if the FTA owes you a credit amount.
Deregistration for VAT Groups
An application for amendment of a tax group can be submitted by the representative member to the FTA to remove a member. A removed member who is eligible and required to register for VAT but has not yet done so may need to complete a VAT registration application.
If the group no longer meets the requirements for a VAT group, the VAT deregistration will be approved. If individual companies in the organization cease being financially intertwined with the rest, the entire group can be deregistered. De-registration will be approved if the taxes of the organization may cause tax evasion.
What are the consequences of deregistering my company from VAT?
Deregistering your company from VAT will prevent you from making further taxable supplies of goods and services. You must therefore ensure that you continue to pay any remaining amounts due on all accounts payable, such as debts to creditors or employees’ salaries or professional fees.
Any unpaid amounts may result in enforcement action being taken against you, including a fine of up to AED 10,000. If your business is deregistered before you have fully paid off debts, these are now considered taxable supplies. However, any tax already paid by you on these debts can be claimed as an input tax credit and credited against other liabilities or filed as a refund with FTA upon request. Further advice should be sought from your accountant before deregistering
VAT Consultants in the UAE:
Companies must apply for VAT deregistration when they cease producing taxable supplies or terminate their operations as a result of stopping their VAT registration with the FTA. VAT-registered companies, however, need to understand when and how to cancel their VAT registrations. This is where a leading VAT consultancy firm like Capital Plus Auditing of Accounts can assist. In addition to providing VAT registration and VAT returns by the FTA regulations and guidelines, this company provides VAT deregistration services as well. deregistration.
The accounting department of Capital Plus Tax helps you to register and deregister accounts and helps you with related tax information, which avoids charges and provides peace of mind. To top it all off, they guarantee that your future transactions are not adversely affected by any undisclosed issues. As a result, if you are looking for a professional company to assist you with VAT needs, Capital Plus Auditing of accounts is a company that cannot be surpassed. To cancel your VAT registration in Dubai, submit your application to the FTA branch office along with supporting documents within one month after closing your business activities or after ceasing to provide taxable services.