VAT Deregistration in Dubai, UAE

Navigating the process of VAT Deregistration in Dubai, UAE, is much more than mere paperwork; it is a crucial legal procedure to make sure your business stays compliant with the FTA (Federal Tax Authority). Errors or delays can lead to expensive penalties & unpredictable complexities. At Xpert Tax, we offer crystal-clear guidance to simplify the process. We offer comprehensive, end-to-end VAT Deregistration services specifically designed to handle the entire process for you, ensuring a smooth, error-free exit from the UAE VAT system.

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What is VAT Deregistration in UAE?

Understanding What is VAT Deregistration

VAT Deregistration refers to the official procedure of cancelling your business venture’s VAT registration with the Federal Tax Authority. When your application gets approved, the unique TRN (Tax Registration Number) assigned to your businesses gets permanently deactivated.

When this happens, it fundamentally alters your tax obligations. You will not be able to charge Value Added Tax on any of your sales, nor will you be permitted to recover the VAT paid from your end on any business purchases and expenditures. It is a necessary step for every business that no longer aligns with the registration thresholds, highlighting a formal alteration in the tax status of your company.

Who is Eligible for UAE VAT Deregistration?

Navigating Eligibility for UAE VAT Deregistration

Understanding whether you are eligible for VAT Deregistration is the primary and most important step.The Federal Tax Authority outlines a specific set of criteria for when a UAE business needs to deregister (Mandatory) and when it can choose to deregister (Voluntary).

Mandatory VAT Deregistration

You must submit an application for VAT Deregistration within a period of 20 business days of either of the following events:

You completely abstain from manufacturing taxable supplies. An example of this is when your business venture ceases all trading operations.
The overall value of your entity’s taxable supplies over the past year or 12 consecutive months falls under the voluntary registration threshold of around AED 187,500*.

Voluntary VAT Deregistration

You have the choice to apply for voluntary VAT Deregistration in either of the following events:

The net value of your business’ taxable supplies over the past year (12 months) is under the necessary registration threshold of AED 375,000* but still more than the voluntary threshold of AED 187,500*.
At least a year (12 months) has passed since the official date you officially registered for VAT. Numerous businesses opt for this to minimize their administrative burden in the case their turnover has decreased.

VAT Deregistration for Tax Groups

A tax group is also needed to officially deregister if it no longer aligns with the legal requirements, i.e., if the members of the group are not financially associated anymore or if the business structure faces the threat of being utilized for tax evasion.

What is the UAE VAT Deregistration Procedure?

The Complete VAT Deregistration Process

The entire process of VAT Deregistration in Dubai, UAE, is managed online through the EmaraTax portal of the FTA. Here is a detailed look into all the steps involved:

Access the FTA’s EmaraTax Portal:

Navigate to the EmaraTax portal and log in to the account of your business using the registered credentials.

Begin the Application:

On the main dashboard, click on the “Deregistration” option present on the VAT tile to initiate the application.

Give Justification & Details:

You must choose the legal basis for your venture’s deregistration from the list of options provided and specify the exact date you became eligible.

Submit Supporting Documents:

Uploading the documents is a major step. Submit clear copies of every required document and finish the financial template for your taxable expenditures and supplies.

Review & Final Submission:

Double-check each piece of information you have put in. Once you are sure about every detail being correct, submit the application.

FTA Review & Communication:

The Federal Tax Authority will review your application. They possess the right to perform a tax audit and might contact you for any additional information or query clarification.

File the Final VAT Return:

Upon receiving pre-approval, the FTA will inform you of the period for which your final VAT return needs to be filled. Every outstanding return needs to be filed, and every liability needs to be paid.

Secure Final Approval:

Once all the dues are cleared and the final return gets accepted, the FTA will give the final approval and officially cancel your unique TRN. Finally, you can download your official deregistration certificate.

What are the Documents Required for UAE VAT Deregistration?

List of Documents Required for Corporate Tax Registration

Having every required document ready when filing for VAT Deregistration will expedite the procedure. Although requirements can vary, a typically deregistration application requires:

Trade license’s copy along with any recent amendments.

Old/amended sales contracts/licenses.

Amended contract of company set-up.

A comprehensive chart, showcasing business itinerary, suppliers, importers, etc.

An official letter (signed and sealed) acknowledging the business’ absence within the United Arab Emirates.

An official letter highlighting the used TRN.

A formal letter of liquidation or a board resolution that confirms the business activities’ cessation.

Your latest fiscal statements, such as Balance Sheets, P/L statements, etc.

A letter sent by the Ministry of Labour confirming the total number of employees or lack thereof.

Head Office business’ TRN Certificate.

Proof that every outstanding tax and administrative fine has been cleared.

Sample sales and purchase invoices’ copies for relevant periods.

A formal, signed letter on the official company letterhead requesting deregistration.

What Mistakes You Should Avoid Making During UAE VAT Deregistration

Common Mistakes to Avoid During VAT Deregistration

Numerous businesses face fines due to making errors. Be mindful of the following errors to avoid hefty fines:

Missing the Deadline: Businesses who fail to apply for deregistration within the set 20-day window is a very common mistake which results in automatic fines.

Unpaid Liabilities: The Federal Tax Authority will not approve your deregistration application until every dirham of outstanding dues, be it tax or penalty, is paid.

Incomplete Business Closure: If you cease operations, ensure cancelling every trade license, permits, as well as corporate bank accounts, since failing to do so could result in fines.

Ignoring Labor Laws: Ensure every employee visa is cancelled and EoS benefits are completely settled before liquidation.

Penalties for Delayed VAT Deregistration

The Federal Tax Authority imposes strict deadlines. Not submitting an official deregistration application within the set 20 business days of turning eligible will lead to a penalty. The penalty begins at AED 1,000* and goes up by AED 1,000* for every subsequent month the process of application gets delayed, up to a maximum amount of AED 10,000*.

The Impact of UAE VAT Deregistration

Here is what happens when you deregister from VAT in UAE:

No VAT Charges: Post deregistration, business entities cannot charge VAT when it comes to sales. This can significantly lower the costs for customers who are non-VAT-registered. However, the VAT charged on any business purchase cannot be claimed.

Minimized Administrative Burden: VAT Deregistration also abolishes the requirement for filing VAT returns, thereby minimizing costs associated with compliance along with the time spent on managing tax.

Alterations in Fiscal Planning: Businesses should re-evaluate their fiscal tactics, as deregistering from VAT has a direct effect on the cash flow as well as pricing competitiveness.

How Xpert Tax Streamlines the Process of VAT Deregistration for You

The VAt Deregistration procedure in Dubai, UAE, involves numerous steps, strict deadlines, and most importantly, precise documentation. At Xpert Tax, we have a streamlined, end-to-end approach for managing each aspect on your behalf, ensuring every detail is paid attention to. Our comprehensive VAT Deregistration service includes:

Comprehensive Eligibility Evaluation: We start by evaluation your fiscal situation to confirm your eligibility in addition to advising on the optimal deregistration timing.

Meticulous Document Preparation: Our team of experts prepares, reviews, and organizes every fiscal statement, official letter, and form for a precise, complete submission.

Expert Portal Submissions: We manage the complete application process on FTA’s EmaraTax portal, navigating its intricacies to prevent basic submission mistakes.

Final VAT Return Guidance: We help you through the calculation and submission process of your final VAT return, making sure every liability is properly reported and settled.

Direct Liaison with the FTA: We act as your representative and manage all forms of communications with the FTA and respond to any query effectively.

Simplify VAT Deregistration With Xpert Tax!

Do not risk paying costly penalties or fines for delays. Let the experienced professionals at Xpert Tax handle your VAT Deregistration, all the way from start to finish. Get in touch with us today for a free-of-cost professional consultation and ensure your business venture shuts off its VAT file accurately and efficiently.

Common Queries About UAE VAT Deregistration

Frequently Asked Questions (FAQs)

What is meant by a final tax return?

The final tax return refers to the last VAT return you submit, converting the entire tax period that ends on your deregistration’s official date. It needs to be filed and paid off within a period of 28 days from the FTA’s specified date.

Can the Federal Tax Authority audit my business during deregistration?

Yes. The FTA holds the right to conduct a complete tax audit of your business after getting a deregistration application to authenticate your final tax position.

Do I get a certificate post VAT Deregistration?

Yes. Post the FTA’s final approval, you can download your official VAT Deregistration certificate from the EmaraTax portal’s dashboard.