VAT Deregistration: Every country imposes taxes on its citizens and businesses to raise revenue. The government uses it to meet citizens’ budgetary demands, including financing public projects and government & making the business territory in the country facilitative for economic growth.
Just like a business must obtain a tax registration, it is also essential that the company applies for VAT deregistration when no longer making taxable supplies and does not intend to create them in the future.
What is VAT Deregistration?
VAT De-registration is a procedure where the VAT registered company cancels their registration. This process becomes compulsory when the business discontinues its operations and or the necessity of VAT registration is no longer needed. The company must apply for VAT De-registration & the Federal Tax Authority cancels the registration when it receives the application. Along with the application of De-registration, the company should also submit the required documents to the FTA. The companies applying for De-registration must know all the procedures of the VAT De-registration & the failure to employ will attract administrative penalties.
VAT Deregister of a company
A company registered under VAT can apply for VAT De-registration in the following cases:
- A company must apply for VAT De-registration if it has stopped making taxable goods and no longer wishes to make any taxable stocks over the next 12-month period.
- A company must apply for VAT De-registration if it is still making taxable goods & the value in the initial 12 calendar months is less than the Voluntary Registration Threshold(VRT), AED 187,500.
- when the company is still producing taxable goods but the value in the earlier 12 months was less than the Mandatory Registration Threshold, that is, AED 375,000
- A company may apply for VAT De-registration if 12 months have passed since the date of registration of the company.
- A company that is voluntarily registered cannot apply for VAT De-registration.
Note:
The companies need to apply for VAT De-registration within 20 business days of becoming eligible for De-registration. The failure to De-register within this timeframe is subject to a penalty of AED 10,000.
How to De-register for VAT?
Companies choosing for VAT De-registration must apply to the Federal Tax Authority. The essential details and reasons for the company VAT De-registration is also submitted. The Federal Tax Authority verifies the motive for VAT De-registration, if the application is valid, the authority will approve the De-registration. The FTA will also confirm the Status of Returns, Due tax payments, and any pending penalties.
If the motive for De-registration is valid, a pre-approval for VAT De-registration is secured. However, the final approval will delay until all the due payments are clear.
How to apply for VAT De-registration of a company?
A company can apply to VAT De-registration by using the following steps:
1) Log in to the company’s FTA VAT portal.
2) Against the VAT registration, click on the De-Register button.
3) Taxable Person Details are included in the de-registration application.
4) Mention the reasons for VAT De-registration.
Select from the drop-down list on what basis the company wants to de-register for VAT.
- The company no longer makes taxable supplies
- The company making taxable supplies, above the Voluntary Threshold but below the Mandatory Threshold
- The company making taxable supplies, but below the Voluntary Threshold
- Other – please specify the reason
5) The effective date from which the company is eligible to de-register relies based on the de-registration
6)The company must upload all the relevant & supporting documents by clicking on Choose Files.
7) The company must review and confirm the approved signatory and declaration section of the application form before submission.
After applying for the VAT De-registration,
- The Federal Tax Authority will examine the application & if they confirm the de-registration, the status of VAT De-Registration will be Pre-Approved.
- Next, the company has to submit the final VAT Return Filing,
- Once the last VAT Return filing is submitted, the company must clear all the due liabilities to complete the VAT De-registration process.
Companies in the UAE apply for VAT De-registration with the Federal Tax Authority for many reasons, including the stoppage of producing taxable supplies or when the company stops its operations.
In such circumstances, the company must apply for VAT De-registration.
