How to apply for VAT Deregistration in UAE? - Xact Auditing

If you are running a business in the UAE then you must be aware of the mechanism of VAT in UAE. It is important to understand the rules and regulations of VAT specifically when it is time to cancel your VAT number. Many business owners forget this part. Staying registered under VAT when you don’t need to be can lead to trouble.

What Is VAT Deregistration?

VAT deregistration in UAE means removing your business from the Federal Tax Authority (FTA) VAT portal and cancel your Tax Registration Number (TRN). Once the business is deregistered, it no longer need to collect VAT or file tax returns.

This is not something you can skip. It is required by law under certain conditions. If you miss it, you might get a penalty from the FTA.

Who Needs to Deregister?

There are two types of businesses that must deregister:

Mandatory

You must apply for cancellation if:

1. Your taxable turnover falls below the mandatory threshold of AED 375,000
2. You have closed down your business.
3. You no longer make taxable supplies.

You must apply within 20 business days of meeting the condition. If not, the FTA can impose VAT fines on you AED 1,000, and additional fines may be imposed if the delay is prolonged.

Voluntary

You may apply voluntarily if:

1. Your revenue is below AED 375,000 but above AED 187,500
2. You registered voluntarily before, but your business no longer qualifies

Still, you must remain registered for at least 12 months before submitting your application.

How to Apply for VAT Deregistration?

Step-by-Step Process:

Step 1: Log in to the FTA Portal

Go to the FTA website and log in to your account.

Step 2: Fill Out the Deregistration Form

Provide the correct reason and complete the required details. Choose the right date. Do not guess. If you are unsure, seek help from a professional tax consultant.

Step 3: Submit Final VAT Return

Before FTA approval, you must submit your most recent VAT return. This includes all pending invoices and adjustments.

Step 4: Pay Any Dues

Clear all pending VAT payments and fines before submitting your application. You will not be able to complete the process until all the outstanding tax payments or fines are cleared.

Step 5: Wait for Approval

FTA will review your request. If everything is fine, they will confirm your deregistration. You’ll get a cancellation certificate.

Common Mistakes to Avoid

Here are the most common mistakes:

• Applying too late
• Giving wrong information
• Not submitting final return
• Forgetting to pay the pending VAT
• Not keeping proper records.

If you are unsure, always consult a professional tax consultant.

What Happens After Deregistration?

Once the VAT cancellation application is approved:

• You must stop charging VAT from your clients
• You are no longer required to file VAT returns on Emaratax
• But, you must keep your tax records for at least 5 years

FTA can still ask for past records during this time. So store everything safely.

VAT Deregistration application must be submitted under the following circumstances:

1. If your revenue is falling and no longer meets the threshold
2. If you are switching to a new business model
3. If you are closing the business
4. If you registered voluntarily but now find it is not needed

With the UAE’s tax rules becoming stricter, it is best not to wait. Review your VAT status at least once a year to ensure accuracy. It could save you time and money.