VAT Deregistration in UAE

A taxable person or business in the UAE may cancel their VAT registration and suspend their Tax Registration number (TRN) through VAT deregistration. The FTA VAT Deregistration procedure is done online.

The Federal Tax Authority (FTA) only permits businesses and individuals to deregister from VAT. AED 10,000 will be the late VAT Deregistration penalty.

Documents Required for VAT Deregistration in UAE

To deregister your firm from VAT in the United Arab Emirates, you must provide the following documents:

• Copy of revoked trade license, letter of liquidation, and board resolution
• The company's most recent financial statement may be the balance sheet, P&L statement, or trial balance (Audited or Unaudited)
• Ministry of Labor letter regarding the number of employees
• previous and updated sales agreements or licensing
• Modified business setup agreement
• Template for financial turnover, including taxable income and costs as of the registration date
• A letter from the Ministry of Labor attesting to the workforce size
• Evidence that the business operations have stopped (if applicable)
• An outline of the business's suppliers and importers
• Formal letter, sealed and signed, confirming the non-operation of business in the United Arab Emirates (If Required) 
• A diagram that displays the business itinerary, suppliers, importers, and the nations where the supplier and customer are located
• An example of an invoice
• Multiple TRNs
• official correspondence mentioning the TRN in use
• TRN Head Office Business Certificate
• Essential Documents:
  
  

The following are the templates that you might have to fill out and submit with your online application:

• Chargeable Expenses
• Taxable items

Who Needs to De-register for VAT?

Only under the following conditions may an individual or entity registered for VAT file for VAT deregistration:

• A company or individual must apply for VAT Deregistration if they cease producing taxable supplies and do not anticipate producing any in the ensuing year.
• Businesses and individuals who continue to make taxable supplies but whose total value during the previous 12 months falls below the AED 187,500 voluntary registration threshold are required to file for VAT deregistration.
• You may request VAT deregistration if your company is still producing taxable supply but the value during the preceding 12 months was below the mandatory registration threshold (AED 375,000), and 12 months have passed since the date of registration if you voluntarily registered.
  

It should be noted that a person who voluntarily registered under VAT is not eligible to apply for de-registration during the year that follows the registration date. The VAT Late registration fee is ten thousand AED.

VAT Deregistration Process | Step-by-Step Guide

Deregistering from VAT in the UAE involves a structured process through the Federal Tax Authority's (FTA) EmaraTax portal. Here's a comprehensive guide based on the provided document:

Step 1: Log In to EmaraTax

• Access the EmaraTax portal with your login credentials or UAE Pass.
• If you don’t have an account, click ‘Sign Up’ to create one.
• In case of forgotten passwords, use the ‘Forgot Password’ feature.

Step 2: Access VAT Deregistration Application

• After logging in, navigate to your dashboard.
• Under the VAT tile, click ‘Actions’, and select ‘Deregister’.

Step 3: Update Information (Optional)

• If needed, click ‘Edit/Review’ to update your bank details before proceeding.
• If no updates are required, click ‘Proceed to De-Registration’.
• Note: For those registered in the Tourist Refund System (TRS), deregistration cannot be fully processed until TRS deregistration is completed.

Step 4: Read Guidelines and Instructions

• Review the guidelines and instructions displayed.
• Check the confirmation box to acknowledge your understanding, then click ‘Start’.

Step 5: Complete Deregistration Application Sections

1. Choose Basis for Deregistration:

• Select the reason for deregistration, such as cessation of taxable supplies or no longer meeting VAT registration thresholds.
• Based on your selection, specific input fields will appear.

2. Provide Supporting Information:

• Enter the eligible date for deregistration.
• Review or modify the effective deregistration date if necessary and provide reasons for changes.

3. Submit Taxable Supplies and Expenses:

• Option 1: Download and fill out the Excel template provided, then upload it.
• Option 2: Enter taxable supplies and expenses directly into the portal.
• Ensure figures are reported in AED.

Step 6:Review and Provide Authorized Signatory Details

• Review the details of the authorized signatory.
• Save the application as a draft if you wish to complete it later.
• Proceed to the next step by clicking ‘Next Step’.

Step 7:Final Review and Declaration

• Verify all the details entered across the application.
• Check the declaration box to confirm the accuracy of the provided information.
• Click ‘Submit’ to finalize the application.

Step 8: Post-Submission Actions

• Application Reference Number: Once submitted, a reference number is generated for tracking and communication with the FTA.
• FTA Review: The FTA will review your application and either pre-approve or reject it. You may be asked for additional documents.
• Final Tax Return: The FTA may request a final tax return, which must be filed along with settling any outstanding tax liabilities or penalties.
• Outstanding Liabilities:
  • Deregistration is only complete once all dues, including penalties, are cleared.
  • For credits with the FTA, initiate the refund process via the EmaraTax portal.
• Check Application Status:
  • Monitor the application status on your dashboard.
  • Notifications on updates will be sent via email or SMS.

Common Mistakes During VAT Deregistration in UAE

Exiting a business in the UAE is not that easy. There are common errors related to VAT deregistration as follows:

Overlooking Tax Obligations

• Unsettled Taxes: All taxes such as VAT, corporate tax, and other levies should be cleared before the exit.
• Pending Tax Returns: All pending tax returns should be filed on time to avoid penalties and delay.

Neglecting Labor Law Compliance

• Unpaid Labor Costs: Clear all outstandings of employees such as salary, end service benefits and social security contributions.
• Inadequate Labor Documents: File all labor documentations including cancellation of visa and termination of labor contracts.

Failure to Cancel Licenses and Permits

• Uncancelled Licenses: Cancel the relevant licenses and permits issued by the government bodies which include among others, trade licenses, municipality permits and DED registrations.
• Incomplete Cancellation Procedures: Each license or permit must be canceled using the precise procedures in case some complications arise in future.

Delay in Closing Bank Account

• Outstanding Debts: Clear outstanding debts and liabilities of business bank account
• Incomplete Closure Procedures: The bank procedures must be strictly followed in regards to account closing and the transfer of remaining funds.

Failure to Update Legal and Commercial Records

• Un Updated Records: Update all legal and commercial records, including the Commercial Register, to reflect the closure of business.
• Inadequate Record Keeping: Accurate and complete record keeping safe for future reference and potential audits.

Consequence of Business Deregistration in UAE

Business deregistration in the UAE is an imperative where there is a need for it. However, it carries several consequences.

• Legal Entity Status Loss: The company no longer has the legal capacity to enter into agreements, hold property, or file and defend lawsuits.
• Cancellation of Licenses and Permits: All licenses and permits held by the business are revoked.
• Closing Business Bank Accounts: Any remaining funds must be moved or withdrawn, and business bank accounts must be closed.sponsoring the employees' visa. 
• Settlement of Tax Liability: The business has to pay off all outstanding tax liabilities before deregistration.
• Possible Legal Repercussions: Failure to comply with the deregistration process may lead to further action and penalties or even lawsuits against the business.

Conclusion 

Reyson Badger provides expert VAT Deregistration services in the UAE. Our team examines the issues in detail and simplifies the deregistration process. Our team evaluates your business operations and deregistration choices from the ground up so you can make the best decision. Contact us today to find out more about our services.