Introduction
VAT deregistration is an important step for businesses in Dubai that are no longer required to be registered for VAT. It could happen when your business closes, your revenue drops below the threshold, or if you are no longer making taxable supplies. This blog will guide you step-by-step on how to apply for VAT deregistration in Dubai, using simple and easy-to-understand language.
Let’s break it down for you.
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What is VAT Deregistration?
VAT deregistration means cancelling your VAT registration with the Federal Tax Authority (FTA) in the UAE. Once you deregister, you are no longer required to charge VAT on your sales or file VAT returns.
Why would a business need to deregister for VAT?
There are a few reasons a business might need or want to deregister for VAT:
- The business has closed down permanently
- The business no longer meets the minimum turnover limit for VAT registration
- The business is no longer making taxable supplies
In short, if your business does not need to be under VAT anymore, you can apply to cancel it.
Who Can Apply for VAT Deregistration in Dubai?
Not every business can apply for VAT deregistration. The Federal Tax Authority (FTA) has clear rules for who is allowed to deregister. You must meet certain conditions.
Compulsory Deregistration
This is when the business must deregister from VAT. You are required to cancel your VAT registration if:
- Your business stops making taxable supplies
- Your revenue falls below AED 187,500, which is the minimum threshold for VAT registration
You should apply for VAT deregistration within 20 business days from the date you are no longer eligible. If you don’t do this on time, you may get a fine.
Voluntary Deregistration
You can choose to deregister if:
- Your taxable supplies or expenses are below AED 375,000 for the last 12 months
- You had registered voluntarily, but your business activities no longer meet the criteria
In both cases, your records should support your application.
What Are the Conditions for VAT Deregistration?
Before you apply, you must make sure you meet these conditions:
- Your business is no longer making taxable supplies
- Your revenue is below the threshold
- You have submitted all your VAT returns
- You have paid all outstanding VAT and fines
Submitting VAT Returns
Before you apply for VAT deregistration, you must submit all your VAT returns until the date you apply. If you have missed any returns or if there are any unpaid VAT dues, your application may get rejected.
Clearing All VAT Liabilities
Make sure your business has paid any VAT amount due, including any fines or penalties. The FTA will not process your deregistration request until all dues are paid.
Step-by-Step Guide to Apply for VAT Deregistration in Dubai
Let’s go through the step-by-step process of how to apply for VAT deregistration on the FTA portal.
Step 1: Log in to the FTA Portal
- Visit the Federal Tax Authority (FTA) website
- Log in using your registered username and password
Step 2: Go to the VAT Deregistration Section
- Once logged in, click on “VAT”
- Then click on “Deregister”
You will see a form to fill out for VAT deregistration.
Step 3: Fill Out the Deregistration Form
You need to enter the following details in the deregistration form:
- The reason for deregistration (choose from the options)
- The date when the business stopped making taxable supplies
- Supporting documents (such as cancellation of trade license, low turnover evidence, etc.)
Be honest and accurate. Wrong or incomplete information can delay your application.
Step 4: Submit the Application
Once you fill in the form and upload the documents, click “Submit”.
The FTA will review your application. If everything is in order, you will receive an email confirming your deregistration.
Documents Required for VAT Deregistration
You need to provide certain documents to prove your eligibility for deregistration. These may include:
- A copy of the business license cancellation (if business is closed)
- Financial records showing a drop in turnover
- Bank statements or accounting reports
- Last VAT return filed
- Proof of payment of VAT and fines
Make sure the documents are clear and recent.
What Happens After You Apply?
After you apply for VAT deregistration, the FTA will review your application. This may take a few working days to a few weeks, depending on your case.
Possible Outcomes
There are two possible results:
- Approval: If your documents and information are complete, and there are no outstanding VAT returns or payments, your application will be approved. You will get a confirmation and your VAT account will be marked as “deregistered.”
- Rejection: If your application is missing information, you have unpaid VAT, or your business does not qualify, the FTA will reject your application. You will need to correct the issues and reapply.
What Are the Penalties for Late VAT Deregistration?
Failing to apply for VAT deregistration on time can lead to fines.
Current Fine for Late Deregistration
As of now, the penalty for late VAT deregistration is AED 1,000, and it may increase if further delayed.
It’s important to submit your application within 20 business days of becoming ineligible for VAT registration to avoid fines.
Tips to Avoid Mistakes While Deregistering
Here are some simple tips to help you avoid common errors while applying for VAT deregistration:
Double-Check Your Information
Make sure all the details you provide in the deregistration form match your records. Any mismatch can cause delays.
Submit All VAT Returns
Do not apply for deregistration unless you have filed all VAT returns. Even if there is no sale or purchase in a period, you must submit a nil return.
Keep Records Ready
Make sure your business records are up-to-date and easy to access. This includes bank statements, sales records, and tax invoices.
Clear All Dues
Pay any outstanding VAT or penalties before you submit your application. The FTA will not process your request if there are unpaid amounts.
Can You Re-Register for VAT After Deregistration?
Yes, you can. If your business becomes eligible again in the future, you can apply for new VAT registration.
When to Re-Register
You may need to re-register if:
- Your business restarts and crosses the registration threshold
- You start a new business under a new license
- You start making taxable supplies again
In such cases, visit the FTA portal and apply for new VAT registration.
Final Thoughts
VAT deregistration is an important process and should be done carefully. Whether your business is closing or your revenue is below the required limit, you must apply for deregistration within the FTA’s given time frame.
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