Introduction
In Dubai, many businesses are registered under VAT (Value Added Tax). However, not every business needs to stay registered forever. There are times when a business may need to deregister from VAT. If you are running a business in Dubai, it is important to know when and why VAT deregistration is necessary.
This article will explain which businesses need VAT deregistration in Dubai, the conditions for it, how to apply, and what happens if you do not deregister on time.
Note:- VAT Deregistration Service in Dubai helps businesses legally cancel their VAT registration when they no longer meet the requirements, such as low turnover or business closure. This service ensures proper filing with the Federal Tax Authority (FTA), avoids penalties, and keeps your business compliant with UAE tax laws.
What is VAT Deregistration?
VAT deregistration means removing your business from the VAT system. This is done by informing the Federal Tax Authority (FTA) that your business no longer meets the conditions to stay registered for VAT.
Once deregistered, your business will no longer collect or pay VAT, and you won’t need to file VAT returns.
Why VAT Deregistration is Important
VAT deregistration is not just about stopping VAT payments. It is a legal process that protects your business from penalties and fines. If your business continues to be registered under VAT without needing to be, it can lead to:
- Unnecessary paperwork
- Extra costs
- Fines for non-compliance
So, deregistration helps you stay compliant and avoid extra trouble.
Who Needs to Deregister for VAT in Dubai?
There are specific reasons why a business must or can deregister from VAT in Dubai. These reasons fall into two main categories:
1. Mandatory VAT Deregistration
This is when a business must deregister for VAT. The Federal Tax Authority makes it compulsory for businesses in the following situations:
a) Business has stopped making taxable supplies
If your business has stopped providing goods or services that are subject to VAT and you do not plan to restart within the next 12 months, you must apply for VAT deregistration.
b) Business turnover is below the threshold
In the UAE, the mandatory VAT registration threshold is AED 375,000 per year. If your total taxable turnover falls below this level, and you don’t expect it to go back up within the next 30 days, you must apply for deregistration.
2. Voluntary VAT Deregistration
Sometimes, a business can choose to deregister even if it’s not mandatory. This is known as voluntary deregistration.
a) Turnover falls below voluntary threshold
If your business was registered voluntarily because your turnover was above AED 187,500 but below AED 375,000, and now it falls below AED 187,500, you can apply for voluntary deregistration.
b) Business restructuring
If your business is merging, closing, or changing its legal structure, you may choose to deregister voluntarily.
When Should You Apply for VAT Deregistration?
Timing is important. The Federal Tax Authority gives businesses 20 business days to apply for VAT deregistration from the date they become eligible.
If you miss this deadline, you may face a penalty of AED 10,000. So, make sure you apply on time.
How to Apply for VAT Deregistration in Dubai?
Applying for VAT deregistration is simple if you follow the correct steps. You can complete the process online using the FTA e-Services portal.
Step-by-Step VAT Deregistration Process
Step 1: Log in to the FTA Portal
Go to the and log in using your registered account.
Step 2: Go to VAT Deregistration Form
In your account dashboard, you will see an option for VAT Deregistration. Click on it to access the form.
Step 3: Fill in the Form
Provide all required details such as:
- Reason for deregistration
- Date you stopped taxable supplies
- Supporting documents (like business closure proof or bank statements)
Step 4: Submit the Form
After filling in the information, submit the form online.
Step 5: Wait for Approval
The FTA will review your application. If everything is correct, they will approve the deregistration and notify you.
Documents Required for VAT Deregistration
To successfully deregister, you may need to provide documents such as:
- Trade license cancellation (if business is closing)
- Bank statements
- Sales and purchase records
- Last VAT return
- Audited financials (if available)
Having these documents ready will help speed up the process.
What Happens After VAT Deregistration?
After your application is approved, your business will:
- No longer charge VAT on its goods or services
- Stop filing VAT returns
- Be required to keep VAT records for at least 5 years after deregistration
- Settle any outstanding VAT liabilities before final deregistration
Keep in mind, even after deregistration, the FTA can audit your business records to ensure you followed the rules.
Common Mistakes to Avoid in VAT Deregistration
It is easy to make small errors when applying for deregistration. Here are some common mistakes and how to avoid them:
Mistake 1: Delaying the application
As mentioned earlier, you only have 20 business days to apply. If you delay, the fine is AED 10,000.
Tip: Set a reminder or ask your accountant to track your VAT registration status regularly.
Mistake 2: Incomplete documents
Missing documents can lead to rejection or delays.
Tip: Prepare all documents before applying. Double-check each one before submission.
Mistake 3: Not settling VAT dues
You must clear all VAT dues before the FTA can approve your deregistration.
Tip: Submit your final VAT return and pay any outstanding amounts.
How to Know If Your Business Needs VAT Deregistration?
Here are a few questions you can ask to check if your business needs to deregister:
- Has my business stopped all taxable activity?
- Is my taxable turnover below AED 187,500 or AED 375,000?
- Am I closing or restructuring my business?
- Do I no longer plan to continue taxable supplies?
If you answer yes to any of these questions, you may need to start the deregistration process.
What If You Want to Register Again After Deregistration?
If your business becomes eligible again for VAT, you can always re-register with the FTA.
You will need to go through the same registration process again and provide updated documents.
Importance of Professional Help
VAT rules in Dubai can be confusing, especially when it comes to deregistration. Getting help from a tax consultant or accounting firm can make things much easier.
They can:
- Check if your business is eligible
- File your application correctly
- Submit your final VAT returns
- Keep you updated with FTA regulations
This saves you time and avoids costly mistakes.
Conclusion
VAT deregistration is an important part of running a business in Dubai. Whether you are stopping your business, earning less revenue, or restructuring, knowing when to deregister can help you avoid fines and stay legally safe.
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