Businesses in the UAE can terminate their VAT registration with the UAE Federal Tax Authority through a procedure known as VAT deregistration, which is also known as VAT cancellation or termination of VAT registration. In the UAE, approval for VAT deregistration is subject to several requirements and the existence of legal justification. Businesses in the UAE have the option to deregister from VAT if they no longer engage in taxable supply activities or if their turnover within the first 12 months of FTA registration does not exceed AED 187,000. This blog will explore the specifics of company VAT deregistration.
Deregister for VAT in the UAE
In the UAE, VAT deregistration is a digital procedure carried out through the FTA site. To start the VAT deregistration procedure, firms that cease operations must first acquire a company liquidation notice from the appropriate government agencies. BMS helps businesses cancel their VAT registrations by providing efficient VAT deregistration services in Dubai and throughout the UAE.
According to a recent update from the FTA, companies have the option to opt out of the VAT under certain circumstances stated in Federal Decree-Law No. 8 of 2017.
In the UAE, VAT Deregistration is a statutory process that permits businesses to stop paying taxes, either voluntarily or as required by specific rules.
The FTA will carefully assess any applications for VAT deregistration in the UAE that are submitted by companies. The FTA will proceed to revoke the entity's related VAT registration number if it complied with all legal criteria. The FTA may, however, reject the application for deregistration if the stated grounds for deregistration are invalid and the prerequisites are not satisfied.
The FTA has highlighted that Taxable Persons' voluntary compliance is the only need for the UAE Tax System to function. This is relevant to a number of factors, including registration, tax return filing, payment of overdue taxes, and deregistration procedures.
As a result, a company in the UAE may opt to file for VAT deregistration or may be required to do so in certain situations, which are explained below:
A Registrant cannot request VAT deregistration until 12 months have passed since the date of tax registration, as per Article 17.
A company may start the voluntary deregistration procedure if:
- Twelve months have passed since the tax registration date.
- It no longer does taxable goods sales.
- Even after engaging in taxable transactions, its yearly revenue is less than AED 187,500.
- The voluntary registration threshold will not be exceeded by the whole expected value of taxable supplies or costs that will be subject to tax in the next 30-day period.
- The company has permanently stopped trading.
In simple terms, a company may choose to voluntarily deregister for VAT if it has been registered for at least a year, is no longer engaged in the sale of taxable goods, has an annual turnover of less than AED 187,500, does not anticipate ever exceeding the voluntary registration threshold, or shuts down permanently.
If one of the following applies, a business must start the necessary deregistration process:
- The company's earnings are less than AED 375,000.
- The company stops offering any taxed items.
In essence, a company is required to go through the statutory deregistration process if its income falls below AED 375,000 or if it ceases delivering taxable items.
VAT Deregistration for Groups
In the following circumstances, the tax authority, FTA, will approve the termination of a group's VAT registration:
- If the requirements for group recognition are no longer met by the registered enterprises.
- If the group's businesses are no longer financially related to one another.
- Keeping group tax status is recommended if there is a risk that it may encourage tax evasion.
- As soon as the deregistration is granted, the authorities will invalidate the VAT number given out during registration. Any company in the group that wants to reapply for VAT registration can do so by starting the registration procedure over from scratch, and a new VAT number will be given to them.
The reason for rejecting the application
There will be no changes to registration unless:
- The application isn't delivered within the allotted 20 business days.
- There are still unpaid administrative penalties and taxes.
- For the registration period, all required tax returns have not yet been filed.
- According to Cabinet Resolution No. 40 of 2017 on Violations of Tax Laws in the UAE, failure to submit a de-registration application within the allotted time frames would result in a penalty of Dh 10,000 in administrative fines.
How to deregister VAT in UAE?
The procedure for deregistration is as follows:
- Make sure you adhere to all conditions for UAE VAT deregistration.
- By logging in, you can access your VAT Account through the FTA Portal.
- Fill out the VAT deregistration form completely, including all relevant information and the deregistration's reason.
- Your registered phone number will send you an SMS confirming the submission of your form successfully.
- Submit the form in digital form.
When an application is successfully filed, its first status will be "Pre-Approved." Once all unpaid financial responsibilities have been satisfied, it will only switch to "Approved".
It is not wise to proceed through with the VAT cancellation process if you plan to keep operating your firm or anticipate making additional investments. If you anticipate big returns during the following twelve months, it is preferable in such cases to keep your TRN and file zero-tax returns.
How BMS Helps you with VAT Deregistration in UAE
Specialized VAT Deregistration services from BMS are entirely compatible with Emirati VAT laws and are available in the UAE. Every element is carefully examined by BMS, which streamlines and simplifies the deregistration procedure. BMS analyzes your company's operations from the ground up and estimates the likelihood of deregistration, streamlining the entire process.
We offer a wide variety of VAT services in Dubai and understand the importance of VAT services for any business entity operating in the UAE. These services include:
- VAT Training
- VAT Registration
- VAT Deregistration
- VAT Compliance and Control
- VAT Filing and Payment
- VAT's Impact on Company Cash Flow, and more.
Apart from providing VAT deregistration services in Dubai, BMS extends a range of business solutions, including CFO expertise, auditing, accounting, software support, and due diligence services. If you require guidance on the UAE VAT Deregistration process or assistance with your existing business, please feel free to get in touch with us. BMS is ready to assist!
Choose BMS for the best VAT Deregistration services in the UAE
In conclusion, BMS is your reliable guide through the VAT Deregistration procedure in the UAE. With the help of our expert guidance and extensive services, we make sure that your company complies with tax regulations and deregistration goes smoothly. Please contact us at any time to discuss your business needs .Your success is our top priority at BMS.