A Step-by-Step Guide to Deregister for VAT in UAE
Value Added Tax (VAT) is a fundamental part of doing business in the United Arab Emirates (UAE). It is a consumption tax levied on the value added to goods and services at each stage of production or distribution. VAT was introduced in the UAE in 2018, with the purpose of diversifying government revenue sources and reducing reliance on oil income. It plays a crucial role in funding public services and infrastructure development in the country.
In this context, it is essential for businesses to understand the VAT regulations, including when and how to deregister for VAT. Deregistration for VAT becomes relevant when businesses no longer meet the criteria for mandatory VAT registration. In this article, we will guide you through the process of deregistering for VAT in the UAE.
A Step-by-Step Guide to Deregister for VAT in UAE
Requirements for VAT Deregistration in the UAE
To begin the process of VAT deregistration in the UAE, businesses must first meet specific criteria. These criteria are as follows:
- The business is no longer making any taxable supplies.
- The business is making taxable supplies over a period of twelve consecutive months but below the voluntary VAT registration threshold of AED 187,500.
Thesis Statement: To deregister for VAT in the UAE, businesses must submit a deregistration application to the Federal Tax Authority (FTA) within 20 business days of meeting the deregistration criteria.
Steps to Deregister for VAT in the UAE
Now, let’s delve into the step-by-step process of deregistering for VAT in the UAE:
Step 1: Review the Deregistration Criteria
Before proceeding with the deregistration process, businesses should review the criteria mentioned earlier to ensure they meet the eligibility requirements.
Understanding When Deregistration is Necessary
Before delving into the steps, it’s crucial to recognize the circumstances that make deregistration necessary:
- Falling Below the Threshold: If your business’s taxable turnover falls below the mandatory VAT registration threshold of AED 375,000 in the preceding 12 months, you become eligible for deregistration.
- Cessation of Business: If your business ceases operations or is sold, you should consider deregistering for VAT.
- Change in Business Activity: If your business undergoes a significant change in its core activities such that it no longer meets the VAT registration criteria, deregistration may be required.
Step 2: Prepare the Deregistration Application
Once eligibility is confirmed, businesses can proceed with preparing the deregistration application. This application is a crucial document that provides the FTA with essential information. It can be submitted online through the FTA website. The following information is typically required in the application:
- Business name and tax registration number (TRN).
- Reason for deregistration.
- Date on which the business ceased to make taxable supplies.
- Details of any outstanding VAT liabilities.
Step 3: Submit the Deregistration Application
The deregistration application can be submitted through the FTA’s online portal or by post. It is important to ensure that all information provided is accurate and up-to-date.
- Log In to the FTA Portal: Access the FTA e-Services portal using your registered credentials.
- Submit Deregistration Form: Complete the VAT deregistration form with accurate and up-to-date information.
- Attach Supporting Documents: Upload the necessary documentation, including financial records and VAT returns.
Step 4: Receive Confirmation from the FTA
After the deregistration application is submitted, the FTA will review it and notify the business of the outcome. If the application is approved, the business will be officially deregistered from VAT. This means they will no longer be required to file VAT returns or pay VAT.
IV. Await FTA Review
After you’ve submitted your deregistration request, the FTA will review your application. This review process may take several weeks, during which the FTA will assess your eligibility for deregistration.
V. VAT Deregistration Certificate
Once the FTA approves your deregistration, they will issue a VAT Deregistration Certificate. This certificate officially confirms your VAT deregistration.
VI. Inform Relevant Parties
After receiving the VAT Deregistration Certificate, you should inform your suppliers and clients of your deregistration status. Update your invoices and records accordingly to avoid any misunderstandings.
VII. Settle Outstanding VAT Liabilities
If there are any outstanding VAT liabilities or penalties, ensure they are settled promptly to avoid further complications.
VIII. Maintain Records
Even after deregistration, it is essential to maintain financial records for the prescribed period, usually five years, as these records may be required for audit or tax inspection purposes.
Can I deregister for VAT?
Yes, you can deregister for VAT if you meet one of the following criteria:
- Your business is no longer making any taxable supplies.
- Your business is making taxable supplies over a period of (12) consecutive months but below the voluntary VAT registration threshold of AED 187,500.
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Should I deregister for VAT?
Whether or not you should deregister for VAT depends on your specific circumstances. If you are no longer making any taxable supplies, then you should definitely deregister to avoid having to file VAT returns and pay VAT.
However, if you are still making taxable supplies, but below the voluntary VAT registration threshold, then you may want to consider whether or not deregistering is in your best interests. There are some benefits to remaining VAT registered, such as being able to claim input tax credits on your purchases.
When to deregister for VAT?
You should deregister for VAT within 20 business days of meeting the deregistration criteria.
How long does it take to deregister for VAT?
The FTA will review your deregistration application and notify you of the outcome within 20 business days of submission. If your application is approved, you will be deregistered from VAT and will no longer be required to file VAT returns or pay VAT.
How to deregister for VAT?
To deregister for VAT, you can submit a deregistration application online through the FTA website. The application will require you to provide the following information:
- Business name and tax registration number (TRN).
- Reason for deregistration.
- Date on which the business ceased to make taxable supplies.
- Details of any outstanding VAT liabilities.
When can you deregister for VAT?
You can deregister for VAT at any time, provided that you meet the deregistration criteria.
Can I deregister for VAT if I close my license?
Yes, you can deregister for VAT if you close your license. However, you must first settle any outstanding VAT liabilities.
Can we deregister for VAT in UAE?
Yes, businesses in the UAE can deregister for VAT if they meet the deregistration criteria.
How to deregister for VAT in UAE?
To deregister for VAT in the UAE, you can submit a deregistration application online through the FTA website.
Should I deregister for VAT in UAE?
Whether or not you should deregister for VAT in the UAE depends on your specific circumstances. If you are no longer making any taxable supplies, then you should definitely deregister to avoid having to file VAT returns and pay VAT.
However, if you are still making taxable supplies, but below the voluntary VAT registration threshold, then you may want to consider whether or not deregistering is in your best interests. There are some benefits to remaining VAT registered, such as being able to claim input tax credits on your purchases.
When to deregister for VAT in UAE?
You should deregister for VAT in the UAE within 20 business days of meeting the deregistration criteria.
In the United Arab Emirates (UAE), businesses can deregister for Value Added Tax (VAT) under specific circumstances. Deregistration is allowed if a business no longer makes taxable supplies or if its taxable supplies over twelve consecutive months remain below the voluntary VAT registration threshold of AED 187,500. To deregister for VAT, businesses must submit a deregistration application to the Federal Tax Authority (FTA) within 20 business days of meeting the criteria. This application can be conveniently submitted online through the FTA’s website. The FTA reviews the application within 20 business days and notifies the business of the outcome. If approved, the business is officially deregistered from VAT and is no longer obligated to file VAT returns or pay VAT. Deregistering for VAT in the UAE can be a strategic move to reduce administrative burdens and ensure compliance with tax regulations.
How to file VAT in UAE?
2. How to file VAT return in UAE?
- To file a VAT return in the UAE, businesses need to log in to the FTA’s online portal, complete the VAT return form by reporting their sales, expenses, and tax calculations, and then submit it within the specified timeframe.
3. How to claim VAT refund in UAE?
- VAT refunds in the UAE are generally for businesses rather than individuals. Businesses can claim VAT refunds by following the FTA’s guidelines and submitting the necessary documents to support their refund claim.
4. How to claim VAT refund in UAE for tourists?
- Tourists visiting the UAE can claim a VAT refund on eligible purchases made at participating retailers. To do this, they need to follow the UAE’s Tourist Refund Scheme procedures and present their invoices and goods at the airport when departing.
5. Anyone experienced with filing VAT input tax recovery?
- Experienced tax professionals and accountants often handle VAT input tax recovery for businesses. This process involves claiming back the VAT paid on eligible business expenses. It is advisable to seek expert advice to ensure compliance and maximize recovery.
6. Do I need to pay VAT?
- Whether you need to pay VAT in the UAE depends on your business turnover and the type of goods or services you provide. Businesses exceeding the mandatory VAT registration threshold are required to charge and pay VAT, while smaller businesses may be exempt.
7. How can I get 5% VAT refund in Dubai?
- Tourists can get a 5% VAT refund on eligible purchases by following the UAE’s Tourist Refund Scheme. This involves submitting invoices and goods for inspection at the airport before departure.
8. How can I avoid VAT in Dubai?
- VAT in Dubai and the UAE is generally not avoidable for most businesses and consumers. It is a legal requirement, and attempting to evade VAT can result in penalties. Businesses should focus on proper compliance.
9. Can you claim VAT back from Dubai?
- VAT refunds in Dubai are typically for tourists who make eligible purchases. Businesses can claim VAT input tax recovery for their legitimate business expenses.
10. How can I avoid VAT in UAE? – VAT in the UAE is a legal obligation for many businesses. There are limited exemptions and zero-rated supplies, but avoiding VAT is not generally advisable and can lead to legal consequences.
11. Can I deregister for VAT? –
Yes, businesses that no longer meet the VAT registration threshold or have ceased trading activities can apply for deregistration. The process involves submitting the required documentation to the FTA.
12. VAT exemption UAE – VAT exemptions in the UAE may apply to certain financial services, residential properties, bare land, local passenger transport, and more. It’s important to consult the FTA guidelines to understand specific exemptions.
13. VAT exempt supplies list –
The VAT exempt supplies list includes categories of goods and services that are exempt from VAT in the UAE. This list is periodically updated by the Federal Tax Authority (FTA), and businesses should refer to it for accurate information.
