VAT deregistration refers to the formal process of cancelling a business’s VAT registration (TRN) with the Federal Tax Authority (FTA) in the UAE. It is a legal requirement for businesses that no longer meet the conditions for VAT registration and must be handled with care to avoid penalties.
This guide outlines when VAT deregistration is required, the types of deregistration, how to apply, and key points to consider.
Who Should Apply?
Businesses must apply for VAT deregistration if:
- Their taxable supplies and imports in the last 12 months are below AED 187,500
- The business has ceased operations or no longer makes taxable supplies
- They registered voluntarily and no longer meet the minimum threshold of AED 187,500 for the past 12 months
- A branch or business segment is closing while the main license remains active under a different TRN
Types of VAT Deregistration
There are two main scenarios :
1. Mandatory Deregistration
If your business no longer meets the VAT registration requirements (e.g., taxable turnover is below AED 187,500 or business activity has stopped), you must apply for deregistration within 20 business days from the date of eligibility. Failure to do so may result in administrative penalties from the FTA.
2. Voluntary Deregistration
A business that voluntarily registered for VAT but has not exceeded the AED 187,500 threshold in the past 12 months can request voluntary deregistration. The process is similar but not mandatory, and the decision lies with the FTA based on the submitted evidence.
Timeline and Deadlines
- Application Deadline: 20 business days from the date you become eligible for deregistration
- FTA Review Time: Typically processed within 10 business days (may vary based on documentation)
Required Documents
To submit your application, prepare the following:
- Copy of your Trade License
- VAT Registration Certificate
- Emirates ID and Passport copies of the owner/manager
- Last VAT Return filed
- Audit report or financial statements (if applicable)
- Reason for deregistration (e.g., business closure, revenue drop)
How to Apply?
Follow these steps:
- Log in to your account on the FTA e-Services portal
- Select “VAT Deregistration” from the VAT section
- Fill in the form with required details and select reason for cancellation
- Attach supporting documents
- Submit the application and await confirmation via email or portal
Once the FTA approves your request, your Tax Registration Number (TRN) will be officially cancelled.
Post-Deregistration Responsibilities
Even after VAT deregistration, businesses are still required to:
- Submit a final VAT return
- Settle any outstanding VAT liabilities
- Maintain accounting records for 5 years as per UAE VAT law
Failure to meet these obligations may result in penalties or legal consequences.
Why Is VAT Deregistration Important?
Deregistering on time:
- Helps avoid unnecessary VAT compliance burdens
- Prevents late filing penalties or misuse of the TRN
- Keeps your business in good standing with the FTA
Need Help with VAT Services?
The VAT deregistration process can be straightforward, but errors in filing, missed deadlines, or insufficient documentation can lead to fines. It’s recommended to consult a qualified VAT advisor or accounting firm to handle the process professionally.