With the introduction of Value Added Tax (VAT) in UAE, the paradigm has changed from being tax-free and welcomed new opportunities and challenges. VAT deregistration is equally important as VAT registration and businesses should understand the procedure to apply for VAT de-registration in the UAE.
What is VAT Deregistration?
VAT deregistration is the removal process for registered businesses to delete their VAT registration. It usually follows when a taxable entity stops its business activities or can no longer meet the conditions required for VAT registration. VAT deregistration requests by taxable businesses should be submitted, and FTA would only delete the registration after the submission of all the needed paperwork following approval.
Importance of VAT Deregistration
Businesses need to understand when to apply for VAT deregistration. A business needs to file its application early enough to avoid penalties since one would attract heavy fines if it fails to deregister on time.
Taxable entities should be updated on the procedures that ought to be followed to deregister to avoid potential complications in the future.
Conditions for VAT Deregistration in the UAE
Firms that are no longer providing taxable supplies may apply to deregister from FTA for VAT. Further, where the taxable supplies of a business have reduced below the statutory limit of AED 375,000 but are above the voluntary limit of AED 187,500, it must deregister voluntarily. However, if taxable supplies fall below the said voluntary limit, then the firm has to deregister.
There are two types of VAT deregistration in line with the rules of FTA:
1. Voluntary VAT Deregistration
- This is available to businesses if they cease making taxable supplies.
- Total taxable supplies made in the previous year and the next thirty days are less than the threshold for optional VAT registration.
2. Mandatory VAT Deregistration
- It is a situation where the FTA cancels the VAT registrations of qualifying businesses.
- Businesses that have been registered voluntarily under VAT for at least twelve calendar months are also eligible to deregister.
Deadlines and Fines
VAT deregistration should be filed within 20 days. Failing to file for VAT deregistration by a business or individual may attract fines.
How BMS Auditing Can Help You
VAT deregistration might take a lot of time, and many procedures will be involved. Partner with an acclaimed VAT consulting firm like BMS Auditing to help advocate your deregistration and get the best out of it. Our tax consultants who are licensed will help you through the requirements of the VAT deregistration procedure, and they will ensure that you have all the details and assistance required in completing this task efficiently.
Call us today and ensure that your deregistration from VAT is handled smoothly without any problems with the regulatory authorities.
