VAT Deregistration in the UAE

When Is VAT Deregistration Required?

A business should review VAT Deregistration when it ceases making taxable supplies or when taxable supplies fall below the voluntary registration threshold.

VAT Deregistration may also be required when the business no longer satisfies the conditions for VAT registration under UAE VAT legislation.

Businesses Below AED 187,500

Where taxable supplies fall below AED 187,500, businesses should review whether VAT Deregistration is required.

Remaining VAT registered despite no longer meeting the applicable requirements may create unnecessary compliance obligations, FTA enquiries, and potential penalties.

Businesses Between AED 187,500 and AED 375,000

Where taxable supplies remain above AED 187,500 but below AED 375,000, VAT Deregistration may be optional depending on the circumstances.

The business should review its future activities, VAT recovery position, customer requirements, and commercial needs before deciding whether to cancel its VAT registration.

Businesses Above AED 375,000

Businesses whose taxable supplies or imports remain at or above AED 375,000 will generally continue to meet the mandatory VAT registration threshold and should normally remain VAT registered.

In this case, the business should continue filing VAT returns, maintaining records, and paying VAT within the applicable deadlines.

Business Closure and VAT Deregistration

Where a business ceases trading or permanently stops making taxable supplies, VAT Deregistration should be reviewed.

Closing a business or stopping operations does not automatically cancel the VAT registration. A formal deregistration application must be submitted and approved by the Federal Tax Authority.

Risks of Late VAT Deregistration

Failure to submit a VAT Deregistration application when required may result in penalties and continuing tax obligations.

A business may also continue to be required to file VAT returns as long as the Tax Registration Number remains active.

• Administrative penalties for late deregistration.
• Continued VAT return filing obligations.
• Penalties for missing VAT returns.
• Unnecessary tax or compliance obligations.
• Additional requests from the Federal Tax Authority for supporting documents.

Before Applying for VAT Deregistration

Businesses should review their VAT records and ensure that all VAT obligations have been addressed before submitting a deregistration request.

• Review previous VAT returns.
• Confirm that all required VAT returns have been filed.
• Review VAT liabilities and refund balances.
• Review tax invoices, credit notes, and debit notes.
• Review sales and purchases up to the deregistration date.
• Prepare documents supporting reduced turnover or business closure.

Required Documents for VAT Deregistration

Required documents may differ depending on the reason for VAT Deregistration, and the Federal Tax Authority may request additional information depending on the business case.

• Trade License.
• A request or explanation stating the reason for VAT Deregistration.
• Sales and taxable supplies records.
• Latest financial statements, trial balance, or profit and loss statement.
• Bank statements where required.
• Previous VAT returns.
• Evidence supporting business closure or reduced taxable supplies.
• Supporting contracts and invoices.
• Any additional documents requested by the Federal Tax Authority.

Common Reasons for Delay or Rejection

• Insufficient documents supporting the reason for deregistration.
• Outstanding VAT returns.
• Outstanding VAT liabilities or penalties.
• Failure to demonstrate reduced turnover or business closure.
• Differences between accounting records and VAT returns.
• Failure to provide suitable financial statements or turnover records.
• Recent transactions indicating that taxable activities are still continuing.

Final VAT Return After Deregistration

The Federal Tax Authority may require a final VAT return or settlement of outstanding tax liabilities before completing VAT Deregistration.

Businesses should review the tax position, any VAT payable, and any VAT refund balance before completing the deregistration process to avoid issues after cancellation.

VAT Deregistration Services

VAT Deregistration Eligibility Review

• Reviewing the business position.
• Reviewing taxable supplies during the previous 12 months.
• Reviewing expected taxable supplies during the next 30 days.
• Determining whether deregistration is mandatory or optional.

Preparation of Deregistration Application

• Reviewing required documents.
• Preparing the required information.
• Preparing a clear explanation for deregistration.
• Submitting the VAT Deregistration application.

Application Follow-Up with the Authority

• Monitoring the application status.
• Responding to FTA enquiries.
• Providing additional documents where required.
• Following up on the final VAT return where applicable.

VAT Deregistration Issue Resolution

• Rejected deregistration applications.
• Late VAT Deregistration cases.
• Outstanding penalties or previous liabilities.
• Incomplete documents.
• VAT settlement issues before deregistration.

After VAT Deregistration

After VAT Deregistration, the business should continue maintaining historical VAT records and remain prepared to respond to any FTA requests related to previous tax periods.

• Maintain previous VAT records and documents.
• Monitor any correspondence from the Federal Tax Authority.
• Stop issuing VAT invoices after the effective deregistration date.
• Review any remaining balances, liabilities, or refund amounts.

How Can We Help?

We assist businesses with reviewing VAT deregistration eligibility, preparing supporting documentation, submitting deregistration applications, and completing the VAT cancellation process with the Federal Tax Authority.

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