VAT deregistration is just as important as VAT registration. If your business no longer meets the VAT requirements, you must cancel your VAT registration with the Federal Tax Authority (FTA). This is called VAT deregistration.
Not every business can cancel VAT registration. You need to meet the FTA’s conditions. Here’s when you qualify:
Merging with another company? Selling your business? Changing owners? You may need to deregister and reapply under a new name. Double-check with the FTA to avoid tax troubles later! For example, if Company A buys Company B, B might need to deregister while A takes over its VAT responsibilities.
You’ll need to enter:
– Trade License Number
– VAT Registration Number (TRN)
– Reason for Deregistration (Business closed? Revenue dropped? Ownership changed?)
Be honest and accurate at this step. This is the step where you have to be very careful and may even need expert advice like that of Adepts. This is because if your reason doesn’t match FTA rules, your application could get rejected. You may be just confused but the system will reject the application. A rejection can be extremely cumbersome and problematic.
1- Business Closure? → License cancellation certificate
2– Revenue Dropped? → Profit & loss statements, VAT returns
3– Ownership Change? → Transfer agreements, updated trade license
Once everything is in place, submit your deregistration request. You can track its progress in EmaraTax under the “Application Status” section. You’ll get regular updates but you can check the status on your own too.
Your trade license must be active when applying. If your business is already closed, you may need a license cancellation certificate from the relevant authority.
The FTA may request profit & loss statements, balance sheets, and tax invoices to check your eligibility. Keep them accurate and up to date.
– Trade license cancellation certificate
– Business closure confirmation from authorities
This proves that your business is no longer operational and does not need VAT registration.
If you are eligible for a VAT refund, your bank details must be up to date. Ensure that:
If you’ve made any adjustments to VAT returns (like corrections in past filings), you may need to submit supporting documents. These include:
The FTA officer reviewing your case may request extra documents based on your application. Always keep your financial records and compliance documents ready to speed up the process.
VAT deregistration is not instant. The Federal Tax Authority (FTA) follows a structured review process, and approval depends on how complete and accurate your application is. Let’s break it down.
The FTA typically processes it within 20 business days. However, this is just an estimate. It can take a lot more than this. It could be just 20 days too. Here are the factors that make the difference:
Once your application is submitted, the FTA will review your request based on the following:
It’s important to regularly check your application status on EmaraTax. If the FTA requests more details, respond as soon as possible. This will help speed up the process.
Once the FTA completes its review and approves your application, you will receive:
Once you receive the confirmation, your VAT obligations officially end. However, you should keep your VAT records for at least five years, as the FTA may request them for audits in the future.
VAT deregistration applications can be rejected if they don’t meet the required conditions. Some common reasons for rejection include:
Don’t stress—getting denied isn’t the end. Just follow these steps to get back on track:
Check the reason – Log in to EmaraTax and see why your application was rejected. Missing documents? Unpaid fines? You need to know what went wrong. The reason will be given quite clearly. Just make sure to get it out of the way.
Fix the problem – Settle any outstanding fines, submit missing VAT returns, or correct errors in your application. The FTA won’t approve it until everything is in order. If you are thinking of bypassing FTA, give up the thought.
Reapply with the right info – Double-check every detail before submitting again. One small mistake can send you back to square one!
Still confused? Contact the FTA – If you’re unsure what to fix, reach out to the FTA for clarification. It’s better to ask than to keep getting rejected.
Ignoring the rejection won’t make it disappear. You just need to follow the instructions of the governmental authorities. Resolve the issues that are stipulated by the authorities. If you don’t resolve the problem, you’ll still need to file VAT returns and could face penalties.
Are you wondering why worry about deregistering so much? There are some solid reasons here. If you don’t deregister properly, you’ll potentially face serious fines, legal trouble, and business disruptions. The authorities may keep adding your VAT to your payable account if your deregistration is not complete and confirmed. Here’s what you need to know:
Miss the deadline? The FTA slaps you with an AED 1,000 fine, increasing every month up to AED 10,000. You see, even delays are so expensive. If you don’t deregister properly, get ready for even worse. So, delays will cost you sp it is better to deregister on time!
Messy VAT returns? Unpaid dues? The FTA doesn’t take these lightly. You could face steep fines for errors or missed payments. Accuracy is key.
Don’t even think of non-compliance. Skipping VAT rules can cause:
In November 2024, the UAE toughened VAT laws under Cabinet Decision No. 100. Now, the FTA can forcibly deregister businesses that violate tax rules. If you’re not compliant, they can shut you down.
In the end, businesses should know that ignoring VAT rules isn’t worth the risk. Stay compliant and avoid fines, legal trouble, and business headaches.
At TaxAdepts, we specialize in helping businesses navigate the complexities of VAT compliance, including:
With our expert team, you can avoid delays, errors, and unexpected penalties.
Many businesses unknowingly make mistakes when deregistering for VAT. Here’s how TaxAdepts ensures your business remains compliant:
Before applying, ensure you have:
Common reasons include:
You can pay through:
Simply check your EmaraTax account for any outstanding amounts and settle them ASAP!
Yes! If a branch stops taxable activities but the main business is still running, you can apply for partial deregistration. The FTA will assess your case before approving it.
Yes, but not immediately. You must keep VAT records for 5 years even after deregistering. The FTA can still audit past returns if needed. Keep your paperwork in order!
No! Even if your business closes, you still have to manually apply for VAT deregistration on EmaraTax. If you don’t, the FTA may continue charging fines for non-compliance.
Not directly. But if you’re deregistering due to business closure, your trade license may also be canceled, affecting visa renewals for employees. Plan ahead!
Oops! If you deregister by mistake, you must reapply if your revenue crosses the threshold. But during re-registration, you can’t charge VAT, so be careful with your timing!
Yes! If your income falls below AED 187,500, you can deregister. But if your income increases again, you’ll need to re-register.
Importers: You lose your TRN, so you can’t claim VAT refunds on imports.
Exporters: You can’t issue VAT invoices or claim refunds on export taxes.
Accordion Content
For years, the UAE used to be an almost tax-free haven. It attracted entrepreneurs and investors from all over the globe and companies operated without the burden of tax regulations. But in 2018, the landscape changed.
For VAT Registration in UAE, businesses must adhere to specific requirements set by the FTA.
