VAT deregistration (or cancellation of a VAT TRN in the UAE) is the official process through which a registrant terminates its VAT registration with the Federal Tax Authority (FTA). At VAT Registration UAE, we assist businesses undergoing closure or restructuring to manage these important VAT obligations effectively, helping them avoid unexpected financial liabilities. This guide outlines the process of canceling VAT in the UAE and provides a detailed checklist to ensure a smooth and compliant VAT deregistration.
After deregistration:
- You no longer charge VAT on supplies (where applicable).
- You are no longer required to file periodic VAT returns (except final ones).
- You can no longer reclaim input VAT (except as allowed by the FTA in the final settlement).
- Your TRN is removed or suspended.
In what cases and when should a Business deregister VAT UAE?
- Mandatory Deregistration
You need to seek deregistration in case:
- You stop making any taxable supplies (and have a reasonable expectation of not making supplies in the near future, which is within the next 12 months).
- Your turnover is less than the required minimum registration (which is AED 375,000 at the moment), and you do not anticipate passing it.
- Failure to meet the deadline attracts penalties.
- Voluntary Deregistration
Voluntary deregistration may be made (not a prerequisite) under the following circumstances:
- Your supplies during the past 12 months are less than the required amount (and more than the voluntary amount, in many cases, AED 187,500) of your taxable income.
- You do not suppose you will rise beyond that within 30 days.
- One exception: in case you were initially voluntarily registered, you cannot deregister for at least 12 months after registration.
VAT de-registration procedure UAE
The process includes the following steps:
Step 1: Apply for the Deregistration Application. Deregistration is done through the EmiraTax / FTA portal under deregistration of VAT, where you fill the form and give reasons with the effective date and attach supporting documents.
Step 2: FTA Preliminary Review / Pre-Approval FTA examines the application; it can request more information or clarification.
Step 3: File Final VAT Return . After pre-approval, you file a final return on the basis of which you cover the period through to the date of deregistration.
Step 4: Pay all pending liabilities Before being fully deregulated, you have to pay any pending VAT, penalties, interest.
Step 5: Final Approval and Certificate Review and confirmation: FTA cancels VAT registration; you receive a deregistration certificate through the portal.
Step 6: Revise Systems, Notify Stakeholders, once deregistration date has been successfully achieved and date has stopped charging VAT, revise accounting systems, notify suppliers/customers, etc.
Time: The FTA expects to be able to approve a full deregistration application in 20 business days.
Your deregistration should be made not later than 20 business days of the occurrence of the condition obligating deregistration (e.g., closure of a business).
In case of lateness, a penalty comes into effect (AED 1,000 + AED 1,000 per month, limited).
Punishments and Non-Compliance issues for VAT deregistration UAE
The costs of not deregistering appropriately or default on time can be severe:
- Late deregistration fine: AED 1,000 and AED 1,000 in addition to time by month, and to a maximum of AED 10,000.
- Denial of deregistration application: In case you fail to pay off the outstanding returns, VAT and submissions, FTA might reject deregistration.
- Liability: You are still under a liability to submit returns and suffer penalties until the time of deregistration.
- Audit/assessments: The FTA can instigate tax audit after the closure or in the course of deregistration examination.
- Breach of record retention requirements: The failure to retain records over a period of at least 5 years at the conclusion of the period of relevance to the taxes may be subject to penalties.
Post-Deregistration: Records-Keeping and Audits.
Although your registration as a VAT is cancelled, you remain liable:
- Keep records 5 years (minimum) of the end of the tax period that the invoices, books, contracts, correspondence, etc., relate to.
- Collaborate with FTA audits: In case in the future the FTA poses questions about the previous transactions, you should have documents.
- No VAT refund: You cannot recover VAT, as a rule, after effective deregistration date (except by special adjustments in FTA regulations).
- Possible re-registration: Should your business resume taxable operations and exceed the VAT threshold, you have to re-register.
Contact VAT Registration UAE
At VAT Registration UAE, we support companies in achieving a smooth and compliant deregistration by preparing the application, reconciling outstanding liabilities, filing the final VAT return, and obtaining the deregistration certificate. Contact us today, and we shall be glad to assist you.
FAQ (Q & A)
Q1. When should I apply for VAT cancellation if I’m closing my company?
You must submit the deregistration application within 20 business days from the date the condition occurs (e.g. trade license cancellation or cessation of taxable supplies).
Q2. What documents do I need? And what is the VAT deregistration checklist UAE?
Typical documents include:
- Trade license cancellation certificate or proof of closure
- Final financial statements, trial balance, profit & loss
- Declaration letter (signed)
- Details of taxable supplies, expenses, input VAT etc.
- Any other documents FTA requests in the review stage
Q3. What if I miss the 20-day deadline?
A late penalty will be imposed (starting AED 1,000, plus AED 1,000/month, capped at AED 10,000).
Q4. How long does FTA take to approve deregistration?
If your application is fully complete, FTA aims for 20 business days for processing. If additional documents are needed, processing may take longer.
Q5. Do I still need to file a last VAT return?
Yes — a final VAT return must cover taxable transactions up to the effective deregistration date.
Q6. Can I deregister voluntarily if my turnover is low?
Yes, if your taxable supplies in last 12 months are below the mandatory threshold and you expect them to remain low. But note restrictions if you originally voluntarily registered.
Q7. What happens if FTA rejects my application?
You would need to respond with additional documentation or clarify issues. Until approved, you remain liable to file returns and settle liabilities.
