Failing to Submit VAT Deregistration on Time? Here's What You Need to Know

Introduction

VAT deregistration in the UAE is a crucial step for businesses that no longer meet the Value Added Tax (VAT) registration requirements. Failing to deregister on time can result in unnecessary fines, penalties, and administrative burdens. In this article, we’ll explore the VAT deregistration process, key eligibility criteria, and why timely action is essential for business tax compliance in the UAE.

What is VAT Deregistration?

VAT deregistration is the formal process of canceling a business’s registration with the Federal Tax Authority (FTA) in the UAE. Companies may apply for deregistration under specific conditions, and non-compliance can lead to penalties.

Who Should Apply for VAT Deregistration?

A business should apply for VAT deregistration if it falls under any of the following circumstances:

1- Business Closure or Discontinuation

If a company ceases its business activities or liquidates, it must apply for deregistration on the date of business closure or trade license cancellation.

2- Revenue Falls Below the VAT Threshold

If the company’s taxable supplies turnover is below the voluntary VAT registration threshold of AED 187,500, it qualifies for deregistration.
If taxable supplies over the past 12 months fall between AED 187,500 and the mandatory VAT registration threshold of AED 375,000, the company may also apply.

3- Business Transfer or Structural Change

If a business transfers all or part of its assets to another entity, it may qualify for VAT deregistration.
If a company undergoes a change in legal structure, such as a sole proprietorship converting into a partnership or an ownership transfer leading to a new legal entity, VAT deregistration may be required.

Steps for VAT Deregistration in the UAE

To successfully deregister from VAT, businesses need to follow the official FTA VAT deregistration process:

Step 1: Prepare the Required Documents

A turnover declaration letter printed on the company’s letterhead, signed, and stamped by an authorized signatory.
Supporting documents explaining the reason for deregistration (e.g., business closure certificate, financial statements, transfer documents, etc.)

Step 2: Submit the Deregistration Request

The application must be submitted via the FTA portal by the business owner or an appointed tax consultant.
Ensure all details are accurate to avoid processing delays.

Step 3: Clear Outstanding VAT Liabilities

Before the FTA approves the application, businesses must ensure that all VAT returns are filed and any outstanding VAT payments are settled.
Any VAT refunds due must also be processed before the business bank account is closed.

Step 4: FTA Approval & VAT Deregistration Certificate

Once the FTA verifies the application and all financial obligations are met, the business will receive a VAT deregistration certificate , officially confirming the process completion.

Consequences of Failing to Deregister on Time

Failing to apply for VAT deregistration within the stipulated timeframe can result in:

Fines and penalties imposed by the FTA.
Continued obligations to file VAT returns despite ineligibility.
Additional administrative burdens and compliance risks.

How Cedrus Tax Consultant Can Help

Navigating VAT deregistration requires expertise to avoid costly mistakes. Cedrus Tax Consultant specializes in VAT compliance and can help businesses:

- Assess their eligibility for VAT deregistration.
- Prepare and submit accurate documentation.
- Ensure compliance with FTA regulations to avoid penalties.

Conclusion

Timely VAT deregistration in the UAE is essential to prevent unnecessary fines and legal complications. If your business falls under any of the eligible categories, act promptly to ensure a smooth deregistration process. For expert guidance, contact Cedrus Tax Consultant today and stay compliant with UAE tax laws.

Looking for VAT Deregistration Assistance?

Get in touch with Cedrus Tax Consultant to ensure a seamless and hassle-free process.