VAT deregistration is required for businesses ceasing operations or falling below the VAT threshold. Below is an overview of the process along with relevant details:
1. Eligibility Check
Businesses must first determine whether they qualify for deregistration as per Federal Tax Authority (FTA) rules. Eligibility criteria include:
- Ceasing Operations: Businesses that have permanently stopped trading or providing taxable supplies.
- Threshold Requirement: Businesses whose annual turnover falls below the mandatory registration threshold of AED 375,000.
This initial assessment ensures deregistration compliance and prevents unnecessary penalties for maintaining VAT registration without meeting legal criteria.
2. Deregistration Filing
Once eligible, businesses must submit a VAT deregistration application through the FTA’s portal. The application process involves:
- Providing documentation that supports the eligibility claim, such as financial statements, tax invoices, or business closure certificates.
- Ensuring that all VAT obligations, such as filing pending VAT returns or settling unpaid VAT liabilities, are completed prior to deregistration.
Failure to deregister on time can result in penalties of up to AED 10,000, emphasizing the importance of timely and accurate filing.
Completing the VAT deregistration process allows businesses to officially exit the VAT system and ensures full compliance with UAE tax regulations.