Value Added Tax (VAT) has been an important part of the UAE’s tax framework since 2018. While thousands of businesses are required to register for VAT, there are cases when a company no longer qualifies or decides to shut down operations. This raises a frequent question from business owners: “How can I deregister for VAT in the UAE?”
The good news is that the Federal Tax Authority (FTA) provides an easy-to-use online system that allows eligible businesses to cancel their VAT registration. In this article, we’ll walk you through how to cancel VAT registration online in UAE, eligibility requirements, important considerations, and answers to common questions.
Eligibility for VAT Deregistration in UAE
Not all businesses can apply for deregistration immediately. The FTA has clear guidelines:
- Turnover Below Threshold: If your taxable supplies in the past 12 months drop below AED 187,500.
- Business Closure or Liquidation: If your trade license is canceled or the business ceases operations.
- Change in Activities: If your goods or services are no longer subject to VAT.
- Transfer of Ownership: If the company has been sold or merged into another entity.
Failing to apply for deregistration when eligible may result in fines, so business owners should act quickly once the conditions apply.
Step-by-Step Process: Cancelling VAT Registration Online
The FTA has streamlined the process so that it can be done entirely through its portal. Here’s how:
1. Log in to the FTA Portal
- Go to the FTA e-services Portal.
- Enter your username and password to access your VAT dashboard.
2. Select VAT Deregistration
- Click on the VAT tab.
- Choose the Deregistration option to begin.
3. Fill in the Application Form
- State your reason for deregistration (closure, reduced turnover, or other valid reasons).
- Enter required details about your business and VAT compliance history.
4. Upload Required Documents
- Trade license (and cancellation documents, if applicable).
- Liquidation or closure letter (if shutting down).
- Any other supporting documents requested by the FTA.
5. Submit the Application
- Review all details carefully before submitting.
- You will receive an acknowledgment and reference number.
6. FTA Review and Approval
- The FTA will verify your request and documents.
- If approved, you’ll receive confirmation of deregistration.
- The process can take 20 business days or more, depending on your case.
Important Considerations Before Cancelling
Before applying, make sure you:
- File a Final VAT Return: Your last VAT return must cover the period up to the deregistration date.
- Clear All Outstanding Dues: Pay any unpaid VAT liabilities, fines, or penalties.
- Keep Records Safely: Even after deregistration, UAE VAT law requires you to keep accounting and tax records for five years.
Tip: Many companies use a VAT calculator in UAE to cross-check their tax obligations before filing their final return, ensuring accuracy and avoiding disputes with the FTA.
Common Questions
Can I claim VAT if not VAT registered?
This is one of the most common doubts business owners have. The answer is no, only VAT-registered companies can reclaim VAT on purchases and expenses. If your business is not registered, or once deregistration is complete, you cannot recover VAT. That’s why it’s advisable to claim pending input VAT before applying for deregistration.
What happens after deregistration is approved?
Once your application is accepted, your VAT registration number will be canceled, and you will no longer be required to file VAT returns. However, you must still keep records for the legally required period.
Conclusion
Knowing how to cancel VAT registration online in UAE is essential for businesses that no longer meet the mandatory registration criteria or are planning to close. By carefully filing your final return, paying outstanding liabilities, and following the FTA’s process, you can deregister smoothly and avoid unnecessary penalties.
If you’re unsure about eligibility or documents, it’s wise to consult a tax advisor or professional VAT services. This ensures compliance and a hassle-free deregistration process.