VAT Deregistration
VAT deregistration is the process of canceling your business’s VAT registration with the Federal Tax Authority (FTA). This is a crucial step to ensure ongoing compliance and to avoid future liabilities and penalties. According to FTA regulations, a business must apply for deregistration when it ceases to meet the eligibility criteria for mandatory or voluntary registration.
Mandatory Deregistration
A business must apply for VAT deregistration if:
- It stops making taxable supplies and does not expect to make any taxable supplies over the next 12 months.
- The total value of its taxable supplies and imports over the last 12 months is less than the Voluntary Registration Threshold of AED 187,500.
The application for mandatory deregistration must be submitted within 20 business days of becoming eligible.
Voluntary Deregistration
A business can voluntarily apply for VAT deregistration if:
- The total value of its taxable supplies over the past 12 months was less than the Mandatory Registration Threshold of AED 375,000.
- And, 12 calendar months have passed since the date of its initial voluntary registration.
The Deregistration Process
Deregistration applications are submitted through the FTA’s online portal. Once logged in, you can access the deregistration form and provide the necessary details and reasons for your request. The FTA will review the application and its decision will be based on:
- The reason provided for deregistration.
- The status of all outstanding liabilities and administrative penalties.
- The status of all previously due VAT returns.
It is important to continue filing all your VAT returns until your deregistration is officially approved by the FTA.
Penalties for Non-Compliance
Failing to apply for VAT deregistration within the specified timeframe (20 business days) results in a penalty of AED 10,000.