VAT De-registration in the UAE: When and How to Cancel Your VAT Registration

 



VAT (Value Added Tax) was introduced in the UAE in 2018, requiring businesses meeting the taxable turnover threshold to register with the Federal Tax Authority (FTA). However, not all businesses need to remain VAT-registered indefinitely. In some cases, businesses may qualify for VAT de-registration, either voluntarily or mandatorily. Understanding when and how to cancel your VAT registration is crucial to avoid penalties and ensure compliance with UAE tax laws.

This blog explains the conditions for VAT de-registration, the step-by-step process, and key considerations for businesses in the UAE.

When Should a Business Apply for VAT De-registration?

VAT de-registration is the process of canceling a business’s VAT registration with the FTA. Businesses may apply for de-registration under the following circumstances:

1. Mandatory VAT De-registration

A business must apply for VAT de-registration if:

  • It ceases making taxable supplies (e.g., the business shuts down or changes its business activities).
  • Its taxable turnover falls below the voluntary registration threshold (AED 187,500) and remains there for 12 consecutive months.

Failure to apply for mandatory de-registration within 20 days of meeting these conditions may result in penalties.

2. Voluntary VAT De-registration

A business can apply for voluntary VAT de-registration if:

  • Its taxable turnover in the past 12 months has fallen below AED 375,000 but remains above AED 187,500.
  • It is no longer expecting to exceed the mandatory registration threshold in the next 30 days.

Unlike mandatory de-registration, there is no penalty for not applying for voluntary de-registration. However, businesses should consider whether remaining VAT-registered is beneficial.

How to Apply for VAT De-registration in the UAE

If a business meets the de-registration conditions, it must follow the FTA's online de-registration process via the EmaraTax portal.

Step-by-Step VAT De-registration Process

Step 1: Log in to the FTA Portal

Step 2: Select VAT De-registration

  • Navigate to the VAT De-registration section.
  • Choose the Tax Registration Number (TRN) you wish to cancel.

Step 3: Provide a Reason for De-registration

  • Select the reason for de-registration (e.g., turnover below the threshold, business closure, or change in activities).
  • Upload supporting documents if required, such as:
    • Financial statements showing a drop in taxable turnover.
    • Business closure documents (e.g., trade license cancellation).

Step 4: Review and Submit the Application

  • Ensure all information provided is accurate.
  • Submit the de-registration request.

Step 5: Await FTA Approval

  • The FTA will review your application, which may take a few weeks.
  • If additional information is required, you will be notified via email.

Step 6: File Final VAT Return and Settle Outstanding Liabilities

  • If your de-registration is approved, you must submit a final VAT return covering the period up to the de-registration date.
  • Pay any remaining VAT liabilities to complete the process.

Important Considerations Before De-registering for VAT

Ensure All VAT Returns Are Filed
Businesses must file all outstanding VAT returns before de-registration is approved.

Pay Any Outstanding VAT Liabilities
Any unpaid VAT must be cleared before the FTA processes the de-registration request.

Retain VAT Records for 5 Years
Even after de-registration, businesses must keep VAT records for at least 5 years in case of future audits.

Re-registering for VAT
If a business de-registers voluntarily but later exceeds the VAT threshold, it must apply for VAT registration again.

Conclusion

VAT de-registration is necessary for businesses that no longer meet the UAE’s VAT registration requirements. Whether mandatory or voluntary, businesses must follow the proper de-registration process through the FTA portal and ensure compliance with final tax return filings.

Failing to apply for de-registration on time can lead to penalties, so businesses should regularly monitor their taxable turnover and financial activities. If you are unsure whether your business qualifies for VAT de-registration, consulting a VAT expert can help you navigate the process smoothly.

If you need assistance with VAT registration, de-registration, or compliance, contact a UAE VAT consultant for expert guidance.

Comments

  1. NitaJune 22, 2025 at 11:50 PM

    VAT de-registration in the UAE is an important process that businesses must handle carefully to remain compliant with the Federal Tax Authority (FTA) regulations. Whether due to business closure, reduced turnover, or eligibility changes, knowing when and how to cancel your VAT registration is crucial. Timely de-registration helps avoid penalties and unnecessary tax filings. Working with professional VAT consultants in Dubai can make the process smooth, ensuring all criteria are met and documentation is properly submitted to the FTA.

    ReplyDelete

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