VAT DE REGISTRATION IN UAE
The Federal Tax Authority in a statement has clarified the conditions and procedures for tax deregistration for value-added tax in accordance with the Federal Decree-Law No 8 of 2017 since its implementation.
The purpose of this article is to elucidate VAT deregistration in the UAE.
CONDITIONS TO BE FULFILLED FOR DEREGISTRATION
A registrant must submit an application to deregister its business from VAT to the authority if he fulfills the following conditions :
- He should stop making taxable supplies
- The value of taxable supplies made by the registrant over the period of 12 consecutive months is less than the voluntary registration threshold of Dh 187,500
- The total value of the registrant’s anticipated taxable supplies or expenses subject to tax in the coming 30 day period would exceed the voluntary registration threshold
As per the UAE VAT legislation, the businesses that registered with the introduction of VAT which is not making any taxable supplies or having average taxable supplies of less than Dh 16,000 in the previous 12 months are required to mandatorily deregister.
WHAT ARE THE PROCEDURES FOR DE REGISTRATION?
The deregistration application is to be submitted within 20 business days of the occurrence of the aforementioned cases to the FTA’s e-services portal which is available 24/7 on the Authority’s website. Deregistration would not be confirmed until and unless the registrant has:
- Paid all the due taxes and administrative penalties
- Filed the required tax returns for the period in which they were registered
CONSEQUENCES FOR DEFAULT IN SUBMITTING DE REGISTRATION APPLICATION
Failure to submit the deregistration application within the time specified in the legislation would result in the imposition of administrative penalties stipulated in the Cabinet Resolution No 40 of 2017 on the Administrative Penalties for Violations of Tax Laws in the UAE.
VAT deregistration would result in VAT charged becoming a cost to the company which would result in an increase in prices. Deregistration would disable the businesses to claim VAT on the expenses incurred afterward. Furthermore, they would have to pay VAT on inventory or other assets purchased while registration.