Value Added Tax (VAT) is an indirect tax imposed on the supply of goods and services in the United Arab Emirates (UAE). While VAT registration is mandatory for businesses that meet certain turnover thresholds, there are situations where deregistration becomes necessary. In this blog post, we will delve into the process of VAT deregistration in the UAE, including when to deregister, the application process, time limits, penalties, and other essential details.
When to Deregister for VAT:
VAT deregistration becomes mandatory if you cease conducting business operations or if your taxable turnover falls below the voluntary registration threshold of AED 187,500. Additionally, you can choose to apply for deregistration voluntarily if your taxable turnover exceeds AED 187,500 but is still below the mandatory registration threshold of AED 375,000.
Time Limit for Submitting a VAT Deregistration Application:
To initiate the deregistration process, you must submit the application to the Federal Tax Authority (FTA) within 20 business days from the occurrence of the event that necessitates deregistration, as specified under Article 21 of the VAT Law.
VAT Deregistration Process:
The process of VAT deregistration involves the following steps:
a) Submitting the Application: Access your online account and accurately complete the VAT deregistration application. Provide the effective date for de-registration and upload all relevant supporting documents.
b) Final VAT Return: Upon review of the deregistration application, the FTA will notify you to submit your final VAT return. Ensure timely submission as per the instructions provided.
c) Settling Liabilities: Settle any outstanding liabilities, including penalties pending for payment, with the FTA. If you are in a credit position, you may also submit a refund application at the time of deregistration.
Final Return:
The final tax return represents the last tax period for which you were registered with the FTA. It should be filed, and any payable tax should be settled within 28 days from the effective date of de-registration. Failure to adhere to the deadlines may result in penalties and delays in completing the deregistration process.
Filing during the Deregistration Process: Sometimes it takes months to get the VAT Deregistration, all the Filings need to be filed zero during the deregistration process to ensure no Non Filing Fine is accumulated.
Who Can Submit the Deregistration Application:
The application for deregistration can be submitted to the FTA by the VAT registrant, a tax agent, or a legal representative.
Late Deregistration and Penalties:
Failure to submit the deregistration application within the specified timeframe outlined in the Tax Law may result in a penalty of AED 1,000 for the initial delay, with an additional AED 1,000 penalty per month thereafter, up to a maximum of AED 10,000.
Saving Application as a Draft:
Yes, you can save an in-progress deregistration application as a draft and complete it at a later time. However, if you fail to submit the application within 60 calendar days of initiation, it will be automatically canceled. Reminder notifications will be sent to your registered email or verified mobile number.
Deregistering VAT TRN from Planet:
If you are registered with Planet, a tourist refunds system, it is mandatory to deregister your VAT TRN from Planet as part of the VAT deregistration process.
Application Submission and VAT Deregistration Certificate:
Once you submit your deregistration application to the FTA, it undergoes a review process. The FTA may request additional information if needed. Upon completion of the review, the FTA will either approve or reject the application and notify you via email. Following approval, your VAT Registration Number (TRN) will be deregistered, and you can download your VAT deregistration certificate from your Emaratax account.
Filing Returns during the Application Review:
During the review of your deregistration application with the FTA, it is essential to continue filing all VAT returns within the prescribed due dates. This obligation remains in effect until the deregistration process is finalized and the final return is generated.
Estimated Time for Deregistration Processing:
In general, the FTA aims to complete the deregistration application within 20 business days from the date of receiving the completed application. However, additional processing time may be required if further information is needed.
Deactivation of EmaraTax Account:
Deregistering for VAT does not result in the deactivation of your EmaraTax account. The account remains accessible, but the status for VAT registration will be updated to reflect the deregistration.
Conclusion:
VAT deregistration is a significant process for businesses in the UAE, and understanding the requirements and procedures is crucial to ensure compliance with the law. This comprehensive guide has provided insights into when to deregister, the application process, time limits, penalties, and other essential details. By following the proper steps and adhering to the FTA’s guidelines, businesses can smoothly navigate the VAT deregistration process in the UAE.
Elevate offers expert services for VAT deregistration in the UAE, ensuring compliance with Emirati VAT laws. Our team thoroughly analyzes all aspects, providing comprehensive assistance to simplify the deregistration process. From the initial review of your business activities to exploring deregistration possibilities, Elevate Accounting & Auditing is dedicated to making the process seamless and efficient.
Tax Agent Approval Number (TAAN) 20007621
Tax Agency Number (TAN) 30000996