Value Added Tax (VAT) is an important constituent of the United Arab Emirates’ taxation system and it impacts businesses across various sectors. While VAT registration is mandatory for entities meeting specific turnover thresholds, there are circumstances where deregistration becomes necessary or beneficial. Understanding the features of VAT Deregistration Service ensures compliance and optimizes financial operations.
When Is VAT Deregistration Required?
Businesses must apply for VAT deregistration within 20 business days under the following conditions:
- Cessation of Taxable Supplies: If a business ceases all taxable activities and does not anticipate any taxable supplies in the forthcoming 12 months, deregistration is mandatory.
- Turnover Below Voluntary Threshold: If the value of taxable supplies over the past 12 months is less than AED 187,500, and the business does not expect this to change in the next 30 days, it is obligated to deregister.
Additionally, businesses may opt for voluntary deregistration if their taxable supplies exceed AED 187,500 but remain below the mandatory registration threshold of AED 375,000.
The VAT Deregistration Process
Deregistering from VAT in the UAE involves a structured process through the Federal Tax Authority’s (FTA) EmaraTax portal:
- Access the EmaraTax Portal: Log in using your credentials or UAE Pass.
- Initiate Deregistration: Navigate to the VAT section, select ‘Actions,’ and choose ‘Deregister.’
- Complete the Application: Provide accurate information. This includes the reason for deregistration and the effective date.
- Submit Supporting Documents: Upload necessary documents like financial statements or proof of ceased operations.
- Final VAT Return: Upon FTA’s review, submit the final VAT return and settle any outstanding liabilities.
The FTA typically processes deregistration applications within 20 business days. However, delays can occur if additional information is required.
Penalties for Late Deregistration
Failing to apply within the stipulated 20 business days can result in VAT Deregistration Penalty:
Initial Penalty: AED 1,000
Subsequent Penalties: An additional AED 1,000 for each month of delay (up to a maximum of AED 10,000).
Post-Deregistration Obligations
Even after deregistration, businesses must:
- Maintain Records: Keep VAT-related documents for at least five years.
- Settle Liabilities: Double-check if all taxes and penalties are paid.
- File Final Returns: Submit the final VAT return within 28 days from the effective date of deregistration.
The Role of VAT Audit in Dubai Before Deregistration
Before proceeding with VAT deregistration, businesses may need to undergo a VAT Audit in Dubai. This is to certify all tax obligations have been met. An audit assesses compliance with VAT regulations, verifying the accuracy of filed returns and identifying any outstanding liabilities.
If discrepancies are found, businesses may face a VAT Penalty, further complicating the deregistration process. Partnering with an expert VAT Audit Service in UAE helps businesses rectify errors before submitting their deregistration request. What this ends up doing is reducing the risk of fines and ensuring a smooth transition out of the VAT system.
Elevate Accounting & Auditing’s VAT Services in UAE
Navigating VAT regulations can be complex. Elevate Accounting & Auditing offers comprehensive VAT Services in UAE, including:
- VAT Registration Service: Assisting businesses in registering for VAT to ensure compliance.
- VAT Filing in UAE: Managing timely and accurate VAT return submissions.
- VAT Audit in Dubai: Conducting thorough audits to ensure adherence to VAT laws.
- VAT Penalty Reconsideration: Assisting clients in applying for VAT Fine Waivers or VAT Fine Reductions when applicable.
Our team of experts is dedicated to providing all-round solutions, so that your business remains compliant and efficient in its VAT obligations.
Understanding and executing VAT Deregistration Service in the UAE is a necessity for businesses that no longer meet the requirements for VAT registration. Timely action prevents unnecessary penalties and ensures compliance with the FTA’s regulations. Partnering with experienced professionals like Elevate Accounting & Auditing can simplify this process, allowing you to focus on your core business activities.
For personalized assistance with VAT Deregistration in UAE or other VAT-related services, contact Elevate Accounting & Auditing today.