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VAT DE-Registration

VAT De-Registration is the legal requirement to formally cancel a business's VAT status with the Federal Tax Authority (FTA) once it no longer meets the legal thresholds for registration. This is a non-negotiable step in closing the loop on your VAT obligations.

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What is VAT DE-Registration

Tax De-Registration is the mandatory legal action that cancels a registered entity's VAT status, officially deactivating its VAT number. This process may be initiated by the registered Taxable Person or enforced by the FTA once the business no longer meets the required criteria for mandatory VAT registration.

Timely De-Registration is a crucial compliance step. Failure to process the cancellation within the stipulated timeframe—such as when a company's total supplies fall below the threshold or the business ceases taxable operations—can lead to financial penalties from the Federal Tax Authority (FTA).

The VAT Law allows registered taxable individuals to revoke their VAT registration. Let us look at the situations under which a person can deregister from VAT and the procedure that must be performed.

When can a person apply for VAT De-registration in UAE?

  • Cessation of Supplies : The person has ceased making any taxable supplies and has no expectation of resuming taxable activity within the next 12 months.
  • Taxable Threshold Drop : The total value of their supplies or incurred taxable expenses over the last 12 consecutive months has fallen below the voluntary registration threshold (AED 187,500), and they do not anticipate their threshold being exceeded in the upcoming 30 days.

When can a registration be cancelled by the FTA in UAE?

  • Condition Triggered : This occurs if the FTA discovers that the registered person currently satisfies either of the two legal conditions that mandate De-registration (e.g., supplies have ceased or taxable turnover has dropped below the threshold).
  • Obligatory Action : This process is known as Obligatory Tax De-registration. It serves to ensure the tax register is kept accurate, and the cancellation is initiated by the FTA when an eligible business fails to submit its own De-registration request.