VAT De-registration

When and how to cancel your VAT registration.

VAT De-registration

VAT de-registration is the formal process of cancelling a business’s VAT registration with the Federal Tax Authority. Once a business is deregistered, it is no longer required to charge VAT, file VAT returns, or comply with ongoing VAT obligations. This process is essential when a business stops making taxable supplies or no longer meets the VAT registration thresholds.

From a compliance perspective, de-registration ensures that businesses do not remain unnecessarily registered, which could otherwise result in penalties, incorrect filings, or administrative complications.

When is VAT De-registration Required?

Mandatory De-registration

A business must apply for VAT de-registration when:

• It stops making taxable supplies completely, or
• Its taxable turnover falls below the voluntary registration threshold (AED 187,500), or
• Company is winding up or a liquidator is appointed

In such cases, the business is no longer eligible to remain registered and must inform the FTA.

Voluntary De-registration

A business may apply for de-registration when:

• Its turnover falls below the mandatory threshold (AED 375,000) but remains above AED 187,500

This is optional and depends on business preference.

Deadline for Application

The de-registration application must be submitted within 20 business days from the date the business becomes eligible for de-registration.

Failure to apply within this timeframe will result in administrative penalties.

Penalties for Late De-registration

If a taxable person fails to apply within the required period:

• Penalties may start from AED 1,000
• Can increase up to AED 10,000 for repeated delays

This highlights the importance of timely compliance.

How to Apply (FTA Process)

The application is submitted through the EmaraTax portal of the FTA.

Process flow:

1. Log in to EmaraTax account
2. Access VAT profile
3. Select “De-register”
4. Complete application with required details
5. Upload supporting documents
6. Submit for FTA review

The FTA typically reviews the application within 20 business days.

Documents Required for VAT De-registration

The required documents depend on the reason for de-registration. Common requirements include:

• Trade license cancellation or amendment
• Financial statements (P&L, Balance Sheet, Trial Balance)
• Financial turnover details from VAT registration date
• Declaration letter confirming cessation or reduced turnover
• Employee confirmation (if applicable)
• Supporting contracts (in case of sale/transfer)

Incomplete documentation is one of the main reasons for delays or rejection.

7. Conditions Before Approval

The FTA will only approve de-registration if:

• All VAT returns are filed
• All VAT liabilities and penalties are paid
• Final tax return is submitted
• Supporting documents are verified

If any obligation is pending, de-registration will not be completed.

8. Final VAT Return

After approval (or as part of the process), the business must submit a final VAT return.

• This return covers the period up to the effective de-registration date
• Any payable VAT must be settled within 28 days
• Any excess input VAT may be claimed as a refund

This ensures proper closure of the VAT account.

9. Post De-registration Obligations

Even after de-registration:

• Records must be maintained for at least 5 years
• The FTA may still conduct audits
• Businesses must not charge VAT after deregistration

This ensures continued compliance even after exiting the VAT system.

10. Important Notes from FTA Guidelines

• The FTA may request additional documents before approval
• A reference number is generated after submission for tracking
• De-registration is not finalized until all compliance obligations are met
• If there is a credit balance, a refund must be separately requested through the portal