What is VAT De-registration?
Tax De-registration is the provision for a registered taxable person to cancel his/her VAT registration. It means de-activation of the registration and the VAT number of the taxable person. Tax de-registration can be applied for by a person registered under VAT or done by the FTA on finding that a person meets the conditions for de-registration.
As per VAT Decree Law, a tax registrant may apply for VAT de-registration if his Taxable Supplies during the past (12) months was less than the Mandatory Registration Threshold (please note Mandatory Registration Threshold limit is AED 375,000).
VAT Executive Regulations requires that a Tax Registrant must apply to the Authority for de-registration in accordance with certain cases mentioned in the VAT Decree-Law, within (20) business days of the occurrence of any of them.
INSIDE THIS ISSUE
- Eligibility Criteria.
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“If date of submission for the de-registration form is more than 30 days from the date you are required to de-register, there will be a late de-registration penalty of AED 10,000/-”
ELIGIBILITY for VAT De-Registration :
What is the process of de-registration under VAT in UAE?
MANDATORY DEREGISTERING VAT:
Under the rules such an individual or a business which,
- Stops dealing in taxable goods and services OR,
- The taxable supplies or expenses in the previous 12 months and the future 30 days do not exceed the voluntary registration threshold (i.e. AED.187,500/-)
If a business or an individual, who was registered as tax payer with FTA, fulfills to these criteria, it must not delay applying for de registration of VAT to avoid any penalties.
THE TIME LIMIT:
Once an FTA registered entity becomes eligible for VAT deregistration under this criterion, they have a time limit of only 20 business days from the event causing such eligibility. Failing to apply within the available time will cause financial loss due to fines as a penalty for late application.
“If we stop making Taxable Supplies
Value of Taxable Supplies is less than Voluntary threshold”
VOLUNTARY DEREGISTERING VAT:
Under the rules of FTA any individual or business, registered for VAT, if:
- Is still dealing with the taxable services and goods, but for the past 12 calendar months the supplies or expenses were under the mandatory VAT registration threshold (i.e. AED. 375,000.) AND,
- 12 calendar months have been passed since the entity was registered with FTA under voluntary registration.
In this situation, the taxed entity may apply for Voluntary deregistration of VAT. There is no limitation for any number of days to apply for FTA deregistration.
PROCESS to Cancel – VAT Registration
Once an entity fulfills the criteria to deregister for VAT in UAE, the can do so through logging into their VAT Account on FTA Portal. After login in, through vat deregistration form UAE you can provide with the details along with the reason for the VAT deregistration. Some information will already be populated into form from the earlier registration data.
The decision of FTA to approve the application for deregistration of VAT depends on the provided reason as well as the clearance of all:
- Outstanding Taxes against the entity.
- Returns being filed.
- Any Administrative Penalties have been paid in full.
Late submission can be made but the approval from FTA to deregister VAT will be on hold unless all the liabilities along with the late submission penalty have been paid.
Even with the valid reason, the approval from FTA will show the status of the application as “Pre-Approved” and will only be considered complete when all these liabilities are cleared.
VAT De-Registration Penalty
The penalty for failing to apply for a mandatory de-registration of VAT within the specified timeframe i.e. within 20 business days, from the occurrence of the event causing the tax payer entity to get eligible for tax deregistration, is AED 10,000/-.
When online form is completed after providing all the details and reasons, it is to be submitted electronically. The applicant deregistering for VAT will get SMS confirmation on their registered number for submission.
The FTA will analyze the application for the reasons provided along with the status of returns, any pending penalties or tax payments. If everything is according to the rules and regulations of FTA without any errors, the application will be approved and VAT Registration will be cancelled.
The FTA will deregister VAT, effective from the ending date of the last tax period when the taxed entity became eligible for cancellation of VAT.
Tracking your De-Registration Application Status
In the eService portal, you will be able to understand the status of your de-registration application during the whole process, i.e.
- Pending: once the de-registration request is submitted by the Taxable Person, or once the Taxable Person has submitted the additional information requested.
- Resubmit: after the FTA requests for additional information.
- Pre-Approved: once the FTA approves the de-registration application and there are outstanding liabilities.
- De-Registered: once the FTA approves the de-registration application and there are no outstanding liabilities. Or, once the Taxable Person has paid the final tax return and penalties for a ‘Pre-Approved’ application.