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Deregistration of VAT in UAE

Deregistration of VAT in UAE

With the ever-changing business landscape in UAE, some companies may find it necessary to deregister from VAT. The deregistration of VAT in UAE is a crucial step that companies need to take to avoid any non-compliance penalties. VAT deregistration enables you, as a taxable person or a business, to cancel the VAT registration if the business stops activities related to VAT supplies. 

Eligibility for Deregistration of VAT

A taxable business must apply for VAT deregistration within 20 business days if your business has stopped activities that are related to VAT supplies. Following are the conditions under which an individual or business can apply for a VAT deregistration

  • If a taxable business is not producing or does not have any plan to make these kinds of products in the next 12 months.
  • The supplies or expenses that were taxable in the previous year, and also for the next thirty days, don’t cross the gateway for voluntary registration for VAT in the UAE.

Process of  VAT Deregistration

The following is the process for the deregistration of VAT in UAE,

  • If you want to deregister from VAT, you have to access your Emara Tax account. You can access your Emara Tax dashboard using your login details.
  • Once you have accessed the Emara Tax dashboard you will get the taxable persons list here select the taxable person and click view to view the dashboard.
  • On the VAT title click the action button and select the deregister button to start your deregistration application.
  • Modify your bank details before starting the deregistration application.
  • Click Proceed to deregistration to get access to the VAT deregistration application.
  • Click Start to begin the process.
  • Upload all the required documents and fill in all the required details.
  • Select the reason that on what basis you are deregistering.
  • Mention the date eligible for deregistration.
  • The effective date will automatically appear in the Emara tax portal as per your eligibility date.
  • You will need to present those taxable products and items and their expenses to support your application.
  • You must enter the expenses only in UAE Dirham.
  • Save it and then go to the authorized signatory section by clicking on the next.
  • Verify authorized signatory details and click on Next to go to the next section.
  • Review the entire application before submitting it.
  • Click the submit button to submit your application.

Post Application Submission

After you have submitted the application for deregistration of VAT a reference number is given against the submitted application so that you can easily communicate with the Federal Tax Authority in the future.

  • Once you have applied you will be notified whether your application is approved or rejected. The Federal Tax Authority might also demand some additional supporting documents.
  • You can check the status of your application in the dashboard.
  • You might receive an email or an SMS after submitting the final tax return requesting to pay outstanding payments if any.

Required Documents for Deregistration Process

The following are the documents that are required for the deregistration process of VAT in Dubai.

  • Copy of canceled trade license.
  • Most recent financial statement of your business is like a balance sheet.
  • Letter issued by the Ministry of Labor on no of employees.
  • Sales license.
  • Financial turnover which includes taxable expenses and income from the registration date,
  • Proof of the business activities.
  • Sample of invoice.
  • TRN certificate of Head Office business.
  • Forms of Taxable Expenses and Taxable Supplies.

VAT Deregistration Penalty UAE

If you do not submit a VAT deregistration application when it is required can lead to multiple fines or penalties. Therefore, it is advised to seek help from VAT consultants in the UAE to meet all the regulations.

  • If you do not deregister from VAT within the given timeframe by the local authorities on taxation the fine to be paid is AED 10,000.
  • If you are unable to provide authorities with the required records in Arabic language, the fine that is to be paid is AED 20,000.
  • When appointing a representative, the individual must inform the Federal Tax Authority within a given timeframe. If they have violated this a fine of AED 20,000 will be imposed on a representative.
  • In case of an amendment in any tax record, you need to inform the Federal Tax Authority about it. If you are unable to do it a fine of AED 5000 should be paid and if the same thing is repeated the fine will be AED 15,000.
  • If you don’t keep the record requested by the tax authorities, the penalty fine will be around AED 10,000 which will jump to AED 50,000 if it is repeated.
  • If an incorrect final tax return, there are two penalties. One is a fixed penalty which is AED 3000 for the first time and AED 5000 in case of repeated violation. The second type of penalty is a percentage-based penalty which will be applied to unpaid amounts on the Federal Tax Authority by any mistake. If a business is unable to disclose the mistake it will owe an amount of 50% to the Federal Tax Authority.
  • The local authority will ask the business to appoint a legal representative for filing the tax return. In case of violating this and not doing this within a limited timeframe will cause a penalty of AED 1000 on the representative. The penalty would increase to AED 2000 if the violation is again repeated after 24 months. 

VAT Deregistration Time Limit

The process of deregistration takes up to 3-12 months, so it is advised to follow up time after time to ensure that all documents are there and the deregistration is in process.

Endnotes

The process of Deregistration of VAT in UAE might seem complicated and time-consuming. For this reason, Al-Riyady is here to help you out. With all the experts on the panel, we will provide you with the best suggestions and help you go through the process of deregistration of VAT in the UAE without any problem. So if you are looking to deregister your VAT we can help you navigate through this process efficiently and smoothly. We can also help you with Corporate Tax, Pro Services Dubai and Bookkeeping.

FAQs

Deregistration means a company is no longer registered as it is not doing any kind of business and has no outstanding liabilities and assets.

Yes, VAT can be reclaimed for the services given after the deregistration, if the services were provided when the business was registered.

Deregistration means the company is no longer operating. Hence after the deregistration the company can not obtain any rights or any kind of projects. The owner may have to pay off any kind of debt they have or complete any kind of other obligation.


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