How to Apply for VAT Deregistration in UAE?
Value Added Tax (VAT) is a type of consumption tax that is imposed on goods and services in the UAE. It is a relatively new tax system in the country, having been introduced in January 2018. Ever since that time, companies that are functioning in the UAE have been obligated to enroll for Value Added Tax (VAT) if the amount of their taxable sales go beyond the compulsory limit of AED 375,000. However, there may be instances where a business with Top Auditors in Dubai may no longer be required to charge VAT, and in such cases, they can apply for VAT deregistration. In this blog post, we will take a closer look at how to apply for VAT deregistration in the UAE.
What is VAT Deregistration?
VAT deregistration is the process by which a registered business is removed from the VAT system. In the UAE, a business can apply for VAT deregistration if its taxable supplies fall below the mandatory threshold of AED 187,500 or if it has ceased trading or has closed down permanently. Once VAT deregistration is approved, the business will no longer be required to file VAT returns or charge VAT on its supplies.
Steps to Apply for VAT Deregistration
Step 1: Check Your Eligibility
Before you begin the VAT deregistration process, it is important to check if your business is eligible for it. You can do this by reviewing your taxable supplies over the past 12 months. If your taxable supplies fall below the mandatory threshold of AED 187,500, or if you have ceased trading or closed down your business, you can apply for VAT deregistration.
Step 2: Prepare Required Documents
Once you have determined that your business is eligible for VAT deregistration, you will need to prepare the required documents. These documents include:
- A formal request for VAT deregistration, outlining the reason for the application.
- The business’s original VAT registration certificate.
- A final VAT return for the tax period in which the business ceased trading or the taxable supplies fell below the mandatory threshold.
- Copies of invoices and other VAT-related documents for the same period.
- Other relevant documents.
Step 3: Submit the Application
Once you have prepared all the required documents, you can submit your application for VAT deregistration to the Federal Tax Authority (FTA). The application can be submitted through the FTA’s online portal or through registered tax consultants in Dubai.
Step 4: Wait for Approval
Once you have submitted your application for VAT deregistration, you will need to wait for the FTA’s approval. The FTA will review your application and the supporting documents and will inform you of its decision within 20 business days. If the FTA approves your application, you will be deregistered from the VAT system, and you will no longer be required to file VAT returns or charge VAT on your supplies.
Things to Keep in Mind When Applying for VAT Deregistration
Here are a few things to keep in mind when applying for VAT deregistration:
- Timing: It is important to time your application for VAT deregistration carefully. If you apply too early, you may be required to pay backdated VAT, and if you apply too late, you may face penalties for late submission of VAT returns.
- Supporting Documents: Make sure you have all the required documents ready when you submit your application for VAT deregistration. Failure to provide the necessary documents may delay the process or result in your application being rejected.
- VAT Liability: Even if your business is deregistered from VAT, you may still be liable to pay VAT on any outstanding debts or invoices. Make sure you settle any outstanding VAT before applying for deregistration.
- VAT on Assets: If your business owns assets that have been subject to VAT, you may still be liable to pay VAT on the disposal or sale of those assets, even after deregistration. It is important to take this into account when applying for VAT deregistration.
- Voluntary Deregistration: In some cases, a business may choose to apply for voluntary deregistration, even if it is still above the mandatory threshold. In such cases, the business must provide a valid reason for the application, such as a change in business activity or a change in ownership.
- Tax Agent: If you are unsure about the VAT deregistration process, it may be beneficial to seek the advice of a registered tax consultants in Dubai. They can guide you through the process and ensure that you comply with all the relevant regulations.
In conclusion, VAT deregistration is an important process for businesses that are no longer required to charge VAT on their supplies. By following the steps outlined in this blog post, you can ensure that your application for VAT deregistration is processed smoothly and efficiently. It is important to keep in mind the timing of your application, the required documents, and any outstanding VAT liabilities. If in doubt, it is always advisable to seek the advice of registered VAT advisory services Dubai like A&A Associate LLC.