UAE Taxes: Answer to queries on VAT Deregistration!
Since the introduction of VAT in the UAE, there are lots of queries to be answered among the entrepreneurs. Today, every business is updated with the VAT news in UAE; they know the importance of VAT registration with FTA or Federal tax authority. VAT deregistration is a crucial process often downplayed by eligible business. The companies should have better understanding about VAT Deregistration, when they should apply for it, otherwise you may face heavy penalty for late application of VAT deregistration.
What is VAT Deregistration?
VAT Deregistration is a process where registered companies cancel their VAT registration with FTA. It’s a mandatory process when taxable company ceases its operations or doesn’t require VAT registration no longer! Taxable businesses usually apply for VAT deregistration and FTA will cancel the registration after receiving application and successful submission of required documents. The companies should be aware of the tax news in UAE, as the failure to apply tax rules will attract administrative penalties. UAE accounting experts recommend VAT deregistration on time to prevent additional penalties.
What is the eligibility for VAT deregistration?
According to Dubai VAT news, the companies that no longer deal with taxable supplies can apply for deregistration with the FTA.
The VAT registered companies are also eligible for voluntary deregistration, if the value of taxable goods and services are decreased by the prescribed threshold of AED 375,000, but above the threshold value of AED 187,500. When the taxable supplies in a company, are below the threshold value, it’s compulsorily required to undergo VAT deregistration.
As per the FTA guideline, there are two types of VAT deregistration,
- In first instance, company can directly apply for the voluntary VAT deregistration.
- Secondly, FTA involves in compulsory deregistration, where the authority itself cancels the registration of firms.
Whether its voluntary or compulsory, companies should understand the eligibility norms and criteria for deregistration process.
What are the different types of VAT deregistration?
- Compulsory VAT deregistration
According to VAT news Dubai, the registered business becomes eligible for VAT deregistration when the taxable supplies produce a lower value than the usual threshold limit. In such cases, company should compulsorily apply for VAT deregistration.
- Voluntary VAT Deregistration
In this case, companies opt for voluntary deregistration, if the supplies for past 12 months don’t exceed an overall threshold value of AED 375000, but above the minimum threshold values of AED 187,500.
Why does a company or business deregister for VAT?
The rise in VAT UAE has significantly reduced the complications related to tax regulations in the business sector. If you’re no longer eligible to be VAT registered, then have a number of key considerations before involving in the deregistration process.
Some of the reasons why business is deregistered for VAT,
- Stop producing taxable supplies or no intention to produce them in the future.
- In case of legal entity changes , change from a sole trader to a company
- If the registered business make taxable supplies, but no longer exists.
- If business is sold
How to apply for VAT deregistration?
It’s an online process and easily accessible through FTA portal. The closed businesses must have a company liquidation letter from authorities, while they apply for deregistration.
It must be applied within 20 days, in case of above-mentioned situations. The companies should submit the application to FTA with necessary details and other reasons for deregistration.
The FTA authority will verify the factors for deregistration, if the reasons are found to be valid, then it issues voluntary deregistration.
FTA will verify the following documents,
- Remaining tax payments
- Status of returns
- Any pending penalties
What is the eligibility of deregistration for VAT groups?
The VAT deregistration for VAT groups has similar criteria as the individual taxable entities. However, there are certain other criteria for VAT groups that include,
- The deregistration will be approved, if the group no longer meets the conditions as a VAT group
- If the constituent member companies of a group are no longer financially associated with the group
- If the FTA anticipates the tax status of the group that may lead to tax evasion, in such case, tax deregistration will be approved.
What is the procedure for VAT deregistration?
- Initially, login to the FAT online portal
- Check for the de-registration option
- Fill up the application form with exact information and send it to review and approval of VAT deregistration.
- After reviewing the application, FAT changes the status of application into ‘pre-approved’.
- Finally, businesses have to submit their VAT return filing and should clear all the outstanding liabilities in order to complete the VAT de-registration process.
How A & A associates support as a VAT consultant in the UAE?
A & A associates is a popular UAE accounting firm with well-qualified chartered accountants, who offer exemplary services related to VAT in the UAE.
We support our clients by providing excellent services like
- VAT registration
- VAT deregistration
- Filing of VAT returns in compliance with FTA regulations and guidelines.
A & A associates tax agents’ help our clients to complete all the tax related requirements on time. This prevents them from incurring penalties and letting them do their business with great peace of mind.
Leave all the complex issues regarding VAT to us, for more information on VAT deregistration in the UAE, feel free to contact us!