How to Cancel Vat Registration in UAE

Value Added Tax (VAT) was introduced in the United Arab Emirates (UAE) on 1st January 2018. Since then, businesses have been required to register for VAT if they meet certain criteria. However, circumstances may arise that require a business to cancel their VAT registration. In this article, we will discuss the steps involved in canceling VAT registration in the UAE.

When to cancel VAT registration in the UAE

A business can cancel its VAT Registration UAE if it meets any of the following conditions:

1. Ceasing trading: If a business stops trading and will no longer make taxable supplies, it can cancel its VAT registration.
2. Below the threshold: If a business’s taxable supplies fall below the mandatory VAT registration threshold of AED 375,000 in the last 12 months, it can cancel its VAT registration.
3. Transfer of business: If a business transfers its ownership, the new owner must register for VAT, and the previous owner can cancel their registration.
4. Change in business structure: If a business undergoes a change in structure (for example, from a sole proprietorship to a company), it can cancel its VAT registration.
5. Merger or acquisition: If a business merges with or is acquired by another business, the new entity may register for VAT, and the old entities can cancel their registrations.
6. Special cases: In some cases, businesses can apply for a special VAT deregistration. These cases may include liquidation, insolvency, or the death of the owner.

Steps to cancel VAT registration in the UAE

Once a business has met one of the conditions above, it can apply to cancel its UAE VAT Registration. The following are the steps involved in the process:

Step 1: Submit a VAT deregistration form

The first step is to submit a VAT deregistration form to the Federal Tax Authority (FTA) through the e-Services portal. The form requires the business’s tax registration number (TRN), the reason for deregistration, and the expected date of cessation of trading or transfer of ownership. It is important to ensure that all fields are filled accurately, and any supporting documents are attached.

Step 2: Settle any outstanding VAT liabilities

Before the FTA approves the VAT deregistration, the business must settle any outstanding VAT liabilities. This includes paying any VAT owed to the FTA, submitting any outstanding VAT returns, and paying any penalties or interest. The FTA may request proof of settlement before approving the deregistration.

Step 3: Return any unused VAT invoices

If the business has any unused VAT invoices, it must return them to the FTA. This ensures that they are not used for fraudulent purposes in the future.

Step 4: Notify customers and suppliers

Once the VAT deregistration is approved, the business must notify its customers and suppliers of the cancellation. This can be done through email, letter, or any other appropriate means. The notification should include the date of cancellation and any other relevant information.

Step 5: Keep records

Even after the VAT registration is cancelled, the business must maintain records for a certain period of time. The FTA requires that all VAT-related records are kept for at least 5 years from the date of cancellation.

Conclusion

Canceling VAT registration in the UAE can be a straightforward process if the right steps are followed. It is important to ensure that all outstanding VAT liabilities are settled, any unused VAT invoices are returned, and customers and suppliers are notified of the cancellation. By following these steps, businesses can avoid any penalties or fines from the FTA and ensure a smooth transition out of VAT registration.