In 2018, the UAE introduced Value Added Tax (VAT), requiring every business meeting the registration threshold to register and comply with VAT regulations. However, not every business remains in that position forever. Companies may scale down, stop operations, or fall below the taxable threshold. In such cases, the Federal Tax Authority (FTA) requires them to deregister from VAT.

VAT deregistration means closing your company’s Tax Registration Number (TRN) and officially informing the FTA that you are no longer liable to charge, collect, or pay VAT. Under UAE VAT law, deregistration is a mandatory compliance step once eligibility conditions are met. Failure to apply within the FTA deadline can trigger penalties of up to AED 10,000. For businesses that are eligible, deregistration helps avoid unnecessary compliance costs and simplifies operations.

Understanding when you should deregister, how to apply, and which documents you need is essential to completing the process without delays or fines.

When Do You Need to Deregister VAT in the UAE?

VAT deregistration in the UAE is the official process of canceling your company’s Tax Registration Number (TRN) with the Federal Tax Authority (FTA), confirming that you are no longer required to charge, collect, or pay VAT.

There are two types of deregistration in the UAE:

• Mandatory VAT deregistration in the UAE applies when a business stops taxable activities or when its turnover in the last 12 months falls below AED 375,000.. In such cases, the business must apply for deregistration within 20 business days. Missing this deadline leads to a penalty of AED 10,000.

• Voluntary VAT deregistration in the UAE is allowed if the business’s taxable turnover falls below AED 187,500 in the past 12 months and the entity has been VAT-registered for at least a year.

Knowing which category your business falls under is important because it affects your eligibility and obligations.

How to Apply for VAT Deregistration in the UAE

The Federal Tax Authority has made the process digital and straightforward through its online portal. However, businesses need to follow the steps carefully to avoid rejection or unnecessary delays.

1. Check eligibility – Make sure your turnover or business status qualifies for deregistration.
2. Log into the FTA e-Services portal – Use your company’s VAT account and select the option for deregistration.
3. Fill out the deregistration form – Provide details about your business, TRN, and reasons for deregistration.
4. Submit supporting documents – These may include financial statements, turnover reports, or liquidation documents if the business has closed down.
5. File your final VAT return – All VAT due up to the deregistration date must be declared and submitted.
6. Pay outstanding VAT liabilities – Any pending dues must be settled before the FTA approves the application.
7. Wait for FTA review – The FTA usually reviews VAT deregistration applications within 20 business days. However, delays may occur if supporting documents are missing, so businesses should prepare financial reports and tax records in advance.
8. Receive confirmation – Once approved, the TRN will be cancelled, and your business will be considered officially deregistered.

Documents Required for VAT Deregistration in the UAE

Having the correct documents is critical for making sure your deregistration application is approved without delays. While requirements may vary depending on the business situation, the most common documents include:

• Copy of Trade License, Board Resolution, or liquidation letter (if ceasing operations)
• Latest financial statements (P&L, balance sheet, trial balance; audited or unaudited)
• Bank statements covering recent financial activity
• Ministry of Labor letters or records showing employee numbers
• Contracts or agreements, e.g., supplier or sales agreements
• Declaration of non-operation, and proof if operations ceased
• Turnover breakdown showing taxable supplies versus expenses
• Invoices as examples of transactional activity
• Complete list of suppliers and importers, including country of operation
• Documentation for any TRN groups, if applicable
• Final VAT return to cover activity up to deregistration
• Evidence of tax liability settlement or refund request

Preparing these documents in advance makes the process much smoother.

PS:

Timeline & Key Steps

Key notes:

• Continue filing VAT returns until deregistration is officially approved.
• Ensure all tax dues are cleared to avoid delays.

What Happens After VAT Deregistration?

Once your VAT deregistration is approved,

• Your Tax Registration Number (TRN) will be cancelled.
• You will no longer be able to issue VAT invoices or charge VAT on sales.
• You cannot claim VAT on business expenses going forward.
• You are required to keep VAT-related records for at least five years (15 years if related to real estate).
• Your customers, suppliers, and internal accounting systems should be updated to reflect the change.

This step is often overlooked, but keeping proper records even after deregistration is a legal requirement in the UAE.

Common Mistakes to Avoid

Many businesses face penalties or unnecessary delays during the VAT deregistration process because of avoidable mistakes. Some of the most common ones include:

• Failing to apply within the 20-business-day deadline for mandatory deregistration.
• Not filing the final VAT return before applying.
• Submitting incomplete or incorrect documents.
• Forgetting to settle outstanding VAT liabilities.
• Assuming group deregistration works the same as individual deregistration.
• Assuming deregistration happens automatically once the business closes.

Avoiding these mistakes ensures a smooth transition and prevents fines.

Conclusion

VAT deregistration in the UAE is a critical compliance requirement for businesses that fall below the VAT threshold or cease taxable operations. Working with experienced UAE VAT consultants like Metaworld Consultant ensures smooth deregistration, timely FTA approval, and avoidance of costly penalties.

For companies that find the process complex, working with VAT consultants in the UAE like Metaworld Consultant, can be extremely helpful. Professional guidance ensures compliance with FTA requirements and saves businesses time, money, and stress.

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