Understanding the Conditions of VAT De-Registration
Did you stop making taxable supplies or started making supplies less than AED 187,500 or AED 375,000? If your answer is affirmative to any of the above question then this article will help you in avoiding penalty of AED 10,000 and getting yourself de-registered from VAT.
Tax De-Registration means cancellation of your VAT Registration which was obtained from FTA by submitting all required documents.
Tax De-Registration can either be applied by the Registrant (business owner) himself (or) it can be done by the FTA on finding that a registrant meets the conditions of de-registration.
As per the provision of the UAE VAT Law, a registrant should apply for Mandatory De-registration and may apply for Voluntary De-Registration.
Mandatory De-Registration
As per Article 21 of Federal Decree law No.8 of 2017, a Registrant shall apply for De-Registration in any of the following independent cases:
- Registrant stops making taxable supplies
- If the value of taxable supplies in the last 12 months does not exceed AED 187,500 and its not expecting to cross AED 187,500 in the next 30 days
Registrant must apply for De-Registration in the above two cases within 20 Business days from the day of the occurrence of such event.
If Registrant fails to submit a deregistration application within 20 Business days then there will be a Penalty of AED 10,000.
Voluntary De-Registration
As per Article 22 of Federal Decree law No.8 of 2017, A Registrant may apply for De-Registration if his Taxable supplies in the Past 12 months was less than AED 375,000.
For applying Voluntary De-Registration, one year must be elapsed for the Registration by exercising Voluntary Registration option.
A Registrant shall not be deregistered unless he has paid all Tax and Administrative Penalties due and filed all Tax Returns.
Any goods and services forming part of the assets of business carried on by a Registrant shall be deemed to be supplied by him at a time immediately before ceasing to be a Registrant and any tax payable shall be included in the final tax return.
This blog post is written by CA Rashid Ali, Tax Advisor at Flyingcolour Tax Consultants. If you have any question related to de-registration of VAT in the UAE then feel free to call us at +971 4 4542366 today for a quality consultation or please send inquiry to info[at]flyingcolour[dot]com.
