The VAT Deregistration process is a formal request submitted to the Federal Tax Authority (FTA) by a taxable person or entity to cancel their VAT registration. This step is crucial when a business is no longer eligible or required to be VAT registered under UAE tax law.
When is VAT Deregistration Required or Optional?
A business can apply for VAT deregistration under two circumstances:
1. Mandatory Deregistration:
The business must apply if:
- It stopped making taxable supplies.
- It is no longer conducting business.
- Its taxable turnover has dropped below the mandatory registration threshold (AED 375,000) for the past 12 months and there is no expectation that it will exceed this threshold in the next 30 days.
2. Voluntary Deregistration:
A business may apply for voluntary deregistration if:
- The taxable turnover has dropped below the voluntary threshold (AED 187,500) for the last 12 months.
- The business wishes to cease its VAT obligations due to reduced operations or change in activity type.
Key Steps in the Deregistration Process
- Login to the FTA Portal
Access your account using your registered email and password. - Go to VAT Deregistration Section
Locate the deregistration form in the VAT dashboard. - Complete the Deregistration Application
Provide valid reasons (e.g., business closure, turnover below threshold) and accurate supporting data. - Attach Supporting Documents
- Trade license cancellation certificate (if applicable)
- Final financial statements
- Proof of ceased operations (e.g., tenancy termination, final invoices)
- Clearance of outstanding tax liabilities and penalties
- Submit the Final VAT Return
Before deregistration is approved, the FTA requires the final return to be filed and any due amounts paid in full. - FTA Review and Approval
Once submitted, the FTA will review the application and may request additional documents or clarifications. The process may take several weeks depending on the case.
⚠️ Penalties for Non-Compliance
If a business fails to apply for deregistration within 20 business days of becoming eligible, a penalty of AED 1,000 will be imposed, increasing by AED 1,000 each month up to a maximum of AED 10,000.
Additionally, continued VAT filing obligations and penalties will apply if the account remains active unnecessarily.
✅ Best Practices & Tips
- Ensure all VAT returns are filed and paid before submitting the deregistration request.
- Double-check that supporting documents are clear and complete.
- If your business operations are seasonal or suspended temporarily, consult with a tax advisor to confirm if deregistration is the right step.
- Keep a copy of your deregistration confirmation certificate for records and compliance audits.
📣 Need Expert Help?
At L.E.G.O. & Associates, we assist clients in navigating the VAT deregistration process end-to-end—from eligibility assessment to application, documentation, final filings, and FTA follow-up. For further guidance, please email us at info@laafzllc.com or call/whatsapp us in +971 50 506 1908.