What is VAT Deregistration?
VAT deregistration is the formal cancellation of your VAT registration with the Federal Tax Authority. Once deregistration is approved, your entity’s VAT registration details are removed from the FTA register and you are no longer required to file VAT returns (monthly or quarterly) from the effective deregistration date.
Who Needs to Apply for VAT Deregistration?
You must apply for VAT deregistration when any of the following conditions apply:
- Permanent cessation of taxable activities: If you were making taxable supplies but have permanently stopped and do not intend to resume, you must deregister.
- Business closure or liquidation: If you cancel your trade license, liquidate the company, or sell the business, you need to deregister.
- Turnover falls below voluntary registration threshold: If your taxable turnover (and expenses) falls below AED 187,500 over a 12-month period and you do not expect to exceed this threshold in the next 30 days, you should apply for deregistration.
- No longer eligible to be VAT registered: Any other situation where you are no longer required to remain VAT registered.
When Must You Apply? The 20-Business-Day Rule
You must submit your VAT deregistration application within 20 business days from the date you become eligible for deregistration. The countdown starts from the day the deregistration conditions are met (for example, the date you cancel your trade license).
Penalties for Late Deregistration
If you miss the 20-business-day deadline, the FTA imposes a penalty of AED 1,000 per month of delay. This recurring monthly penalty continues up to a maximum of AED 10,000.
Using the earlier example: if you applied on 1 June 2025 after becoming eligible on 1 January 2025, you would be charged penalties for February, March, April, May, and June totaling AED 5,000.
FTA Approval Conditions: What the FTA Checks Before Approving Deregistration
The FTA will only approve your VAT deregistration once the following conditions are met:
- All outstanding VAT returns filed: You must have submitted every VAT return you are liable for up to the deregistration date.
- All tax liabilities paid: Any VAT due, plus any applicable penalties, must be fully paid.
- Final return and deemed supplies declared: If your business has assets on hand at closure, these must be declared as a deemed supply in the final VAT return. The final return must be submitted and approved.
After the FTA reviews and approves your final return, they will notify you within 10 business days from the effective deregistration date. You will then be able to download your VAT deregistration certificate from the FTA portal.
Documents and Evidence You Should Prepare
Prepare and keep these documents ready when applying for deregistration:
- Trade license cancellation certificate or proof of business closure
- Copies of the latest VAT return filings
- Proof of VAT payment clearance (bank payment proof or FTA payment confirmation)
- Final VAT return showing deemed supplies (if you have assets on hand)
- Supporting documents such as liquidation reports, final accounts, or a letter of intent for closure
- Updated contact details in the FTA portal (if they have changed recently)
Step-by-Step Checklist for a Smooth VAT Deregistration
- Confirm eligibility to deregister (ceased taxable activity, license cancellation, turnover below AED 187,500, etc.).
- Calculate the 20-business-day deadline (exclude weekends and UAE public holidays).
- Gather documents listed above and ensure all VAT returns are filed up to the deregistration date.
- Pay all outstanding VAT and any penalties before submitting the application.
- Declare assets as deemed supplies in the final VAT return, if applicable.
- Submit the VAT deregistration application via the FTA portal before the 20-business-day deadline.
- After approval, download the deregistration certificate from the portal (FTA will notify you within 10 business days of effective deregistration).
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