The majority of businesses in the UAE that meet the VAT registration criteria have already completed their registration. Once registered, taxable persons must adhere to VAT regulations, including:

  • Issuing Invoices: Invoices must be issued in the prescribed format.
  • Filing Returns: VAT returns must be filed promptly according to the deadlines set by the Federal Tax Authority (FTA).
  • Paying Tax Due: VAT payments must be made by the specified due dates.

The VAT Law allows registered taxable persons the option to cancel their VAT registration under certain conditions. Here, we will explore the circumstances under which de-registration can occur and outline the process for doing so.

What is VAT De-registration?

Tax De-registration allows a registered taxable person to cancel their VAT registration. This process effectively deactivates the VAT registration and the associated VAT number. Tax de-registration can be initiated either by the registered person themselves or by the Federal Tax Authority (FTA) if the person meets the criteria for de-registration.

When can a registration be cancelled by the FTA in UAE?

The Federal Tax Authority (FTA) can cancel a person’s VAT registration if it determines that the registrant meets either of the following conditions for de-registration. This process is known as mandatory tax de-registration:

  1. The person has ceased making taxable supplies and does not expect to make any taxable supplies over the next 12 months.
  2. The person’s taxable supplies or expenses over the past 12 months have fallen below the voluntary registration threshold (AED 187,500), and they do not anticipate exceeding this threshold within the next 30 days.

For individuals or businesses who no longer make taxable supplies and meet the applicable conditions, VAT de-registration provides a useful option. Such registrants are not required to maintain their VAT status and can apply for de-registration accordingly.

When can a person apply for VAT De-registration in UAE?

A person registered for VAT can apply for tax de-registration in the following situations:

  1. Ceasing Taxable Supplies: The person has stopped making taxable supplies and does not expect to make any taxable supplies over the next 12 months.
  2. Threshold Criteria: The person’s taxable supplies or taxable expenses over a period of 12 consecutive months have fallen below the voluntary registration threshold (AED 187,500) and they do not anticipate exceeding this threshold within the next 30 days.

Please note that a person who has voluntarily registered for VAT cannot apply for de-registration within the first 12 months from the date of their registration.