Businesses in the UAE often reach a stage where their revenue falls short, or perhaps they stop producing taxable supplies altogether. At this stage, staying VAT-registered is no longer needed. Therefore, businesses must take the necessary steps to cancel VAT Registration in UAE, such as submitting the deregistration application, settling outstanding liabilities, and keeping tax returns up to date. 

In this guide, we will cover important details about cancelling VAT registration in the UAE, including the eligibility conditions, application process, and common pitfalls to look out for, to ensure a smooth VAT exit without any penalties. 

Eligibility to cancel VAT Registration in UAE 

Businesses, when no longer meeting the criteria for being a taxable entity, are required to cancel their VAT registration. Therefore, understanding the deregistration rules is necessary to ensure compliance and avoid legal complications. 

Businesses or individuals can apply for VAT deregistration under the following conditions: 

1. Business Stops Taxable Supplies: If your business stops providing goods or services subject to VAT, including shutting down operations completely. 
2. Annual Revenue Falls Below Threshold: When the taxable supplies of the business fall below the VAT registration threshold. 
3. Temporary Suspension of Activities: If your business stops all taxable activities for more than six months. 
4. Non-Trading Entities: If VAT-registered companies have never commenced trading in the UAE. 
5. Changes in Business Structure: If the company merges, dissolves, or is liquidated. 

Steps to cancel VAT Registration in UAE: Key documents required 

While getting into the steps to cancel VAT registration in UAE, you need to ensure that all necessary documents are prepared well in advance. The process requires specific paperwork, which includes: 

• Recent financial statements & turnover records 
• Copy of cancelled business license 
• Board resolution approving VAT deregistration 
• Letter of liquidation (if the company is closing) 
• Evidence confirming that the business operations have ceased 
• Updated HR records & letter from the Ministry of Labour for employees 
• Sample invoices confirming chargeable expenses 
• Sales agreements or licenses (Previous and updated) 
• TRNs, e-mail mentioning TRNs, and Head Office Business Certificate 
• Blueprint of business operations, detailing the suppliers, customers, and countries 
• Description of suppliers, importers, and partners 
• Letter confirming non-operation in the UAE 

Steps to cancel VAT Registration in UAE: Detailed procedure 

These are the steps to de register for VAT in UAE in compliance with VAT deregistration rules:- 

Step 1: Log in to the EmaraTax Account 

Access the EmaraTax account using the registered username and password or the UAE PASS. To proceed, enter the One-Time Password (OTP) received via email or mobile. New users must sign up to create an account and link to the business. 

Make sure the account details, including the email address and mobile number, are up to date, as all VAT deregistration communications will be sent to them. 

Step 2: Select Your Company Profile 

After logging in, locate the list of Taxable Persons on the dashboard. Select the company for which VAT deregistration is required. In case the concerned company is not listed, create a Taxable Person in EmaraTax by entering the company details, trade license, and VAT registration number. This will prevent errors in the application. 

Step 3: Initiate VAT Deregistration Application 

Now it’s time to officially start the deregistration process: 

On the dashboard, click Actions on the VAT tile and select Deregister to open the deregistration form, where all the details, documents, and reasons for deregistration will be captured. 

Step 4: Update Your Business Information 

Click “Edit/Review” for updating details, such as bank account, contact information, or company address. Make sure all essential documents are prepared accurately. Click ‘Proceed to De-Registration’ to initiate the formal process. 

Step 5: Provide Required Information and Upload Documents 

Fill in all necessary information accurately and upload supporting documents in accepted formats, such as PDF or Excel, to avoid rejections. Select the reason for deregistration and fill in additional fields with specific details as displayed on the system. 

To save time, it is advisable to keep scanned copies of all documents ready. 

Step 6: Specify Eligible Deregistration Date 

Next, enter the date when the business becomes eligible for VAT deregistration. Oftentimes, the system automatically calculates this based on the submitted business records. Nevertheless, if the applicant has a specific reason, they can select a different effective date. 

It is important to note that the specified date should be accurate, as it determines the VAT liability period of the company. 

Step 7: Enter Taxable Supplies and Expenses 

Provide evidence of taxable supplies and expenses to support the deregistration request. Record figures in AED (UAE Dirhams) in the Excel sheet provided in the system. After completing the sheet, proceed to the Authorized Signatory section. 

To avoid any delays in approval, make sure to double-check the numbers entered in the taxable supplies or expenses field. 

Step 8: Verify Authorized Signatory 

This particular step is to ensure that the person applying for VAT deregistration is authorized. Check the details of the Authorized Signatory, including the signature, name, and designation, in the system. 

Step 9: Review and Submit the Application 

Finally, review the entire application, including personal information, business details, taxable supplies, and uploaded documents, before final submission. Click Submit and receive confirmation once it has been approved by the system. 

Make sure to keep a copy of the submitted application and acknowledgement for the record. 

Steps to cancel VAT Registration in UAE: Common mistakes to avoid 

Although the steps to de register for VAT in UAE seem simple and straightforward, businesses may often cause blunders due to confusion or misunderstandings. These are some of the common mistakes that may lead to non-compliance issues in the UAE VAT Deregistration process:- 

1. Applying Before Meeting Eligibility Criteria - Attempting to deregister before meeting the requirements of the FTA, such as taxable supplies below the mandatory threshold, terminating business operations completely, etc., may result in the rejection of the deregistration application. 
2. Incomplete or Incorrect Documentation - Submitting documents with missing information, such as cancelled trade licenses, financial statements, or employee details, or unaligned with FTA guidelines, can delay the process. 
3. Neglecting Outstanding VAT Payments - Overlooking pending VAT liabilities or unfiled returns or not settling unpaid VAT before applying for deregistration can result in fines or rejection of the request. 
4. Incorrect Reporting of Supplies - Miscalculations in reporting taxable, zero-rated, or exempt supplies can lead to disagreements. 
5. Failure to Update Business Records - Failing to reflect changes in HR records, contracts, or financial agreements may raise red flags during FTA evaluation. 
6. Ignoring VAT Deregistration Deadlines – Failing to apply for deregistration within a specified period after becoming eligible can result in penalties. 
7. Not Using the Portal Properly - Deregistering outside the official online portal or not following the correct steps can cause delays or rejections in the applications. 
8. Assuming Deregistration Cancels All Liabilities – Not fulfilling all prior obligations or liabilities can reject the deregistration request.  

Let experts handle your VAT obligations 

While figuring out the process and steps to cancel VAT Registration in UAE, it is crucial to stay compliant with the FTA guidelines. From logging into the EmaraTax account to submitting accurate financial documents, you need to make sure that your deregistration process follows the defined procedure. 

Our tax professionals in Dubai will save you time and stress by handling your VAT deregistering process seamlessly and ensuring that your VAT exit is fully compliant. 

Connect with our tax experts and get guidance through every step.