Vat Deregistration and Registration Guide 2024

VAT Registration Time frame in UAE

The processes and time frames related to Value Added Tax (VAT) registration in the UAE may have evolved. However, as of that time, businesses meeting the mandatory registration criteria were required to register for VAT within a specific time frame.

In this comprehensive guide, we delve into the vital processes of vat deregistration and registration From understanding the fundamental principles to practical steps involved, this exploration aims to equip businesses with the knowledge needed to seamlessly manage their VAT obligations.

Mandatory Registration Threshold: Businesses in the UAE are required to register for VAT if their taxable supplies and imports exceed the mandatory registration threshold, which is set by the tax authorities.
Voluntary Registration: Businesses that do not meet the mandatory registration threshold but wish to register voluntarily may also do so.
Time Frame for Registration: Generally, businesses are required to register for VAT within 30 days from the date they meet the mandatory registration criteria or become liable for voluntary registration.
VAT Registration Process: The registration process involves submitting an online application through the Federal Tax Authority (FTA) portal in the UAE. The FTA reviews the application and issues a Tax Registration Number (TRN) upon approval.
Penalties for Late Registration: There may be penalties for late registration. It’s important for businesses to be proactive in registering for VAT to avoid any penalties or issues with compliance. It’s crucial to check with the latest guidelines provided by the Federal Tax Authority or relevant tax authorities in the UAE for the most up-to-date and accurate information. Additionally, consulting with a tax professional or advisor can provide tailored guidance based on your specific business situation and the latest regulatory updates. Tax regulations can change, and it’s important to stay informed about any amendments that may affect your business.

VAT deregistration in UAE.

Businesses in the United Arab Emirates (UAE) can apply for Value Added Tax (VAT) deregistration under certain circumstances.

The process for VAT deregistration in the UAE generally involves the following steps:

Rules for deregistration from VAT

Eligibility for Deregistration: A business may be eligible for VAT deregistration if its taxable supplies and imports fall below the mandatory registration threshold, or if the business ceases to make taxable supplies.
Submission of Deregistration Application: Businesses seeking deregistration should submit an online application through the Federal Tax Authority (FTA) portal. The application typically includes details about the reasons for deregistration and supporting documents.
Providing Supporting Documents: Depending on the reason for deregistration, businesses may need to provide supporting documents. For example, if the reason is that the business has ceased to make taxable supplies, the FTA may require evidence such as financial statements, closure certificates, or other relevant documents.
Clearance of Outstanding Liabilities: The FTA may require the business to clear any outstanding tax liabilities before approving the deregistration request.
Approval from the FTA: Once the FTA receives and processes the deregistration application, and any outstanding liabilities are settled, they will issue an approval for deregistration.
Cancellation of TRN: Upon approval, the FTA cancels the Tax Registration Number (TRN) of the business.
Return of Unused Tax Invoices: The business may need to return any unused tax invoices to the FTA as part of the deregistration process.

It’s important to note that the process and requirements for VAT deregistration may be subject to change, and businesses should check with the latest guidelines provided by the FTA or relevant tax authorities in the UAE. If you are considering VAT deregistration for your business, it is advisable to consult with a tax professional or advisor who can provide specific guidance based on your business circumstances and the latest regulatory updates. Additionally, checking the official FTA website or contacting the FTA directly for the most current information is recommended.

UAE VAT Law

The United Arab Emirates (UAE) has implemented Value Added Tax (VAT) as part of its tax system. The VAT law in the UAE is governed by the Federal Decree-Law No. 8 of 2017 on Value Added Tax, commonly known as the UAE VAT Law.

Here are key aspects of the UAE VAT Law:

Implementation Date: VAT was introduced in the UAE on January 1, 2018.
Taxable Supplies: The UAE VAT Law outlines what constitutes taxable supplies, which includes the sale of goods and services.
Registration Threshold: Businesses meeting the specified threshold for taxable supplies are required to register for VAT. The threshold is determined by the authorities.
VAT Rates: The standard rate of VAT in the UAE is 5%. Some goods and services may be exempt or subject to a zero-rate, as specified in the law.
VAT Registration: Businesses meeting the mandatory registration criteria are required to register for VAT with the Federal Tax Authority (FTA). Voluntary registration is also possible.
VAT Returns: Registered businesses must file regular VAT returns with the FTA, providing details of their taxable supplies and purchases
Input Tax Recovery: Registered businesses can recover the VAT they have paid on their purchases (input tax) against the VAT they have collected on their sales (output tax).
Record Keeping: Businesses are required to maintain proper records of their transactions, invoices, and relevant documents as per the VAT Law.
VAT Invoicing: The law outlines the requirements for VAT invoices, including the information that must be included for a document to be considered a valid tax invoice.
Penalties and Enforcement: The law specifies penalties for non-compliance, including late filing of returns, failure to register, and other violations. The Federal Tax Authority is responsible for enforcing the VAT Law.
VAT Refunds: The law allows for VAT refunds in certain cases, such as for tourists and businesses engaged in international trade.

VAT Delay Charges in UAE

The United Arab Emirates (UAE) has a framework for Value Added Tax (VAT) compliance, and businesses are expected to adhere to the filing and payment deadlines set by the Federal Tax Authority (FTA). Failure to comply with these deadlines can result in penalties and charges. However, it’s essential to note that specific penalty provisions and charges may be subject to change, and it’s advisable to refer to the latest regulations and guidelines provided by the FTA.

Here are some general points related to potential charges for VAT non-compliance in the UAE:

Late Filing Penalties: Businesses are typically required to submit VAT returns within a specific timeframe. Late filing may result in penalties, and the amount can vary based on the number of days the return is overdue.
Late Payment Penalties: Late payment of the VAT liability is also subject to penalties. The penalty may be a percentage of the unpaid tax amount, and the rate can increase the longer the payment is delayed.
Interest Charges: In addition to penalties, interest may be charged on the overdue tax amount. The interest rate is usually specified in the tax regulations.
Failure to Register Penalties: If a business is required to register for VAT but fails to do so within the specified timeframe, there may be penalties for non-compliance. It is crucial for businesses operating in the UAE to stay informed about the latest updates to tax regulations and compliance requirements. The FTA regularly issues guidelines and updates, and these can be accessed through their official website or other official communication channels.

VAT Registration and Deregistration Requirements

The Value Added Tax (VAT) registration and deregistration requirements in the United Arab Emirates (UAE) are governed by the Federal Decree-Law No. 8 of 2017 on Value Added Tax.

Here are key aspects of both VAT registration and deregistration in the UAE:

VAT Registration Requirements:

Mandatory Registration: Businesses that meet or exceed the mandatory registration threshold for taxable supplies are required to register for VAT.
Voluntary Registration: Businesses that do not meet the mandatory registration threshold may choose to register for VAT voluntarily.
Threshold for Mandatory Registration: The specific threshold for mandatory registration is determined by the authorities. It is based on the value of taxable supplies made by the business.
Taxable Supplies: Taxable supplies include the sale of goods and services made in the course of business, excluding exempt supplies.
Application Process: Businesses need to submit an online application for VAT registration through the Federal Tax Authority (FTA) portal.
TRN (Tax Registration Number): Upon successful registration, the business is issued a Tax Registration Number (TRN) by the FTA.
VAT Invoicing: Registered businesses are required to issue VAT-compliant invoices and maintain proper records of transactions.

VAT Deregistration Process:

Eligibility for Deregistration: A business may be eligible for VAT deregistration if it no longer meets the mandatory registration threshold or if it ceases to make taxable supplies.
Application for Deregistration: Businesses seeking deregistration must submit an online application through the FTA portal.
Supporting Documents: Depending on the reason for deregistration, the FTA may require supporting documents, such as financial statements or closure certificates.
Outstanding Liabilities: Businesses must clear any outstanding tax liabilities before the FTA approves the deregistration request.
Approval from the FTA: Once the FTA processes the application and verifies compliance, it issues an approval for deregistration.
Cancellation of TRN: The FTA cancels the Tax Registration Number (TRN) of the business upon approval of deregistration.
Return of Unused Tax Invoices: Businesses may need to return any unused tax invoices to the FTA as part of the deregistration process.

Can I Register For Vat After Deregistration & Reasons for Deregistration of VAT?

In the United Arab Emirates (UAE), if a business has undergone deregistration for Value Added Tax (VAT), there is typically a waiting period before the business can reapply for VAT registration. The exact duration of this waiting period may be specified by the tax authorities and is intended to prevent frequent or improper registrations and deregistration.

Waiting Period: After deregistration, businesses may need to wait for a specified period before they can reapply for VAT registration. The waiting period is designed to ensure proper adherence to tax regulations.
Reasons for Deregistration: The reasons for deregistration may influence the waiting period. For example, if a business voluntarily deregistered due to a temporary cessation of activities but later resumes taxable operations, the waiting period may be relatively shorter.
Changing Circumstances: If there are significant changes in the circumstances that led to the initial deregistration, businesses may be eligible to reapply for VAT registration. It’s essential to communicate any changes to the Federal Tax Authority (FTA) and follow the prescribed procedures.
Compliance Requirements: Before reapplying for VAT registration, businesses should ensure that they meet all compliance requirements, including settling any outstanding tax liabilities.
Application Process: The reapplication process typically involves submitting a new VAT registration application through the FTA portal. The business may need to provide updated information and documentation.
FTA Guidance: It’s advisable to refer to official guidance from the Federal Tax Authority or consult with tax professionals to understand the specific requirements and waiting periods associated with reapplying for VAT registration after deregistration.

Documents Required for Vat Deregistration Of Freezone Company in UAE?

The process for Value Added Tax (VAT) deregistration of a free zone company in the United Arab Emirates (UAE) typically involves submitting a formal application to the Federal Tax Authority (FTA). The exact documentation required for VAT deregistration may vary, but generally, businesses are expected to provide information that supports the deregistration request.

Here are some common documents that may be required:

VAT Deregistration Application: Complete and submit the VAT deregistration application form, which is usually available on the FTA’s official portal.
Covering Letter: Include a covering letter explaining the reason for VAT deregistration. Clearly state the circumstances leading to the decision to deregister.
Company Trade License: Provide a copy of the company’s trade license, highlighting details such as the license number and expiration date.
Passport Copies: Copies of passports of the company’s authorized signatories or representatives may be required.
Financial Statements: Provide financial statements or any relevant financial documentation that supports the reason for deregistration. For instance, if the business has ceased operations, provide evidence of closure.
Lease Agreement or Closure Certificate: If applicable, include a copy of the lease agreement or a closure certificate for the business premises.
Inventory Details: Provide details of any remaining inventory or stock, especially if the business is closing. This helps in determining any VAT liability on remaining assets.
Outstanding Liabilities: Provide evidence of settling any outstanding VAT liabilities, including proof of payment or arrangements made for settlement.
Customs Clearance Documents (if applicable): For businesses involved in importing/exporting goods, customs clearance documents may be required to ensure proper closure of VAT accounts related to imported goods.
Supplier and Customer Details: If relevant, provide details of suppliers and customers to whom the business owes or is owed money. This helps in addressing any outstanding invoices or credits.
Board Resolution (if required): In some cases, a board resolution may be required, especially if there are changes in the company’s management or decision-making structure.

It’s important to note that specific requirements may vary, and businesses should check with the FTA or seek guidance from tax professionals to ensure they provide all necessary documentation for VAT deregistration. The FTA’s official website and guidelines typically provide detailed information on the deregistration process and required documents.

Vat Registration & Deregistration